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How Physician Real Estate Investors Can Prepare for 2021

By Peter Kim, MD
Passive Income MD

I think it’s safe to say that most people are ready to put 2020 behind them. Way behind them. It’s mind-boggling to look back and see how many negative changes happened in 2020. Now, with the new year upon us, the prospect of some positive changes has never been so enticing. 

This year has been interesting for certain real estate trends–producing some new ones while fast-tracking others. After a whirlwind year of uncertainty, where do we as investors go as we move into 2021? 

Well, I can tell you what I’ll be looking into this year, as well as some advice I think everyone will benefit from (I know it’s been great for me). Today, we’ll be looking at what you can do to prepare for 2021 and how you can take advantage of some great trends. Let’s get right into it! 

Look into Short Term Rentals (STRs)

Thanks to the pandemic, people took far fewer vacations in 2020. As a result, short-term rental (STR) sites like Airbnb saw a sharp decline in rentals. Fortunately, with the vaccine rolling out and cabin fever at an all-time high, this market is ready to bounce back. 

Even if this happens slowly (as it likely will), listing your property on a short-term rental platform can be successful even without heavy use. Depending on your property’s location, you could potentially make enough profit in a single week to justify a month’s worth of expenses. The tax benefits alone make short-term rentals very appealing.

Of course, there are many factors and a lot of due diligence to be performed before jumping into the world of STRs. But going into 2021, it’s definitely something to consider. 

Check out New Technology (for research, investments, and organization)

 Obviously, technology has come a long way in the past few years. Thanks to online platforms, specifically, real estate investing has never been easier. Crowdfunding sites, for example, make investing extremely accessible for just about anyone. 

 If you’ve been hesitant to try out some of these new platforms (or just weren’t aware they existed), 2021 is the perfect time to check them out. This applies not only to researching deals, but also to finding up-and-coming markets and organizing the way you communicate. 

 Check out some of the following platforms and see if they’ll be as useful for you as they are for me:

 

  • DocuSign – This is a super simple way to send documents to friends and colleagues and for them to sign them securely. No more waiting days for the mail to come through. 
  • Evernote or Google Keep – Cloud note apps like these allow you to snap photos of receipts and important documents, collaborate with others, and take notes that are searchable for easy finding. 
  • Rentometer – This service makes it easy to compare rents for a particular area or market. This can be very handy in determining if a specific property is worth an investment, or if you’re wondering if it’s time to raise the rent on your existing property. 
  • Cloudhouse –  Though it’s still in beta, this service can give you a great idea of any property’s rental potential, making it a great first step in finding good markets or weeding certain ones out.
  • Personal Capital – While not specifically devoted to real estate investing, this platform is great for tracking your expenses, goals, and one of my personal favorite metrics: net worth. 

Don’t Leave Any Deductions on the Table

It’s well-known that real estate offers some significant tax breaks. But of course, they’re only useful if you take advantage of them! 

For example, as I briefly mentioned before, short-term rental properties allow you to use income received from the rental to offset income from your day job–even without being classified as a real estate professional

Or, perhaps you’ve purchased an out-of-state property. In that case, any flights you make to visit the property are tax-deductible. 

The point is, no matter what investment route you take, don’t miss any deductions–and leave money sitting on the table. 

Invest in Real Estate Investment Trusts (REITs)

2020 wasn’t a great year for Real Estate Investment Trusts (REITs), thanks to the pandemic and economic uncertainty. For 2021, though, things are looking brighter. Of course, REITs usually do pretty well in the long-term, historically outperforming stocks and providing consistent returns. 

Personally, I prefer direct ownership or investing in private real estate deals like syndications and funds for their more favorable tax benefits. However, if you significantly value liquidity but still want to devote some of your portfolio to real estate, REITs might be a way to create some diversification.

If you haven’t looked into REITs before, now may be the time! They’re a great way to get into real estate investing with very low risk and decent returns. 

Keep Learning

Whether you’ve been investing in real estate for years or you’re just starting, the absolute best thing you can do is to continue learning and absorbing new information–for both yourself and your finances. 

As I’m sure you know, there is a wealth of options out there for keeping up-to-date with investing trends. Podcasts are an easy way to hear from experts (check out my list of favorites here). Of course, books are great too, both written and in audio form (check out my reading list here), and blogs like this one are also a phenomenal resource. 

Even if you’ve learned enough about a particular subject to make informed decisions, keeping yourself immersed in the topics of investing and finance will keep you motivated and push you toward new opportunities. 

Conclusion

 With everything that happened in 2020, it’s been tough to hold onto our motivation, and if you’re like me, there have been times when it wasn’t easy to keep that forward momentum. 

Ultimately, a changing of the year is the perfect opportunity to reset and regain that motivation. Whether the new year brings new investments, new ways to be efficient, or just a more diversified portfolio, 2021 is a year you can spend bettering your life and working toward your goals. 

And as always, I’m happy to be a resource for you as we move into this new year together. What has changed for you in 2020? What are your financial plans for 2021? Let me know in the comments below. 

 

 

 

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