How To Build ADUs For Cash Flow in California With Dr. David Namazy

🎙️ 𝗪𝗲𝗹𝗰𝗼𝗺𝗲 𝗯𝗮𝗰𝗸 𝘁𝗼 𝘁𝗵𝗲 𝗣𝗵𝘆𝘀𝗶𝗰𝗶𝗮𝗻𝘀 𝗮𝗻𝗱 𝗣𝗿𝗼𝗽𝗲𝗿𝘁𝗶𝗲𝘀 𝗣𝗼𝗱𝗰𝗮𝘀𝘁 𝘄𝗶𝘁𝗵 𝗵𝗼𝘀𝘁 𝗗𝗿. 𝗔𝗹𝗲𝘅 𝗦𝗰𝗵𝗹𝗼𝗲.

💡 What if the thing holding most physicians back from real estate isn’t money… but the belief that “we’re just doctors” and the fear of stepping into rooms where we’re not the expert?

In today’s episode, I’m joined by Dr. David Namazy—physician, medical director of a vascular center in Southern California, and real estate investor/operator with projects across Texas and Southern California.

David has gone from “first duplex to learn” → ADU development → capital raising → now leading strategic partners on a 52-unit ground-up multifamily project in San Diego.

And yes… the numbers are wild:
 ✅ $2.5M raised in ~3 weeks (right around Christmas)
✅ $3M raised in ~4 weeks to buy land
➡️ now moving into phase two to build the 52 units.

This conversation is a masterclass in the physician-to-operator evolution—mindset, leverage, relationships, and executing in the margins.

🔥 𝗪𝗵𝗮𝘁 𝘆𝗼𝘂’𝗹𝗹 𝗹𝗲𝗮𝗿𝗻:

 ✔️ David’s origin story: why real estate became the “next mountain” after medicine
 ✔️ How his wife (also a physician + entrepreneur) pulled him into real estate through one podcast episode
 ✔️ Why investing in education/community is a mindset shift for physicians (asset vs liability)
✔️ The “duplex first” strategy—and why small deals build big investors
✔️ The real mindset shift physicians must make to succeed in entrepreneurship
✔️ How David pivoted from Texas rentals to building in Southern California
✔️ ADUs explained + what makes a great ADU property (parking, access, lot layout)
✔️ Real ADU numbers in coastal San Diego (and why it can create 10%+ cash-on-cash)
✔️ Why raising capital is scary… and why it’s also one of the biggest ways you can serve others
✔️ The truth about scaling: it’s the who, not the how (partners, operators, teams)

🔥 𝗞𝗲𝘆 𝗧𝗮𝗸𝗲𝗮𝘄𝗮𝘆𝘀:
 ✅ Physicians underestimate themselves—if you survived training, you can build wealth in real estate.
 ✅ The first deal isn’t about perfection… it’s about taking the training wheels off.
 ✅ ADUs are one of the few ways to create meaningful cash flow in high-appreciation markets like SoCal.
 ✅ Capital raising becomes possible when you have trust, a strong team, and repeatable execution.
 ✅ Doctors don’t have to choose: real estate can make you a better physician, spouse, and parent.

🎧 𝗟𝗶𝘀𝘁𝗲𝗻 𝘁𝗼 𝘁𝗵𝗲 𝗲𝗽𝗶𝘀𝗼𝗱𝗲 𝗻𝗼𝘄.

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Transcript

Dr. David Namazy: We raised two and a half million dollars in about three weeks right around Christmas, two years ago. And then from that led to this next deal where we raised. $3 million in about four weeks to buy some land. And then now we're gonna move into phase two to build these 52 units here in San Diego.

Dr. Alex Schloe: Welcome to the Physicians and Properties Podcast, the show where we teach you how investing in real estate can give you the freedom to practice medicine and live life how you want. Doctor, doctor, doctor, doctor, doctor. Now here's your host, Dr. Alex Schloe.

 Hello everyone. Welcome to another episode of the Physicians and Properties podcast. As always, I'm your host, Dr. Alex Schloe, and today I am joined by Dr. David Namazy. He's a physician. He's the medical director of his vascular center in Southern California. He's an active real estate investor with a portfolio spanning Texas in Southern California.

He's built experience across single family investments, ADU development, which we're really excited to talk about tonight. Multifamily syndications, preferred equity raises and ground up development. He's currently leading strategic partners on a 52 unit multifamily project in San Diego. He also mentors physicians and professionals who are entering the world of real estate investing.

I'm really looking forward to this episode. David, welcome to the podcast. How are things going in sunny San Diego Today?

Dr. David Namazy: Alex, thanks. Thanks for having me. Yeah, things are great here. You know, it was like 82 degrees here today. Complain. While the rest of the country's kind of cold, it's usually pretty nice here. So,

yeah. Doing well.

Dr. Alex Schloe: Yeah. Yeah. I'm a little jealous. Little jealous. It was pretty cold today in Colorado. But we need, we need some cold, we need some snow. It's been, uh, it's been a pretty dry winter

Dr. David Namazy: Today, What I heard. Yeah. Hope.

Dr. Alex Schloe: Yeah. I hope so too. I hope so, too. Well, for folks who haven't met you yet, or for that intro, is there anything that I'm missing, and then I'd love to talk about your journey into medicine and what that looked like for you.

Dr. David Namazy: No, that, that, all the stuff you said made me tired just thinking about doing all that stuff. I'm thinking, what am I thinking? Uh, yeah, no, it's, uh, it's been, about five years since I started doing this. You know, I, it's one of those people that kind of knew I wanted to be a doctor since I was. Kid, you know, and so like it was that, that dream that you chased since you were little and you always had that next thing, it was high school, then it was college, and then it was the mcat, and then it was med school and like, you know, residency, fellowship, whatever. And you always had kind of that next goal. And, I felt like, you know, at some point, uh, I, I loved being a doctor. I love being a nephrologist. Uh, I spend most of my time kind of doing interventional work. I fix dialysis, grafts and fistulas mostly. So I'm kind of lucky 'cause I get to do procedures all day. But, you know, at some point you get married, you have kids, you got your job, you're happy, and then you're like, well, what's my next achievement thing?

Right? As doctors we're so used to achieving that next thing. And I felt like that just wasn't there at some point, you know? And it just so happened that kind of real estate and learning, this whole new language, this whole new thing came in just at the perfect time.

Dr. Alex Schloe: That is awesome. How did you first start getting interested in real estate and entrepreneurship?

Dr. David Namazy: You know, it's interesting. My wife, who's also a physician, um, has always been kind of entrepreneurial. You know, she started, she's an allergist and she kind of started this home allergy company and then. She moved towards making, she, she has a company that makes little jewelry called Steth stethoscope Charms for nurses that put them on their stethoscope.

So she's always been kind of entrepreneurial and so she's always listening to these podcasts and I always thought she was kind of crazy. It was about five years ago, and she comes home one day and she's like, okay, we've gotta do this real estate thing. She had listened to, uh, I think it was, uh, Leti, uh, Leti

Leti from Kenji from semi-retired community and, um. She was on Bonnie K's show and she's like, this is amazing. We gotta do this. And of course I was like, nah, this is crazy. This is not for us. You know, we're doctors. What are we thinking? We're we're not gonna do this. She's like, okay, just hear me out. Just listen to this podcast. And so I did.

And uh, I was like, well that's kind interesting. I remember it was early Saturday morning, we were in Palm Springs. We have a house in Palm Springs. That's kind where I do my thinking. It's like my getaway where, you know, I don't have just day-to-day tasks that I feel like I need to get done at home, but it's my kind of quiet place. And you know, if you have kids getting up early Saturday morning is your kind of zen time to think. And I started kind of listening to that podcast and. Just got me kind of thinking and I got more and more interested. We joined the, the, their community and took their course, uh, Kenji and Ladies course, and they were great mentors and we just kinda launched from there. So yeah, it's, and it's just been a journey ever since. Just growth, constant growth.

Dr. Alex Schloe: That is amazing. Yeah. It's so cool to hear how a podcast episode can con completely change the trajectory of your life. And I love hearing that and Letty and Kenji are doing really great things in the space and been fortunate to have connected with them as well. And they've certainly impacted a lot of physicians, so that, that's really cool.

What did. What did it look like for you, kind of taking that leap into community education, you know, it, it cost money to, to do their program. What was that like for you? Was that something that you kind of struggled with or were you pretty understanding like, Hey, I need to do this for the next steps for that accountability, et cetera?

Dr. David Namazy: Well, it's so interesting that you said it. 'cause like as physicians we often see people that potentially could help us as a liability, not an asset. 'cause they cost money. That's a real mindset shift for doctors. And I think part of that is that we, we, you know, along the way there's an insurance salesman that probably was really, uh, really after us, you know, he was got that chase energy and that kind of turned us off, right?

And so I feel like we, we worry about investing in things like that for ourselves, but it was probably the best, you know, the best money spent when you invest in your education like that. And you actually do something with it. I think that was game changing. So that took a little mindset shift. It's like, yeah, this, this is gonna be good.

This could be an investment for us, you know? And there were some big tax ramifications for us that we can certainly talk about. 'cause tax is a big, uh, big topic that I like to, uh, like to think about and talk about and spend some time learning about. So yeah, it started with that The course was worth every penny.

Um. It was like it was the right time, because I don't know how, if you have kids or how old your kids are, but at some point, you know, you're working, your kids get to a certain age where they need you a little bit less and you find yourself coming home from work and like, not gonna just watch TV all day, right?

So it's a great time to take a course, you know?

So that's how you squeeze it into the end of your day. And that's what we did. It was a great investment.

Dr. Alex Schloe: That's great. I love to hear that. Yeah. I have a, a 5-year-old and a almost 2-year-old, and, uh, they're the best. It's so much fun. Oh, yeah. Yeah. They still think dad's the coolest and, uh, I'm gonna ride that out as long as I can. So I've actually kind of done the opposite approach. I just work part-time right now about two days a week in medicine and then gets, get some more time with the boys while they still think I'm a, a superhero, so I gotta, gotta take advantage of

Dr. David Namazy: That is well spent. My, well

Dr. Alex Schloe: Absolutely. Yeah. Thank you so much. Well, what did your first real estate deal look like after you guys got into the course and started learning more? What did that look like for you as you guys decided to take the leap?

Dr. David Namazy: Yeah, so, you know, our market, we decided, 'cause we have roots in Texas. I grew up in Texas. My wife, although originally from New York, we met in Texas at medical school in Houston. And I was a resident, she was a medical student. So we had ties to Houston and um, Dallas. And so really at the end of the course, the Zero Freedom course, we bought a duplex in Dallas.

Uh. It was interesting that we use a lot of our skills. We forced appreciation by adding, uh, a bedroom remotely. We hired a team and you know, we start on a duplex, and I'll tell you, I think starting small for your first, for your first deal is good because you can make mistakes. It's not gonna hurt if you make mistakes.

And, and those mistakes are invaluable, right? That's where the learning occurs. People say, well, you don't, you don't learn when things go well. And that's the absolute truth. When things are going great, it's fine. Right? But yeah, it was a duplex and uh, you know, it didn't cash flow a whole lot, but it just was a way for us to learn, take the training wheels off and, actually do what we were learning, you know?

Dr. Alex Schloe: Yeah, absolutely. That first deal just makes such a huge difference. And once you start getting kind of that little taste of alternative income or passive income, it's just the snowball from there. Uh, looking back on that first deal, anything you would've done any differently or, or feel like that really kind of shaped how you invest today.

Dr. David Namazy: Yeah, I, it's funny, I, I think that I wouldn't do anything differently, to be honest with you. Um, I think, like I said, it was, it was the perfect opportunity for us to learn. And the biggest, you know, I'm gonna back up a little bit because I didn't talk about one of the, one of the biggest changes for me, um, in this whole journey.

And I remember, you know, a lot of these real estate courses, a lot of these mentors talk a lot about your mindset and your limiting beliefs. And I thought that was a bunch of nonsense, honestly.

Dr. Alex Schloe: Me too.

Dr. David Namazy: And I've literally, at the beginning, I'm like, I told my wife this is a cult. They're trying to suck us into something.

Right. But turns out that wound up being kind of the most important part of learning something new and shifting your mindset to say to, to telling yourself that you can do something different, you know? And so for that deal, I don't think I would've done anything different. It was a way for me to practice some of these mind mindset patterns.

We had challenges, right? We had a contractor that was wackadoodle and, we, we had some challenges and, and we pushed through that instead of throwing up our hands and giving up. Um, we decided to push through , and really stick to, you know, focus on the process. My, my daughter's a tennis player.

All my kids are tennis players, but my little one's pretty good. She's always trying to think about the outcome. Like, I wanna win the game. And I always tell her, focus on that process and then the results will follow. Right. And I know I, I laugh at myself for saying things like this, uh, but it, these things actually are true.

And, that was one of the biggest part of really putting some of those principles in practice for that first deal. You.

Dr. Alex Schloe: Yeah, I agree that that is huge and that's something I struggled with too. I don't know if it's a physician thing or what it is, but I, I felt the same way. I remember going to like the, this first real estate kind of mastermind retreat in Breckenridge, and now we've been doing it for five years in a row.

But that first one, I remember being there and sitting there and, and the one of the speakers came to talk about mindset. I'm like. This is dumb. Like someone just show me how I can buy a short term rental or make some cash flow, you know? And then looking back on it now, five years later, it's pretty much the same group and we've all really realized like, hey, you know, these are the things that really matter.

It's family, it's relationships, it's. Time freedom, it's financial freedom and it's mindset and all those things are so much more important than like the nuts and bolts of a specific deal. 'cause there's a million different ways to make a million bucks. Um, but you have to have that mindset and that understanding and kind of put those limiting beliefs at bay to be able to achieve that.

And, uh, it's just funny how that happens.

Dr. David Namazy: That's, that's so true. And I remember, speaking of limiting beliefs, one of my partners, uh, I remember telling me at work, he's like, what are you doing? You know, how many thousands of professional investors are out there? How do you think you're gonna compete with them? You're just a doctor, right? But I think we, we sell ourselves short, right?

You think

about what we went through

to, to get to where we are, tend to kind of be the most capable people in any room. Um, and I think people respect us for that. The, the sacrifices that we made and what we've gone through. And I think, you, you, you really can do things, you know, and you. you. squeeze things in the margins. You do have more, you have more time than you think to do things. I don't know if it's Tony Robbins that says that when you think you're maxed out, you have like another 40% to, to give or something like that.

I find that to be very true. Um, but yeah, just pushing through those limiting beliefs and that's what we did with that first deal.

And uh, yeah, it was a great opportunity to learn. Texas was our first market and you know, then I moved on from a duplex to a fourplex. Um, and then. A bigger property in in Houston before I decided that I was gonna focus on Southern California. So

Dr. Alex Schloe: That is awesome. It's, it's cool to see how that stack happens, how you, you oftentimes start small, you know, single family or duplex, and then a fourplex and then an eight plex, and then next thing you know, you're working on a 52 unit development, uh, which is amazing. And yeah, I agree with everything that you said from that perspective.

And I just wanna foot stomp the, for the folks who are listening here, like, if, if you're a doctor. You know, you got through medical school, you got through residency, you're an attending. Like, you can absolutely be a fantastic investor. Like I, the physician brain is such an incredible thing and we have so many skill sets that translate so well into real estate and entrepreneurship.

So don't for a second think that you can't do this and can't be successful. But it does take some hard work. It does take working in the margins. It's not a get rich quick scheme. And so it is something that you have to figure out, Hey, how am I gonna fit this into my life and the life that I wanna live?

But it's worth it, for sure. Well, let's talk about those next deals. So how did, how did those kind of stack, uh, stack up deals go from the duplex to the quadplex, et cetera? How was

Dr. David Namazy: Yeah, the quad was my next step, and that was in Houston. So the first, first one was in is Fort Worth. Uh, second one was a fourplex in Houston and. Just built a little team there. Um, I really liked that. Like I grew up in Houston and so I, I, my dad worked for NASA, so we lived out in the suburbs and in a town called Clear Lake.

And so, but as I got older, I went to college in, in town in Houston, and I'd always go downtown and see some of these old. Uh, look like these brick old brick buildings in downtown Houston, and I just love those old neighborhoods. And so when I had this opportunity to, to buy this kind of red brick fourplex, like it, it just kind of took, checked in my heartstrings and it was perfectly timed.

I mean, the value was, was actually kind of sad that this man who he rehabbed the whole place, he loved it. He and his wife moved into one of the units. They did everything right and then he died. Um,

sadly. And things like that actually make you stop and think too, by the way. But, um, that opportunity came along and so definitely grew a little bit bigger there.

Um, and was self-managing. You know, I was self-managing all of this stuff remotely, uh, myself. I didn't have a property manager. And to this day I still manage, you know, that fourplex myself remotely. I manage the majority of my properties myself other than my 12 unit in Houston. So. Yeah, it's, it was, it was a great opportunity for me to buy something a little bit emotional, which you're not supposed to do as a real estate investor.

But, uh, but fortunately it turned out good. The market timing was good. You know, interest rates were good. And so I still have that property today.

So,

Dr. Alex Schloe: That is awesome.

Dr. David Namazy: Second one.

Dr. Alex Schloe: Yeah. Well, and it's so cool to, to be able to impact, you know, kind of the community that you grew up in and, and really have some ownership there like that. That is, uh, that is really cool. What a cool project for you. What was it like pivoting from Texas to California? Certainly some differences in the market. What was that like

Dr. David Namazy: Yeah. And you know, I think, I think my pivot from Texas to California was probably, you know, there's usually a deal that you feel like you didn't make a great decision on. Right. And that was my next Texas deal. That was at 12. 12 unit, you know, what happens is, is you do fall into that kind of, that trap of I want to go bigger. My, that 12 unit was an ego buy

Dr. Alex Schoe: Hmm.

Dr. David Namazy: I wanted to own an apartment complex. Like I wanted to be a big real estate investor. Right. I owned an apartment complex so my friends could see that I owned an apartment complex. Right. So it's 2022 was market was kind of, uh, was starting to turn. And you know, as Ken McElroy says, don't get, don't.

What is it? Don't catch a falling knife.

Definitely caught a falling knife.

Yeah. But you know what, again, best education you can have, it was my foray into, uh, into a challenging property, larger property, one that I had to learn from using the property manager. Um, yeah, the market timing was, was tough. Property values were still high as interest rates were still rising and then suddenly they lost value. And so you just gotta get creative as to how to keep that going until you get back into an environment, and that I still have that property. it's a bit of a challenge, but I think it was that you asked me about pivoting in California. It was kind of that deal, that made me realize, you know, I really want to, to manage something kind of in my backyard. I, I get a lot of, um, pleasure about a tangible asset that I can see and touch and I enjoy. Having people live in a property that I own and be happy there. I can't tell you, uh, you know, how much pride you take and responsibility actually in, in providing a good place for people to live.

I think. You can't, if you don't have, that sense, then you're in this for the wrong reasons. Uh, so that, project kind of made me pivot. Um, even though I learned a lot from it to the Southern California market, it's something I wanted to kind of see and touch myself day to day. And I couldn't do that in that remote market, you know? So, yeah.

Dr. Alex Schloe: Yeah, absolutely. Thanks for sharing that. And yeah, you know, it's at some point in your investing journey, you're gonna have a, a difficult time, you're gonna have some struggles and you're gonna have that property that you might have regretted buying. And I know, you know, we felt the, we felt the same way.

And, uh, I feel the same way in assisted living that you do providing good housing and. Like that purpose over profit mentality is really, really important in providing great housing, whether that's, you know, in the multifamily space like you're doing in the A DU space or in senior housing. It's just really rewarding to be able to do that.

Uh, what did the, what did the strategy look like for you when you first got started in Southern California?

Dr. David Namazy: Yeah, so I, I kind of stumbled upon a single family house. And it was kind of 2021. It was kind of the tail end of COVID and rates were still kinda low. And, uh, actually initially my wife was just kind of looking at property 'cause we were looking at something more coastal, uh, to have like a vacation home.

And she was looking kind of in a north coastal San Diego market. There's a, uh, your military, so you might know about Camp Pendleton. And, so , there's a military neighborhood, in Oceanside. It's just a.

Major military hub, you know? And so, um,

Dr. Alex Schloe: Yeah. Love Oceanside.

Dr. David Namazy: Oceanside's fantastic. But five years ago you wouldn't, you wouldn't really wanna be in Oceanside five, 10 years ago when it was late at night.

'cause it, it was a rough neighborhood,

but it's amazing how it was, it was just starting to change about five years ago. And one thing my wife's good at is recognizing value and things that are the path to progress. I feel like we're kind of a good team that way. Um, she's good at that kind of stuff.

I'm good at reading people. Which I think you get from, from a few things in life. But like being a physician, I feel like you, you see people and interact with people every day. And one of the things you're really good at is reading people, Right.

And, um, so yeah, so we make a good team with that.

And she found this property. Our good friend is an agent here. And, uh, and the property had a gigantic backyard. Come to find out. And, um. It was just the time when the A-D-A-D-U laws in, California were coming up because we really need housing for people. And we saw that Oceanside was kind of in the path of progress, and so that was kind of gonna be our first A DU development deal.

Dr. Alex Schloe: That is awesome. For folks who don't know what an A DU is, do you mind explaining what that is and why?

Dr. David Namazy: Absolutely. Yeah. I, I talk about it because in California we, talk about this every day and it's, you

know, it's, it's in our jargon, but. For most people around the country because you know, a lot of these a DU laws have not caught up in other states 'cause you guys have a lot of land or whatever.

But we don't have a lot of land and so we are building a lot of what's called granny flats. Uh, what mother-in-law suites, whatever you wanna call 'em. But A DU stands for accessory dwelling. And it's basically as, uh, can be a smaller home. It can be a home, like the ones I've built are typically the same size as the single family home that I purchased. And in the backyard if you have enough room, you can build an accessory dwelling unit or multiple units. And so that just provides more housing on that same lot. And if you think about, that's an economy of scale, right? You bought the land already. How great would it be if you could add another property to that land?

And so. That was the time that those laws in California were starting to loosen up. You know, when they first passed these laws, you had to live in the main house to build an ADU and rent that out. And those laws start, started to loosen a little bit so that investors could come in and start providing housing for people.

And that just seemed like a good opportunity for me. And that was kind of one of our first projects. The Oceanside. And I still have several projects in Oceanside that. I just love that, area is fantastic. For those that don't know it, you should come visit. Uh, it was on the real house, one of the Real Housewives episodes actually, so

Dr. Alex Schloe: Nice.

Dr. David Namazy: Some momentum, so, yeah.

Dr. Alex Schloe: Yeah. Oceanside. I, I love Oceanside. One of my, one of my best friends for, gosh, over, over a decade now is from Oceanside. I used to go out and visit 'em almost every year, and, uh, yeah it was fantastic. Some of the best California burritos I've ever had. And, uh, yeah. Yeah. Love, uh, love Oceanside.

That is, that is awesome. Well, if folks are listening to this, they're thinking like, Hey, what ADUs, that sounds interesting. Um, what do you think makes a property that has a good A DU opportunity? You mentioned, you mentioned a large lots. Is there anything else that you're looking for that can be beneficial?

Dr. David Namazy: And that first one was ideal. It was corner lot. And so those two houses, they enter on different streets, which is amazing. Um, and there's a real sense that they are separate homes, so corner lot, uh, my second one in ocean's on double driveway, right? So if you can get a double driveway, it's definitely something to look for. You know, enough square footage that you can give people some outdoor livable space for both units or multiple units. You definitely wanna have enough livable space for them. And those are really the big things. You gotta have enough room. Gotta have access, extra driveway parking, very important. Outdoor space is important for people. Those are the things you wanna look at. so yeah, that's, that's kind of what I look at when I'm evaluating an A DU deal. I'm looking at properties every day. There's so many opportunities, actually more opportunities than I can actually buy myself, which is why I've kind of led into trying to help other people do this and do some investing with me. Uh, 'cause I come across opportunities like this every day. I'm looking at, even in the MLS, I mean, all these deals are on the MLS. And they come my way and I just, I don't have, you know, there's not unlimiting funding sources to do this, although I'm getting a little more creative about that these days as well.

So, yeah.

Dr. Alex Schloe: That's awesome. Yeah, I loved, love to hear that. What are, what are some numbers, if you don't mind sharing, like what's a typical A DU play look like there, um, and how much value add are you able to do with that?

Dr. David Namazy: Yeah, that's a good, good question. So I bought that first property for 800, uh, 20 20, 20 21. , I added A DU for about $300,000. Um, so, and then the value, the property instantly after I built it, was worth about 1.2, close to 1.3. So really could pull out, um, could pull out everything that I put into build the a DU. You know, when you, invest in Southern California, you know, people invest, historically, invest here for appreciation as the cash flow is not great, prices are high, even though rents are high. Now with the A DU play, because you're, you know, you've already got the land, you're already paying the property taxes for one, it doesn't go up by that much. Um, then you have an economy of scale and suddenly your cash on cash goes from being almost nothing to greater than 10.

Dr. Alex Schloe: Yeah.

Dr. David Namazy: And you're talking about Southern California. And so yeah, that allowed me, and in future deals to basically pull out, do a cash out refi after I built the a DU, pull out pretty much everything I put in to build the A DU. And then recycle it into the next deal. It's kind of the play, uh, while

still having, uh, good cash on cash, you know?

Dr. Alex Schloe: Yeah. Yeah, that is huge. And you know, there's so many, you know, so many different ways that you can do that. So many benefits, you mentioned a lot of those, but also utilities are right there. So the utility work is minimal. Um, a lot, a lot of great, ways to, to really add value.

what, what did that, uh, that $300,000 investment to build that A DU, how, how big was that property? How many bedrooms,

Dr. David Namazy: It's interesting. Houses in San Diego are pretty small, so the main house was a thousand square feet, three bedroom, two bath. A DU was exactly the same. A thousand square feet, three bedroom, two bath, and, uh, those houses fetch about 4,240 $300 a month for a thousand square feet. In

Dr. Alex Schloe: Wow.

Dr. David Namazy: Coastal San Diego.

So, yeah. Yeah. It's a, it's an expensive market and so, um, yeah, it's a great, great play. If you can, you know, one of the limiting factors for the, for this a u builds are, they're a little cash intensive and, full-time intensive. Right. It's almost like doing a burr on a property or, rehabbing a multifamily.

I mean, that takes time. And my goal was always to be cash flow even, or even a little bit negative for the first year. But once you get that 80 built, then you're outta the gate, you know, off and running.

Dr. Alex Schloe: Yeah. Yeah, it's such a great way to take advantage of a high appreciation market, but also cashflow at the same time. And I think it's probably one of the few ways that you can do that in California. Um,

Dr. David Namazy: You're exactly right.

Dr. Alex Schloe: Interest rates. Yeah. The way that they are. Have there been any, you know, frequent challenges that you've come across, whether that be zoning or whether that be, you know, getting, your permits, anything like that's pertinent for folks to know?

Dr. David Namazy: Yeah. You know, my first one I did was a hybrid build. So they built the majority of the frame of the property of the house in a factory that's steel framed. Then they craned it over, they put it on a flatbed, craned it over the main house. And so we were getting permits while we were building the house in a factory.

And so that actually saved a lot of time. And I was pretty excited 'cause I thought, wow, this could be the future, you know, this prefab think could be the future. And so the problem is going forward, materials started to get expensive and at this point that crossover still isn't there. Stick build tends to still be a little less expensive to build. 3 25 to three 50 a square foot, uh, versus those kind of prefab, hybrid sort of build. So I saved a lot of time on the permitting on that first deal by building while we were getting permitting. No question. With more people building ADUs, the permit process is long and the city's gotten wise. There's a lot of fees, school fees, water up meter upgrade fees, there's all these fees.

So that's kind of a limiting factor. You can get permits. It just takes a, takes some time. Say six to nine months to get your permits in San Diego, maybe a little bit longer in Oceanside. Um, so those are variables you have to factor in, right? 'cause you're holding a single family home and that's why you wanna make sure you're at least cash flow.

Even if you're a little bit negative, that's okay 'cause you are getting a little appreciation. But, uh, yeah, that's the play. That's the play there.

Dr. Alex Schloe: Yeah, that makes, that makes a lot of sense. And if someone wants to build a A DU and they're looking to get some funding for that, is, are you able to take out a heloc? Are you able to get a separate, uh, like development loan for an A DU? What does that look like?

Dr. David Namazy: It's a good question. You know, it's interesting, as doctors, we are taught to pay off all our debt and, um, not be in debt and just like everybody else, I think my whole perspective on that changed when I read Rich Dad Poor Dad, right? We

all. We're all like, wait, wait a minute. We can't earn enough money to be successful and financially free.

You know, that was just like a light bulb that goes off in your head, right? I think we all had that moment, but, um, so leverage was always scary. And I remember when interest rates went really low after COVID or during COVID. We had a, we had, our primary residence and, our house in Palm Springs and. I did a cash out refi on both, and my wife thought I was crazy for pulling out as much money as I could leveraged them to the hilt, but that allowed us to buy two or three properties, in California. And so, , leverage turns out to be your friend. And so yeah, I'm always looking for, for great funding sources.

So that, that would typically be my play is once I did the value add, adding the A DU, I do a cash out refi. I'm now moving into some HELOCs, on both the investment property, which are a little bit harder to get. But there are some places that'll do it. And if you can get one on your personal property, if you have enough, you know, my wife again, would worry about, please don't use our home as a ATM machine.

But remember when people think about that, they're thinking about buying cars and toys and things like

that, Right. Don't want to do that, obviously. And you gotta be careful about leveraging your primary residence. But if you're buying a cash flowing asset. What's the worst that's gonna happen is you're gonna sell that asset, right?

I mean, you're gonna be okay. So as long as you're using that leverage wisely. Um, I think it's okay. So now between HELOCs on the, investment properties and on personal residence, vacation residence, those sort of things that I've been doing, I think my next, my next strategy is to move into A-D-S-C-R loan, or a portfolio loan. So that I can have a bigger pool of, of leverage to kind of act on when I see something that I want to wanna pull the trigger on. And then, you know, the most recent thing I've been working on is bringing other investors in, right? Like I said, there's a lot of these opportunities out there, but bringing other investors that may not know, have the know-how or won't have the time to do something like this.

But, kind of turned it into a small syndication where where they benefit, I benefit, I bring the sweat equity, I bring some money, they bring some money. I bring the knowhow.

Dr. Alex Schloe: It's a great way to do it. Yeah, that is, that is fantastic. Yeah, you know, I think that's something I've been thinking about a lot more lately is kind of return on equity, right? And that's exactly what you're describing is like, Hey, can I help take this equity in one of my properties and make more cashflow, make more equity in other deals, which you were able to do by doing this cash out refinances.

And so, yeah, there's good debt and bad debt, and there's good leverage and bad leverage and making sure that you're, you know, not overextending yourself, but utilizing that. Your advantage can really help you grow and scale. 'cause eventually if you get far enough in the space, you're gonna run outta money and you're gonna have to, you're gonna have to get investors, you're gonna have to get creative.

Um, speaking. Yeah. Speaking of, of growth, you're working on a 52 unit development right? In San Diego.

Dr. David Namazy: Yeah, so I was the reluctant, I was the reluctant syndicator slash razor, you know. And, as part of the, I did the mastermind, that's the Kenji and Leti Mastermind. Their, um, semi-retired, , mastermind called Empire Builders Pro. And, and they kind of. Introduced us to a little bit of, of, uh, raising and raising for some deals.

And, um, I never thought it was for me, but I started to realize the value that I could bring to other physicians in particular because, I mean, you know, we're so busy, like you get busy as a doctor and you, you just don't have the time to learn a lot of the stuff. And so. I I was a little frightened, a little bit to, to take money from my colleagues and friends, but then I realized what I'm doing for them is I'm bringing them an opportunity that they would never have.

I mean, putting a mon, putting your money in a 4 0 1 KI hate to tell you, I mean, it's okay to do, but it's not gonna get you over that finish line where you want to be that fast. That's, it's, you know, compound interest is not as good as compound leverage, in my opinion. And so getting them into these assets was really quite good.

And so. Then it, one of my goals became after I did a small raise, I thought to myself, I set a goal for myself is could I lead one of these raises? And I didn't think I could because I was just so busy with my doctoring work and such. And. Kenji kind of, he lied to me and talked me into it. He is like, yeah, you could do this in the margins of your life, which was, he had to kind of lie to me to get me to do it, but, and I'm glad I did.

And so I led a preferred equity raise for, I think we raised two and a half million dollars in about three weeks right around Christmas, two years ago. And then from that led to this next deal where, where we raised. $3 million in about four weeks to buy some land. And then now we're gonna move into phase two to build these 52 units here in San Diego.

Dr. Alex Schloe: That's amazing. Yeah. We need that push sometimes. And, uh, you know, I feel the same way as you. Every time I have that, the opportunity to raise capital, I think about what an awesome opportunity it is. Uh, but it's terrifying at the same time. It's like, Hey, you know. These are our friends, our family, our colleagues, you know, folks that, have worked incredibly hard for their money and they're trusting us with that to be able to provide them a, a great return and, and to do our best to do that.

And, uh, it is, it is such an honor. How, um, how has that project been going for you through phase one, phase two, and, and, and getting started? A little, little. That's a pretty big development project. So what that, what is that

Dr. David Namazy: You know what's interesting that I figured out at some point when I started building these ADUs is I like. Building some stuff, like, it's fine to rehab stuff that's cool and everything, but man, there's nothing like building something from scratch and then seeing people live in it. It's really awesome.

So I kind of got that development bug and I was at a, you know, it's funny, relationships are so important. You know, they can be good and they can be bad if you get in with the wrong people and you don't use your gut. Like, one of the big things for me is it's my gut feeling about people.

Like I said, I think as doctors we get, you know, you may have a pa like I'll have a patient and I'll talk to them, and then I'll say to my nurse, I'm like, is he Hepatitis C positive? Since he's a drug user? Like, well, how did you know that? I'm like, I mean, after dealing with people so often you get a sense for people's personalities.

And so I think relationships are so important. Whether, you know, you see a personality that you want avoid or someone that you want to be around. And I met, a developer here in San Diego. Had an old fashioned real estate meetup, uh, here in town, and I didn't even think people did that, but this is a, is a really big real estate meetup.

A guy named Rich Summers who does, he does, uh, boutique hotels. Rich is

Dr. Alex Schloe: Yep. I know Rich.

Dr. David Namazy: Heavy hitter. He's a, he's a, so I went to that meetup and met, met a developer named Isaac. And he and I have just become great friends, but like, he's just one of those super smart, super trustworthy people, worthy people. And so getting back to investing our friends and our colleagues money. I feel like knowing the people that you're working with, you know, is key. Those relationships and that trust, you know, these aren't fly by night people. The guy that's doing construction for us, he's got skin in the game and he has built half the buildings in San Diego. And so those relationships and that the trusting those people gives you a lot more comfort when you bring your friends and colleagues into these deals.

Dr. Alex Schloe: Absolutely. Having those relationships, that experience, that trust, the integrity, all that's so important. I do wanna point out how cool it is, you know, you've mentioned relationships multiple times and how, you know, Leti and Kenji's, uh, masterminding courses, how that changed, you know, the trajectory of your life.

How going to a meetup, changed the trajectory of your, you know, real estate investing career. And I think for folks who are listening who are. On the fence about doing something like that. Whether it's going to the meetup, whether it's joining a mastermind, whatever that may be. Like, hopefully you're listening to this story and you've seen like how, how far David has come and grown over the last five years in these awesome projects that you've done and you've, you feel encouraged that you can do the same thing.

So I wanted to, to really foot stomp that. 'cause I think sometimes folks get really timid about getting out of their comfort zone and going to the meetup and, uh, having that discussion. But, uh, it can really change your life.

Dr. David Namazy: That, that is uncomfortable, right? It's can be uncomfortable as a doctor. Remember, you are the one that everyone looks up to, and

suddenly you're thrust in a room where you know, you're all, you're equal there. You're not that guy at the top anymore. And so that's scary people

to get outta that, that comfort zone of that is scary.

Um, and. But once you do it, you realize that these relationships that you, I mean, the relationships I've made in some of these communities are, you know, they've been, again, one of the biggest benefits of all of this. You know, I, by nature, I inherited this from my mom, eh, am a worrier. And I know I, I inherited that from her.

She worried about everyone, and I think she, she died of cancer a couple years ago, and I'm certain that she died premature early of cancer because the negative energy, and chem and biochemistry, I think that comes with that. Um, and so that this journey for me actually. With, these communities of people, with getting out of my comfort zone that this personal growth has actually been the remarkable thing that I never knew I needed or I even wanted.

Um, and as silly as that sounds, it has been the biggest benefit in all this. I mean, sure. Having the properties and the cash flow and all that is generational wealth for your kids. It's great. Being a part of these communities and growing yourself and it is, that's been actually the biggest, the biggest outcome for me.

The best outcome for me in all of this. And I'm being earnest when I say that that's not hokey. I really mean that. 'cause again, I was the guy that thought this was silly and hokey and for me to be here saying this stuff, uh, I was a naysayer. So, yeah, that, that personal growth is real, really is.

Dr. Alex Schloe: Yeah. I love that. Yeah. And I think, I think more and more, as time goes on, we're gonna see that pendulum swing back towards relationships and being together, and community and all those sorts of things. And so I think that's really, really important. And, I love hearing that for you. What does, uh, what does the timeline look like for you in this project?

You, you mentioned you guys are getting ready to get into phase two, so what's it look like for this build for you?

Dr. David Namazy: We're far up phase two, I think, uh, early summer we should be gonna raise money to, to finish that, to, get that raised, to actually do the building. Now we're moving quickly through permits. You know, , we've got some good connections in the city. Um, but we're gonna be raising money to get that property built, um, that preferred equity raise, we did, that building's built already. We came in at the end to try to finish that off 'cause they, they added a bunch more units and they needed some more investors and needed some more money. We finished that off and, that's gonna go up for sale. And so I've kind of now seen one of those come full cycle. So I'm excited about seeing this next one be built.

Um, but yeah, that's been exciting. It's, you know, but, I gotta say I couldn't do this without a group of people. This is not something you do yourself. I know you've had Chirag Chaudhari, one of my, my colleagues, uh, ER doc. I think you're an ER doc, right?

Dr. Alex Schloe: Family medicine. Yeah. He's cooler than me.

Dr. David Namazy: Yeah. He's pretty cool. But, he, he kind of has helped me in this syndication race journey and he's got a great team of people around him at Lightyear Capital and they've just been great partners, uh, to help us get, get these projects off the ground. So shout out to other people that can help you do this. Um, you know, it's the who's in your life, uh, not the how, you're not gonna do everything yourself and that's something you realize early on. You get, you gotta get other people to help you. And I have a great group of, of, and people that I've become really close with incidentally too, so

Dr. Alex Schloe: Yeah, it's true, especially in these bigger projects. And you know, that's something that I do love about the physician real estate community as well, is like, hey we, we all understand for the most part that this is a team sport and we want people to win and we wanna help, you know teach other folks, uh, how to get into this game and to real estate and entrepreneurship sooner.

And I know you mentor a lot of, uh, physicians and professionals as well entering. Real estate. What are some, what are some blind spots you see? What are some, kind of hangups that you've noticed as you've been mentoring some physicians?

Dr. David Namazy: You know, it's interesting. I feel like as doctors it's a zero sum game for us. 'cause that's how we're trained. Think about it, you're competing with everyone else to get into med school, you're competing with people that get into to residencies and fellowships, test scores, all of this stuff. And so, you know, we see it as if I'm taking, you're losing.

Right? And so the business world. Isn't necessarily like that. The entrepreneurship world is actually not like that. There actually is opportunity, uh, for all ships to rise. And I think that's the biggest mindset shift. I think for physicians it's super important, is to realize that we can help each other, we can all grow, we can all do well. And so I think that's one of the hangups is seeing that, you know, not everyone's out to get you. We can all do well together and then, you know, using resources, like I said, you know, your CPA you used, I used to look at my CPA, oh my God, I gotta pay my CPA. I'm happy to pay my CPA because the amount of money that he has saved me in taxes because of our strategy working together, you know, I will come to him with the strategy and he will help me implement it because he really understands that early on I was using the CPA for my practice to do my personal. When I start, this was interesting. When I first started investing in real estate, she, I realized she was wrong about a lot. It's like, I'm like, I want to, I want to get this tax benefit. I have this passive income, I want to use my depreciation. And she was like, no, you can't do that. And then I'd go do a bunch of research and prove it to her.

And she's like, oh yeah, you're right. And then she'd send me a bill for a thousand dollars. I'm like, wait, I just taught you this. You know? And so um, back to my point is using the resources like your CPA, you know. Like your asset protection company and not seeing them as a liability. And so doctors get hung up that, you know, oh no, my, that agent is, is a liability to me.

They're costing me money 'cause I gotta give them money to buy this property. And like, so that's a big mindset shift I think for doctors going from the doctoring world to becoming an entrepreneur, realizing that those who's in your life are super important and you gotta get past that. So, yeah, those are some of the things that I find, you know, my colleagues as I'm trying to get them involved in entrepreneurship and learning about this stuff.

Um, it, it, I gotta get them over those hurdles, you know?

Dr. Alex Schloe: Yeah, I've, I've seen the same thing. And you know, the other thing I, I've seen a lot is, uh, doctors. Getting frustrated and or just kind of being brutal to doctors who are in entrepreneurship in real estate of like, oh, well why are you a doctor if you also want to invest in real estate? Like, you have to choose one or the other.

And I don't think that's the case. And I think you'd probably agree, and I know almost everyone I've had on the podcast has agreed that like some degree of financial freedom, some degree of alternative income is ultimately gonna make you a better doctor, a better. Parent a better spouse. And so it is really important to think about, and you can certainly have multiple passions in life, and you can invest in real estate and you can be a great doctor and, and that is okay.

You don't have to choose one or the other. And, uh, I think about how long the journey it is to become a physician too, right? And like it's okay to have other things that you like and you enjoy, uh, as well.

Dr. David Namazy: But you're right, it is, you know, historically it's been so looked down upon for physicians to be entrepreneurial, but we have to realize that this is not the doctoring being doctor 50 years ago. If you look at, and I, and you know, one of the things that I really, why I advocate for physicians learning to invest and getting some financial freedom is if you look at what Medicare, who sets our payment. Has paid us, it's been flat for 30, 40 years versus inflation going straight up. And, so that's why things feel so expensive to us versus your, your friends who are accountants or, or attorneys, they've raised their rates, right? And so

I try to explain that, that, you know, you need to get into a business that, goes up, you know, your widgets that, that you're selling, you can raise the, the price of those widgets because you kind of can't do that as a doctor.

So, yeah we trained for all these years, and we're taught not to be entrepreneurial, but, but I think it's important. It does make you a better doctor. It, it makes you a better parent if you do have some financial freedom. You're not always worried about exchanging your time for money, you know? And I think we all still fight that. I know, I still fight that you, you're working half time and I'm so impressed by that. I gotta tell you, because it must have been a little scary for you as you sat down with your wife to say, Hey, I wanna work less. I'm scared. I'm not gonna bring in the income. But this is important for me to spend time with you and the kids while they're little, right?

Dr. Alex Schloe: Yep. Yep. Yeah, no, you're, you're exactly right. I, I am slightly lucky that I came from the Air Force, so I was already used to like, making peanuts, and so really my income didn't change too much, but the amount of time. But I was also faced with like, oh, well I could go work full-time and make. Double what I was making in the Air Force or I can be comfortable, you know, with making less.

And, you know, that was a conscious decision, but you're right, it was multiple conversations and, you know, we're Christian. It was praying about that and figuring out, Hey, is this the right path for us? And I realized like. My kids are young and um, you know, for me, I get so much joy out of spending time with them and going on camping trips and traveling and being able to do these things.

It's like there's, there's always gonna be plenty of doctor jobs available and if you want to go back and go full time, you can do that. Um, and so it, yeah. Yeah, absolutely. Well, this has been an awesome conversation. If folks wanna reach out to you, if they want to know more, if they're interested in investing in this project, you, you have, go on that 52 units in San Diego, how can they reach out to you?

Dr. David Namazy: Yeah, so, uh, you can just email me is probably the best way. My daughter told me yesterday, I need to get, I need to beef up my, uh, my social media presence. So I'm still working on that. But, you can email me atDavid@catalystcoastalcapital.com. That's david@catalystcoastalcapital.com. That's probably the best way to get me. Or on LinkedIn. I'm on LinkedIn. Yeah, get in touch. Uh, love to, to bring people in to learn how to A DU invest, uh, and, and get involved in possibly some of these syndications to get them some, some passive income. Always happy to do that.

Dr. Alex Schloe: That is awesome. Well, sounds like a great opportunity and I really appreciate the, the conversation tonight. Thank you so much for, for making the time to come on the podcast.

Thanks, Alex. Appreciate it.

Absolutely. Well, with that, it's been Dr. David Namazy and Dr. Alex Schloe with another episode of the Physicians and Properties Podcast signing off. 

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