FinFair 2015

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Truly one of the Most Groundbreaking FinTech & Alternative Finance Programs to Come to Wall Street

Discussions will include:

  • Applications of Reg A+ from small business capital formation to private debt securitizations
  • Enhancing small cap deal distribution & aftermarket support
  • How Reg A+ will Impact Community Investing
  • An introduction to next-Gen Broker Dealers and online financing platforms
  • How Financial Advisors and RIAs will benefit from Reg A+
  • Building vibrant venture exchanges
  • New trends in liquidity and clearing
  • Diversifying fixed-income portfolios with P2P, P2B and P2R debt
  • Distinguishing between a FinTech bubble or a financial revolution.

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For those who can’t join us in person on the 29th, feel free to join us virtually.

Clear here for details on FinFair’s live broadcast

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US Real Estate Investing Index 2015

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Update July 2015

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Patrick Bourbon CFA

[Bourbon Financial Management

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real estate

Conclusion

Your thoughts and comments on this ME-P are appreciated. Feel free to review our top-left column, and top-right sidebar materials, links, URLs and related websites, too. Then, subscribe to the ME-P. It is fast, free and secure.

Speaker: If you need a moderator or speaker for an upcoming event, Dr. David E. Marcinko; MBA – Publisher-in-Chief of the Medical Executive-Post – is available for seminar or speaking engagements. Contact: MarcinkoAdvisors@msn.com

OUR OTHER PRINT BOOKS AND RELATED INFORMATION SOURCES:

Risk Management, Liability Insurance, and Asset Protection Strategies for Doctors and Advisors: Best Practices from Leading Consultants and Certified Medical Planners™8Comprehensive Financial Planning Strategies for Doctors and Advisors: Best Practices from Leading Consultants and Certified Medical Planners™

“The medical education system is grueling and designed to produce excellence in medical knowledge and patient care. What it doesn’t prepare us for is the slings and arrows that come our way once we actually start practicing medicine. Successfully avoiding these land mines can make all the difference in the world when it comes to having a fulfilling practice. Given the importance of risk management and mitigation, you would think these subjects would be front and center in both medical school and residency – ‘they aren’t.’

Thankfully, the brain trust over at iMBA Inc., has compiled this comprehensive guide designed to help you navigate these mine fields so that you can focus on what really matters – patient care.”

  Dennis Bethel MD [Emergency Medicine Physician]

Medical Practice as a Portfolio Asset Class?

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Valuing the Quintessential Alternative Investment

By Dr. David Edward Marcinko MBA CMP™

[Editor-in-Chief] www.CertifiedMedicalPlanner.org

Dr. MarcinkoAs all FAs, and informed physician investors know, the investment industry and Modern Portfolio Theory [MPT] strives to make optimal ‘allocations’ into different ‘asset classes’; according to some defined risk tolerance level or efficient frontier.

Equities, fixed income, property, private equity, emerging markets and so, are all ‘asset classes’, into which physician investors and mutual fund or portfolio managers will make an allocation of their total funds under management. It is quite proper for them to do this as they seek to balance the risk and potential returns for their own; ME, Inc., or other clients’ money.

But, by creating a “new” asset class, this concept opens the door to significant capital flows; advisory and management fees. Hence; the unrelenting innovation of Wall Street, and its’ commission driven and fee-seeking mavens, is unending.

Making an Impact

This secular and non-secular concept is broadly known as “impact investing”; and may be illustrated using Social Security as an example.

So, Wall Street opines,  if you’re not counting on Social Security benefits as a part of an overall asset allocation strategy, you may be missing out on bigger gains in a retirement portfolio. Those of this ilk say that retirement investors should consider the value of their Social Security as a portion of their fixed-income investments. Others believe it may be too risky for some.

The Strategy

Generally, adopting such strategy would mean shifting a big portion of investible assets out of bonds and into stocks. And, into the hands of money managers, stock brokers, wealth and endowment fund for a fee; of course. This is akin to those financial advisors who rightly or wrongly goaded clients a decade ago, to not pay off a home mortgage and instead reposition the free cash flow into a rising; and then falling; market.

Of course, there are detractors, as well as proponents, of this emerging financial planning philosophy.

Vanguard Group

Jack Bogle, founder of the Vanguard Group, often cites his penchant for basing one’s asset allocation on age. (If you’re 40 years old, you have 40% of your investments in fixed income and 60% in equities. By the time you’re 60, you’ve got 60% in fixed income, 40% in equities).

Example:

So, let’s consider Social Security, citing a physician with $300,000 in an investment portfolio, and capitalizing the stream of future payments.

If the $300,000 is all in equity funds, even equity-index funds, and $300,000 in Social Security, you are already at 50/50″ fixed income versus equities.  The next step is a conversation as a DIYer or ME Inc physician investor or advisory client. This is the nexus of where Social Security meets risk management.

Now, how will the doctor feel when market goes up and down? Some may believe the concept, but not enjoy the inevitable more fluctuating self-directed 401-k, or 403-b plan. So, one must be comfortable with taking on a larger stock position.

Source: Andrea Coombes; MarketWatch, September, 2013.

http://money.msn.com/mutual-fund/social-security-as-part-of-your-portfolio

MD

The Negative

Others experts, like Paul Merriman, opine that Social Security is not an asset class and the idea is fundamentally flawed and should not be a part of anyone’s portfolio.

Why? As classically defined, a portfolio is composed of financial assets. A financial asset is something that can be sold. Social Security cannot be bought and sold. Because of that, it has a market value of zero.

Source: Paul Merriman, MarketWatch, November 2013

Assessment

Therefore, the definitional decision is left up to the informed reader, modern physician or enlightened advisor. Is a medical practice an asset class?

MORE: About iMBA Inc Expertise in Healthcare Valuation

MORE: Social Security as an Asset Class?

Conclusion

Your thoughts and comments on this ME-P are appreciated. Feel free to review our top-left column, and top-right sidebar materials, links, URLs and related websites, too. Then, subscribe to the ME-P. It is fast, free and secure.

Link: http://feeds.feedburner.com/HealthcareFinancialsthePostForcxos

Speaker: If you need a moderator or speaker for an upcoming event, Dr. David E. Marcinko; MBA – Publisher-in-Chief of the Medical Executive-Post – is available for seminar or speaking engagements. Contact: MarcinkoAdvisors@msn.com

OUR OTHER PRINT BOOKS AND RELATED INFORMATION SOURCES:

DICTIONARIES: http://www.springerpub.com/Search/marcinko
PHYSICIANS: www.MedicalBusinessAdvisors.com
PRACTICES: www.BusinessofMedicalPractice.com
HOSPITALS: http://www.crcpress.com/product/isbn/9781466558731
CLINICS: http://www.crcpress.com/product/isbn/9781439879900
BLOG: www.MedicalExecutivePost.com
FINANCE: Financial Planning for Physicians and Advisors
INSURANCE: Risk Management and Insurance Strategies for Physicians and Advisors

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On Doctors Investing in Commercial Real Estate

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Want a good way to build wealth? Own commercial real estate -OR-not!

By Rick Kahler CFP® http://www.KahlerFinancial.com

Rick Kahler CFPReal estate is one of the largest asset classes in the world. The family home is the largest asset many middle-class Americans own. And real estate makes up a significant portion of the net worth of many wealth accumulators.

Direct Ownership

Directly owning real estate is not an investment for the faint of heart, the armchair investor, or the uneducated. Most wealth accumulators would do well to leave direct ownership of real estate to the pros and invest in real estate investment trusts (REITs) instead.

Some Guidelines

Still, the lure of investing in a tangible asset like real estate is enticing for high risk tolerant investors who need a sense of control and interaction with their investments. If you are among them, here are a few guidelines that may keep you on a profitable path.

1. Don’t attempt to purchase investment real estate without the help of a commercial real estate specialist who is a fiduciary bound to look out for your best interest. Engage a Certified Commercial Investment Member (CCIM) with years of training and experience in analyzing and acquiring investment real estate. To find a CCIM near you, go to http://www.ccim.com.

2. You will sign a disclosure agreement that will tell you who the Realtor represents. Be sure the Realtor you engage represents you and not the seller, both parties, or neither party.

3. Never trust the income and expense data provided by the seller’s Realtor. While a seller represented by a CCIM will have a greater chance of supplying you with accurate data, most will significantly understate expenses and overstate the capitalization rate. Selling Realtors often understate the average annual cost of repairs and maintenance. I estimate this annual expense at 10%.

4. Another often understated expense is management. Many owners manage their own properties, so the selling broker doesn’t include an estimate for management expenses. They should. Real estate doesn’t manage itself, ever. You will either need to hire professional management or do your own management (always a scary proposition). Even if you do it yourself, you have an opportunity cost of your time, so you must include a management fee in the expenses. Most small residential apartments and single-family homes will pay 10% of their rents to a manager.

5. You must verify all the costs presented to you by the seller’s Realtor. Demand copies of at least the last three and preferably five years of tax returns. Research utilities, property taxes, legal fees, insurance costs, repairs, maintenance costs, replacement reserves, tax preparation, and management fees. As a rule of thumb, expenses will average 40% of rental income on average-aged properties where the tenants pay all utilities except water. Newer properties may have expenses as low as 35%, while older properties can be as high as 50%.

6. By subtracting the vacancy rate and stabilized expenses from the rent, you will find the net operating income. This is the income you will put in your pocket—assuming the property is paid for. By dividing the net operating income by the purchase price, you will find the return you will receive on your investment, called the capitalization or “cap” rate. In Rapid City, for example, the cap rate tends to be 4% for single-family homes, 5% to 8% for duplexes to eight-plexes, and 8% to 12% for larger residential and commercial properties.

Home for Sale

Assessment

Yes, Physician-investors and all of us can build wealth with real estate. You just need to educate yourself, work hard, start conservatively, think long-term, and be prepared for lean years. This is not a quick or easy path to riches.

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Conclusion

Your thoughts and comments on this ME-P are appreciated. Feel free to review our top-left column, and top-right sidebar materials, links, URLs and related websites, too. Then, subscribe to the ME-P. It is fast, free and secure.

Link: http://feeds.feedburner.com/HealthcareFinancialsthePostForcxos

Speaker: If you need a moderator or speaker for an upcoming event, Dr. David E. Marcinko; MBA – Publisher-in-Chief of the Medical Executive-Post – is available for seminar or speaking engagements. Contact: MarcinkoAdvisors@msn.com

OUR OTHER PRINT BOOKS AND RELATED INFORMATION SOURCES:

LEXICONS: http://www.springerpub.com/Search/marcinko
PHYSICIANS: www.MedicalBusinessAdvisors.com
PRACTICES: www.BusinessofMedicalPractice.com
HOSPITALS: http://www.crcpress.com/product/isbn/9781466558731
CLINICS: http://www.crcpress.com/product/isbn/9781439879900
ADVISORS: www.CertifiedMedicalPlanner.org
BLOG: www.MedicalExecutivePost.com

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Financial Freedom through Commercial Real Estate Education and Investing

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A Viable Alternate Investment Class for Physicians?

By Dennis Bethel MD  www.nesteggrx.com

dennis-bethelI’ve worked as an Emergency Medicine Physician for over a decade now.

Most of that time, I’ve also been investing in real estate.

Real estate has been good to me and I’ve been asked to share my story with this ME-P

RESIDENTIAL REAL ESTATE

Not long after graduating from residency in 2002, I began investing in real estate.  I watched my father-in-law make some money in residential real estate (1 – 4 units), read some books, and jumped in feet first.  I purchased and rented out single family homes, a triplex, and multiple four-plexes (quads).  What I didn’t realize at the time was that I made two critical errors.

My First Mistake

The first mistake was that I purchased residential real estate when I should have gone bigger and purchased commercial multifamily.  I had limited resources and I thought bigger properties were out of my reach.  At that time, I had not heard of fractional investing.

My Second Mistake

The second error, that is inherent to residential real estate, is that I became a landlord.  At times I managed properties and at other times I employed a property manager and limited myself to managing the manager.  Regardless, I was putting in a significant amount of time at my unintended second career as a landlord without the desired compensation.

Not Scaleable

Since there are no economies of scale with residential real estate the cash flow is small and unpredictable.  I was on the long, hard path to financial freedom.  The rents from my properties would someday replace my income as a physician, however, that wasn’t going to happen until I paid off the mortgages completely.  Until then it was going to be too inconsistent and I would have to ride several market cycles including the very painful down-turns.

THE MOVE TO COMMERCIAL REAL ESTATE

Unfortunately, chronic understaffing in the ER coupled with increased regulation and the rigors of shift-work had begun to catch up to me.  I was beginning to feel the effects of burnout.  I began to question whether I could make it 30 years.  I began to see earned-income as a trap in which you trade your valuable time for heavily-taxed income.

Then some devastating news, my wife tested positive for the BRCA (breast cancer) gene mutation.  That was a game changer.  I could no longer rest on my laurels, slowly burning out waiting for a comfortable retirement.  The future was uncertain, and I needed to ensure our wealth.  Come what may, I was determined that she would get the best health care money could buy.

I knew real estate was an incredible wealth building investment vehicle and my path to financial freedom.  In fact, 90% of the Forbes 400 (wealthiest people in the US) either made or retain their wealth in real estate.  While I was doing far better than my colleagues who invested in the stock market, I knew that I could do better.

My New Mission

I made it my mission to become an expert in real estate.  I read even more books as well as attended numerous conferences and seminars.  I invested heavily in my education, took advanced real estate investing classes, retained mentors, and developed networks.  I also grew my experience, buying and selling more properties.

I learned that although real estate won’t make you rich overnight, it needn’t take 30 years either.  I needed to transition out of residential real estate and go bigger into commercial multifamily.  I ultimately landed on multifamily, because shelter is a basic need.  People will give up their luxuries long before they give up the roof over their head.  The difference is that I now look for properties that are between 80 – 250 units.  These types of properties afford the investor true economies of scale that provide for predictable multisource income.  I invest in these properties fractionally, pooling my money with other like-minded investors.

MULTISOURCE INCOME

Real estate is the only investment I know of in which the investor makes his or her money in four different ways.

  • Cash Flow (monthly, quarterly, or yearly distributions of net profits)
  • Appreciation (increasing value of the property as net operating income increases)
  • Tax Benefits (can result in little to no taxes on income and gains)
  • Principal Pay Down (Increased equity as the loan gets paid down by the residents)

Multisource income is an incredible benefit of multifamily commercial real estate investing.  In fact, in all of my commercial properties, I have been able to obtain double-digit returns year after year.  Making money and compounding those gains is what investing is all about.

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real estate

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SAFETY PROFILE

While all investments have risk, the safety profile of multifamily commercial real estate is impressive.  Let’s compare it to business.  We’ve all heard that 9 out of every 10 businesses fail.  These failures are not just limited to small business.  Every year, many big businesses fail as well.  Names like Circuit City, Hostess, Borders, and Mervyns just to name a few.  Many other, well known, national brands teeter on the brink of insolvency.

In contrast, the commercial multifamily properties I invest in meet current Fannie Mae underwriting standards.  Nationally these properties have a paltry 1% – 2% foreclosure rate.  That rate is even lower in the best markets.  In the hands of a quality syndicator, in thriving markets, utilizing proven property management these properties are FAR safer than stocks for capital preservation, equity growth, and current income.

Additional safety measures include the use of non-recourse lending, the ability to insure against loss, and the use of sole purpose entity structures to eliminate any liability risk.

The “Conversation”

Switching from residential real estate to commercial has enabled me to provide for my family and has allowed me to work only part-time in the emergency department.  A few years ago, I walked into the physician lounge and overheard a conversation between two colleagues.  Both around 20 years my senior, were lamenting their inability to retire.  They had each invested heavily in the stock market without any diversification into real estate.  They bemoaned the fact that they had each worked 25 – 30 years in medicine and were nowhere close to retirement.  They wondered how I could afford to work so many fewer shifts than them with two young boys to raise.

An Eye-Opener

This interaction was eye-opening.  I was grateful for the decisions I had made but saddened by the fate of my 60 year old colleagues.  I’ve watched far too many of them push back retirement as the stock market and economic cycles ruined their plans.

Assessment

I knew I could help.  I have recently started an educational website intended to demystify the subject of real estate investing.  My mission is to help physicians and other health care workers find financial freedom through real estate investing and education.

We also provide quality real estate investments for busy professionals looking to diversify a portion of their portfolio out of the stock market and into commercial multifamily real estate without having to become a landlord.  We do this by helping like-minded professionals pool their resources together to buy quality multimillion dollar assets as fractional investors.

I invite you to visit my website at www.nesteggrx.com and explore the content to learn more about real estate and see if it might be right for you.

NOTE: This ME-P is NOT a personal or professional endorsement.

More:

Physician’s Acquiring Real-Estate

Conclusion

Your thoughts and comments on this ME-P are appreciated. Feel free to review our top-left column, and top-right sidebar materials, links, URLs and related websites, too. Then, subscribe to the ME-P. It is fast, free and secure.

Link: http://feeds.feedburner.com/HealthcareFinancialsthePostForcxos

Speaker: If you need a moderator or speaker for an upcoming event, Dr. David E. Marcinko; MBA – Publisher-in-Chief of the Medical Executive-Post – is available for seminar or speaking engagements. Contact: MarcinkoAdvisors@msn.com

OUR OTHER PRINT BOOKS AND RELATED INFORMATION SOURCES:

DICTIONARIES: http://www.springerpub.com/Search/marcinko
PHYSICIANS: www.MedicalBusinessAdvisors.com
PRACTICES: www.BusinessofMedicalPractice.com
HOSPITALS: http://www.crcpress.com/product/isbn/9781466558731
CLINICS: http://www.crcpress.com/product/isbn/9781439879900
BLOG: www.MedicalExecutivePost.com
FINANCE: Financial Planning for Physicians and Advisors
INSURANCE: Risk Management and Insurance Strategies for Physicians and Advisors

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What to do with a $25,000 Windfall?

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What Do … You Do?

Doctor – Suddenly you receive a check for a large sum of money?

This infographic has some suggestions on what to do with that extra cash that will have a positive effect on your finances in the long-run.

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mint-windfall-25kkf-copy

Assessment

Now, suppose the windfall was $250,000 or $2,500,000 or even more! What to do?

Conclusion

Your thoughts and comments on this ME-P are appreciated. Feel free to review our top-left column, and top-right sidebar materials, links, URLs and related websites, too. Then, subscribe to the ME-P. It is fast, free and secure.

Speaker: If you need a moderator or speaker for an upcoming event, Dr. David E. Marcinko; MBA – Publisher-in-Chief of the Medical Executive-Post – is available for seminar or speaking engagements. Contact: MarcinkoAdvisors@msn.com

OUR OTHER PRINT BOOKS AND RELATED INFORMATION SOURCES:

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