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SHOW NOTES FOR EPISODE 071 – PART-TIME REAL ESTATE INVESTING
In this episode, Dr. Buck Joffrey, a full-time physician, talks about how you can generate significant returns by investing in real estate while working full-time. Dr. Joffrey has built over $20 million in real estate and other business and investment assets while working a full-time job.
What You Will Learn
- How it’s possible to successfully invest in real estate while working full-time
- Why “Bigger is Better” when it comes to real estate multifamily purchases
- The book that changed the way he looks at investing
- Why he sees multifamily as recession proof investments
- Two common red flags in 5-Year Pro Forma Projections
- Why he doesn’t like to purchase the properties that house his medical clinics
- Three mistakes he will never repeat when buying investment properties
About our Guest
Dr. Buck Joffrey
Buck Joffrey is an accomplished Physician, Entrepreneur, Asset Manager and Podcaster. Since finishing his medical training in 2008, he has had tremendous success through his start-up businesses and investments going from being broke to having an 8 figure net worth. In order to help his high paid professional colleagues, he started a financial education website called WealthFormula.com and hosts the popular Wealth Formula Podcast. Buck knows the old mantra of “investing in a diversified portfolio of stocks, bonds, and mutual funds,” is outdated and dangerous for high paid professionals given the volatility and instability of the current global economy. Therefore, he advocates entrepreneurship and/or investing in hard assets that provide a cash flow as a more reliable way of approaching personal finance. Through a strong foundation of financial education and emphasis on cash flow investing, Buck teaches professionals how to take charge of their money and prosper.
More About Dr. Joffrey
- Finished medical training in 2008-2009, in the midst of the recession
- Saw many successful friends who lost much of their retirement investment portfolios in the recession and he didn’t want that to happen to him and saw real estate as the safest investment
- Read Cash Flow Quadrant by Robert Kiyosaki – changed the way he thinks
- Written a lot of papers, attended best schools, very successful in business
- Father was an immigrant and started investing in real estate early in life and did very well as a buy ‘n hold investor
- Buck said if he ever invested in real estate he would treat it more like a business – wanted a truly passive business
- As a surgeon he looks at things in a different way – he’s used to solving problems and fixing things
- Likes to build businesses from ground up
- He currently has ownership in 500-600 doors
His First Major Purchase – Also His Biggest Mistake
- In 2010-2011, bought a 14-unit apartment building. Class D property. Landlord stuffed the rent roll.
- Lost $300-400,000
- Learned a lot from the experience
- Never buy a class D building
- Never have a building managed by a person affiliated with the past owner of the building
- Bigger is Better! He now purchases less than 80-100 units. You are less dependent on single factors (i.e. a person, a unit, any single variable) when there is more to your property
Current Real Estate Property Targets
- C and B class properties
- Buys in other states, in markets with promise
- Goal to provide a realistic 5 year projection to 20% IRR
- Likes to do value-add but doesn’t want to be heroic
- Most interested in cashflow
- Be wary of these things in a 5 year projection
- Increase in rent for next 5 years. 2% makes sense. 6% is red flag
- Reversion CAP rate. What do Pro Formulas say the value in that area will be and why?
Other Businesses He Owns
- Owns a number of clinics:
- Cosmetic Surgery
- Sinus & Allergy
- Behavioral Therapy
- Syndication Business
Where He Meets Investors
- Comes through his podcast
- Formed an Investor Club (which is limited to accredited investors)
Where Does he Find His Real Estate Deals?
- Has full-time analyst, who used to work for a REIT,
- Researches potential deals
- Finds deals
- Makes offers
- Finds most of their deals through
- Selling brokers
- Pocket listings
Biggest Success
- In 2012, bought an off-market property
- Found through a broker
- Multiple 20-unit buildings in Chicago area
- Seller needed to get out quick – needed liquidity
- Got the deal at a 15-20% discount
- Market CAPS at 8 – Today they are at 5 (less than 3 years later)
- Made $1 million in equity in each deal
Advice to Those Getting Started in Real Estate Investing
- You need to ask the question “where can I find deals AND people I can trust?”
- The current multifamily market is in a feeding frenzy
- You need to invest with people you know and trust
- The best way is to get plugged into a community of investors is in a place where where people have experience with a number of differnt investors and a variety of investments. You can learn from their experiences before investing
- Don’t be the Guinea pig
Where Does He See His Business Going?
- Retiring from clinical activity in July
- He own all his businesses
- Hopes to continue to grow and create more businesses
- He likes to develop layers on those businesses (i.e. podcast)
- He wants to enjoy and have fun with his business ventures
- He also has an asset management company – He recommends good investments to others
- Go big!
Rap It Up
- Favorite real estate book: The ABCs of Real Estate Investing by Ken McElroy
- Favorite business book: Think & Grow Rich by Napolitan Hill
- Favorite app: Trulia app
- If you lost everything and only had $1,000 cash: Use it to raise money through Internet marketing (books, etc.) and then invest the money raised.
How to Reach Buck
- Website: wealthformula.com
- Email: buck@wealthformula.com
Until our next podcast, keep moving forward and God bless!
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