Why You Should Invest in Investment Property as a Physician

In 2024, the average real estate investor’s home sold for over $190,404 more than the purchase price.

With such returns, it’s no surprise that real estate remains one of the best ways to build wealth. But how can you take advantage of it as a physician?

With busy schedules, high student loan debt, and an income tied to clinical work, physicians can’t invest in just any property.

They need properties that generate passive income, appreciate over time, and require very little management.

How can we determine such properties? Read on to also learn about the five types of properties you should consider when looking for real estate investing opportunities.

Why Should Physicians Invest in Investment Properties

Here are three reasons why you should think about investing in properties as a physician:

1. Passive Income

Multi-family real estate helps physicians co-own a property with other investors and earn ongoing income from tenant rent payments, which means a steady supply of passive income over the time of ownership.

Plus, if you’re renting, it’s unlikely that an entire apartment building would ever stop generating revenue—especially when mixed across multiple units.

This way you always have money on hand even when you aren’t actively working as a physician.

2. Consistent Income

Over the last five recessions since 1980, housing prices dropped in two but increased in three.

This means that an economic downturn doesn’t necessarily cause real estate values to fall.

In some cases, multi-family properties perform even better during market declines.

One reason is that when economic uncertainty discourages people from buying houses, rental demand often increases, which stabilizes your rental income and property values.

3. Appreciation Over Time

Real estate appreciates over time because of national economic trends, demographic shifts, and infrastructure developments like new public transportation lines.

This means you get an opportunity to sell your stake in the future for a tidy profit.

As an example, if you purchase a clinic in an up-and-coming neighborhood, the value of that property may rise as more people move to the area and new businesses open.

What to Look for When Investing in a Property

You should consider the following three factors when investing in a property:

1. Location and Market Trends

Your property’s location will determine its future selling potential and its current renting potential.

If it’s located in an area with a higher standard of living, it’ll likely be a better purchase.

Here are some signs to look for:

• Strong job growth. The more jobs, the more people will be looking to move there, which means a higher demand for living options.
• Public transportation. If you have good public transportation in the area, more people will be likely to show interest in your property.
• Proximity to business districts. If your investment property is closer to business districts, it’s likely to appreciate faster.

Also, make sure to check the vacancy rates in the area.

If they’re low, this means high demand for rentals, which makes for a steady income and fewer concerns about tenant turnover.

2. Financing Options

Banks consider physicians low-risk borrowers, which means you will qualify for special loans with low down payments and interest rates.

For example, physician loans will often come with low or no down payments, no private mortgage insurance (PMI), and lenient debt-to-income requirements.

This will make it easier for you to buy a rental property without spending much of your own money.

Some other options include commercial real estate loans, portfolio loans, real estate investment trusts, and conventional investment loans.

3. Positive Cash Flow

Before purchasing a property, you need to know whether or not it is profitable.

A profitable rental property should generate positive cash flow after covering all expenses like mortgage payments, property taxes, insurance, and maintenance costs.

If you buy a $500,000 single-family property that generates $5,000 in monthly rent and you’re left with $1,200 in profit after deducting expenses, that’s positive cash flow and means that your property value will continue to grow over time.

Types of Investment Property Physicians Should Invest In

What are the types of investment property you could invest in? Here are five you should know about:

1. Single-Family Properties

Single-family homes are residential properties for one tenant or family.

They’re often the most accessible investment option if you’re starting to invest and offer a stable income because they tend to attract long-term renters.

These properties also require less maintenance than multi-family residences because you have fewer units to manage.

They also appreciate quite well over time, so you can sell them for a profit.

However, since single-family homes rely on one tenant for income, a vacancy can halt your cash flow and make it difficult to cover expenses.

2. Multi-Family Properties

Multi-family properties include duplexes, triplexes, quadplexes, and apartment buildings with multiple rental units under one roof.

Unlike single-family homes, these properties help you have multiple income streams.

If one unit is vacant, the rent from others still flows in and helps you cover expenses, which reduces your financial risk.

With that said, multi-family properties require more oversight.

This means you’ll need to hire a property management company to manage your tenants and building maintenance requirements.

They usually take a 1-5% cut of your building’s value per year.

3. Commercial Real Estate

Commercial real estate includes office buildings, retail spaces, warehouses, mobile home parks, and medical office buildings—all of which can provide higher, more stable returns than single- or multi-family residential properties.

Medical office buildings usually have a long-term lease (5-10 years), which means lower turnover and consistent income over the years.

Note that these investments usually require more capital upfront and renovations before they become profitable.

You should only go for these if you have some cash set aside.

4. Short-Term Rentals

Short-term rentals like vacation homes and corporate housing are good investments if they’re in locations with high foot traffic and frequent visitors.

For example, if your property is near hospitals where traveling nurses and locum tenens physicians need temporary housing, you can get higher returns compared to long-term contracts.

You can also adjust your pricing based on demand, which means you can earn more during the busy season for your industry.

The catch here is that short-term rentals require active management—even if you hire a rental manager because issues can pop up.

You’ll also have higher maintenance costs because of the constant wear and tear.

5. Real Estate Syndications and REITs

In syndication, several investors will pool their money to buy multi-million-dollar buildings like apartment buildings, office complexes, or shopping centers.

Real estate investment trusts (REITs), in contrast, work more like stocks. You buy shares in companies that own real estate and earn dividends.

Both of these have their pros and cons for physicians.

For one, you get the benefits of real estate ownership—passive, consistent income and appreciation—without needing to manage anything.

This makes REITs and syndications great if you’re studying for another medical license or just have limited time.

The trade-off is that with syndications, your money will be locked for several years and you won’t be able to sell your stake if you need quick access to cash.

With REITs, your stake will be subject to stock market fluctuations, which makes the investment less stable.

Invest in Properties That Will Work for You in the Future With Physicians Thrive

Real estate is one of the most stable ways to build wealth, and as a physician, you have unique advantages like a high income and access to special financing to invest in property. But success in real estate isn’t just about buying property.

You also have to choose the right loan, keep in mind the maintenance costs, and keep track of the net yield to make sure your property is cash flow positive.

All of this can require time and expertise—two things that can be in short supply when you’re focused on your medical career.

That’s where we come in.

At Physicians Thrive, we help physicians invest in properties that generate a steady income, appreciate over time, and create long-term financial security.

Our team can help you understand your financing and investment options to maximize returns while minimizing stress.

Ready to invest in properties that will work for you in the future? Give our advisor a call today!