#235 Beginner Real Estate Investing: Don’t Make These Mistakes! ft. Peter Kim, MD - Passive Income MD Shop

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#235 Beginner Real Estate Investing Don’t Make These Mistakes! ft. Peter Kim, MD
Episode #235

#235 Beginner Real Estate Investing: Don’t Make These Mistakes! ft. Peter Kim, MD

“In this episode, Dr. Peter Kim talks about the essential pitfalls to avoid as a beginner in real estate investing. If you’re just starting out and eager to build your wealth through property, this episode is a must-listen. Dr. Kim will share his insights on common mistakes that new investors often make, provide practical advice on how to navigate the market, and equip you with the tools you need to make informed decisions.

Whether you’re looking to invest or buy rental properties, understanding these crucial missteps can save you time, money, and stress. Tune in!

Are you looking for a community to encourage you as you begin, or want to accelerate your business to the next level? Then join thousands of physicians who share the same journey of creating their ideal lives through multiple streams of income by joining us in our Facebook communities such as Passive Income Docs and Passive Income MD.

Eckard Enterprises brings this episode to you.

 

 

 

Eckard Enterprises LLC, is a family-owned and operated oil and gas company, specializing in mineral rights and other royalty generating assets in the U.S. energy industry. Eckard believes tangible assets such as minerals can provide opportunities for qualified individuals to directly own one of the most secure and long-term income generating assets available.

14.29 Min • October 28

Episode Highlights

Now, let’s look at what we discussed in this episode:

  • We All Make Mistakes
  • Having a Clear Plan and Strategy
  • The Importance of Due Diligence
  • Underestimating Expenses
  • Join the Passive Real Estate Academy

Here’s a breakdown of how this episode unfolds.

Episode Breakdown

[00:00]

We All Make Mistakes

The episode opens with Peter discussing the inherent fears and potential pitfalls of real estate investments, especially for beginners. He aims to identify common mistakes to help listeners avoid costly errors and invest with greater confidence. Aware of the pressures faced by physicians, he hopes to empower them on their financial journeys.

Peter shares his personal experiences, emphasizing the value of learning from mistakes and encouraging everyone to take action despite their fears.

[01:49]

Having a Clear Plan and Strategy

Peter dives into the need for having a clear plan and defined investment goals, likening investment without a plan to a chaotic race without a finish line. He urges listeners to articulate their financial targets, whether short-term, such as replacing a portion of their clinical income, or long-term, such as complete financial independence. Having specific goals, like aiming for $10,000 per month in passive income within a few years, can help investors reverse-engineer a roadmap to get there.

Peter emphasizes that clarity on one’s financial end-goals allows for more directed strategies and reduces the risk of being overwhelmed or diverted by various investment options. By setting concrete goals, physicians can better determine the level of income that would improve their lives, such as working fewer days or reducing the number of night shifts. He also points out that, while the journey may require course corrections, a strong start with a clear aim will minimize costly missteps.

Have you ever seen a situation where there’s a race and people don’t know where the finish line is?” – Peter Kim, MD

[06:54]

The Importance of Due Diligence

Peter warns against a common beginner mistake: failing to perform thorough due diligence and making emotional decisions. Unlike purchasing a primary residence, where emotional appeal may be more justifiable, he stresses that investment decisions should rely on careful assessment.

Proper due diligence includes evaluating the investment’s fundamentals, sponsor credibility, market conditions, and alignment with one’s objectives. Skipping these evaluations can lead to decisions driven by excitement rather than strategic planning.

He shares his personal experience with the consequences of rushing into investments based on trends or recommendations without fully understanding the risks.

Peter encourages listeners to seek objective input from knowledgeable peers or mentors to offset the natural inclination toward emotional decision-making. He emphasizes the critical role of community support and consultation to maintain objectivity, particularly in real estate.

Peter gives an example, stating, “The market’s going crazy…my friend did it,” highlighting the allure of joining trending investments without understanding the full context, which he says often leads to regretful choices.

“When we buy our primary homes, it’s definitely emotional… but that makes sense when you’re living there and you’re going to enjoy it. But when it comes to investments, again, it’s a different vehicle.” – Peter Kim, MD 

[11:06]

Underestimating Expenses

Peter discusses another prevalent pitfall: underestimating expenses associated with property ownership. He stresses that accurate cash flow projections are essential to maintaining positive income from investments, as unexpected costs can turn a potentially profitable property into a financial drain.

He advises listeners to be mindful of costs like repairs, maintenance, taxes, and insurance and to validate financial projections thoroughly to avoid unforeseen expenses.

Peter admits he has fallen into this trap himself by initially taking financial estimates at face value, which led to properties with negative cash flow.

By underestimating expenses, investors may find themselves having to fund the property out-of-pocket, defeating the purpose of creating passive income. He also cautions against simply accepting optimistic financial projections, advocating for a “trust, but verify” approach.

He says, “It led to a situation where I had a property that was negative cash flow,” emphasizing the importance of rigorously assessing all potential costs to avoid investments that drain rather than support one’s finances.

Real estate is about cash flow. You want positive cash flow. I’ve always said the two most important words in investing are cash and flow.” – Peter Kim, MD 

[13:19]

Join the Passive Real Estate Academy

Peter wraps up by recommending the Passive Real Estate Academy, a course and coaching program specifically designed by physicians for physicians, aimed at helping participants confidently perform due diligence, create a strategic roadmap, and scale their real estate portfolios.

He emphasizes the supportive community aspect, which allows members to share experiences and resources. Peter hopes that discussing common mistakes will help listeners avoid stress, worry, and financial loss on their investment journeys.

YOU KNOW ALL TOO WELL THAT ENTREPRENEURSHIP CAN BE A LONELY BUSINESS.

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