Paging Financial Freedom

Building Multiple Income Streams As Physicians

• Daniel Shin, MD and Lila Kaplan, CFP • Episode 4

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In this episode of Paging Financial Freedom, Dr. Daniel Shin, a surgeon and real estate investor, and Lila Kaplan, a former Wall Street professional and certified financial planner, discuss why doctors need additional income streams and how to take control of their financial future. Together, they share personal stories, challenges they've faced, and practical strategies for physicians looking to achieve financial freedom through real estate and tax savings.

The conversation dives into the current state of physician income, with salaries stagnating and burnout rates rising, and the importance of diversifying income sources to combat these issues. Dr. Shin and Lila explain how real estate investing has allowed them to create more autonomy and financial security in their lives. They share insights into how physicians can build wealth beyond their W-2 jobs, reduce tax liabilities, and regain control of their careers.


Key Takeaways:

00:00 – Introduction to the podcast and why physician salaries are decreasing compared to inflation.
05:07 – How Dr. Shin recognized the need for a "Plan B" and the steps he took to diversify income streams.
06:33 – Lila’s decision to leave corporate America to build additional income streams and the importance of supporting a spouse's financial journey.
 07:31 – The power of real estate investing in building long-term wealth and creating financial freedom.
12:03 – Using Roth IRAs and bonuses to fund real estate investments and the initial capital needed to get started.
15:38 – The tax benefits of real estate and how they help reduce expenses.
16:59 – The importance of financial freedom, autonomy, and the risks involved in real estate investing.

Dr. Shin and Lila’s discussion highlights the importance of taking control of your financial future and building wealth beyond a single job. By focusing on real estate and other income streams, physicians can regain autonomy, reduce stress, and ultimately create a more secure and fulfilling future.


Links Mentioned in the Episode:

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00:00
What if I told you that even though you're doing the same amount of work, maybe even more work, you're actually getting paid less each year? According to the Medicare physician fee schedule, between 2006 and 2017, physician pay actually went down over 20 % compared to inflation. Think about that. You're not just standing still, you're falling behind. So in today's episode, we're going to talk about why doctors need additional sources of income. We'll talk about the silent risks of relying on a single W-2

00:29
and how to start building income streams that put you back in control. Let's get into it.  Welcome to Paging Financial Freedom, a podcast about doctors and spouses and the journey to financial freedom through real estate and tax savings.  I'm Dr. Daniel Shin, a surgeon and real estate investor. You might know me on social media as the Darwinian doctor or the founder of Sirius Real Estate.  And I'm Lila Kaplan, former Wall Street professional, certified financial planner.

00:57
and the person on a mission to retire my orthopedic surgeon husband in the next five years. I specialize in apartment investing, helping doctors and their families build true financial freedom beyond their W-2 incomes.  If you're interested in achieving tax-efficient financial freedom through real estate, you're in the right place.  Let's get started.

01:19
All right, Laila, how is it going today?  I'm doing great, Dan. How about you? I'm good. I think it's a really exciting topic.  It's something that I've lived through and then I see in my day to day when I talk to physicians. Yeah, that reminds me. How long have you been in medicine now? Well, I guess counting from the time I actually got my MD, it's been over 15 years. So it's been a while. Yeah. And what have you seen in terms of your income over this period of time? Yeah. I mean,

01:49
I, uh, you know, in residency made quite,  um, a low salary compared to the amount of time that I was working. And I think that's, you know, really reflective of pretty universal for physicians, you know, the resident salary is really low. And then it does go up tremendously when you become an attending, but it depends a lot on what type of income and employment you choose. You know, if you're going to go into your own practice, things are different. You might not make much in the beginning, uh, but.

02:17
You would expect your income to go up after that. You know, in my case, I was at Kaiser, so I knew exactly, you know, generally what my income was going to be. It wasn't awesome, but it was still pretty substantial. Yeah. I mean, that's so interesting. Cause you know, my husband who's an orthopedic surgeon had  similar experience, super low pay in residency. And as matter of fact, when I started dating him in residency,  I snuck a peek.

02:45
Uh, at his, um,  W two or,  uh, what is it that the pay stub?  Um, and realize how low he was getting paid as a doctor.  had no clue when he first finished training, um, after his fellowship, the starting salary was amazing. But as his new contract came a few years later, it was barely even any higher. Um, and now when he's negotiating contracts, a lot of times.

03:14
They guarantee a nice salary in the first two to three years and significantly reduce it in the following years and as much as 50%. So I don't know if you had the same experience, but in corporate America, when we negotiate a salary, it goes up. But it looks like doctor salary has been consistently coming down in the last few decades. What are your thoughts?

03:43
Yeah. I mean, that's, think the comparison between corporate America and like physicians is, is, is pretty striking. You know, you know, theoretically salaries and corporate America come down, but typically instead of dropping your salary, they'll just fire you. You know, you'll have to get a different job, but yeah, I've seen this definitely happen where, uh, doctors are sort of guaranteed a salary in the beginning of a contract. And then afterwards, when they're sort of on a more revenue based or production based, uh, income.

04:13
The salary can go down tremendously. then, you know, not to mention if private equity is taking over the practice, they can slash salaries, you know, 30%, 50%. I've definitely seen it happen and you don't have much power in that situation. So it's pretty crazy. And honestly, all of this to say is that physician burnout has been a major issue for many years. Salaries have been decreasing.

04:39
And there should really be a shift of mindset of generating one income for the family. How have you shifted your mindset in terms of creating additional streams of income for your family? Yeah. I mean, I  think that's the thing because, you know, just a couple of years into  being an attending physician, I noticed all these trends that you were talking about, you know, physician income was fairly stagnant,  actually, you know, dropping compared to inflation.

05:07
And burnout is a really big thing. I remember I actually did a, I did a survey in my department,  uh, when I was chief of my urology department in Kaiser, there were 14 of us. I did a survey  of my own docs and I think we were 80 % burnt out at the time. You know, that was during COVID of course, when burnout was the worst and,  uh,  in America for the physicians. But even now, you know, they, there was this big headline, uh, recently that

05:35
Burnout rates are finally below 50 % for physicians. I know everyone was celebrating, but And that's extremely high still. Exactly. Half of the physician workforce is burnt out. I think that when you combine the really tough things that physicians have to do, plus really prevalent burnout rates, plus income actually going down compared to inflation, it's kind of a hard sell. Like you wonder why we have a physician shortage. This is

06:03
certainly one of the issues. So, but I think you asked me about like, you know, how  I chose to respond to that.  And for me, you know, that was the couple of years into my tenant career. When I saw that, that was my sort of my aha moment. And I was like, well, I think I sort of need a plan B. I need to prepare for potentially, you know, shifting away from medicine in the future. Yeah, absolutely. And for me, just observing,  you know, the day to day grind for my husband.

06:33
It's super stressful and I definitely see him, you know, burnt out as well. And so that's when I started, I actually quit corporate America so that I can create additional revenue stream for us so that I can retire him in the next five years or so. And I talk about this all the time, but it's so true. And I think my husband is starting to realize it as well.  As a doctor, he's beginning to actually build additional income streams like

07:02
doing consulting or teaching  while I created a  real estate investment management company where I am trying to build a portfolio to  whether actively investing or passively investing to generate that  mailbox money. So, Daniel, what do you think? What have you done so far that have made sense for you? Yeah, I mean, I think we were talking  before the show about how  the truly wealthy have

07:31
seven plus streams of income.  you know, it's not like physicians  just have one, you know, even if they have just a W-2, they probably have a retirement, you know, which eventually will pay them income. you know, I would say  most physicians probably have two streams of income, if you think about it.  But,  you know, when I was thinking about how to add to those streams of income  and give myself more

07:59
autonomy  and financial power to  sort of make these  gain regain control over my career. You know, I started, you know, sure. I started investing more in stocks, but then eventually I turned more and more of my attention to real estate like you have.  And I was doing it actively  and  buying property,  renovating the property, you know, helping to get tenants in there through property management and.

08:25
You know, more recently have really turned a lot more towards large scale and passive investments as well. But there's more than that. You know, like you said, I think physicians can think about  consulting surveys  and back when more physicians were  practice owners, that was a business, you know,  it was a different way of thinking about it. They weren't just getting a paycheck. They were in control of their own business. Unfortunately, that's not really the case anymore though.

08:51
So you mentioned real estate investing earlier. How did you first get started with that? Yeah, I mean, I think the, you know, the really the first thing  that I did  was  listen to podcasts just like this. You know, uh, I had two hours of commuting time in Southern California traffic  and I had all this time to fill  and I just started listening to podcasts and you sort of go down this  rabbit hole where initially I was listening to just

09:19
financial podcasts about how to manage my money, create a budget and  invest my capital. But then  more and more I was listening to people who had achieved that financial freedom and by and large, the majority of them were real estate investors. So I was like, okay, this sounds like a good idea. And I started slow. I bought a single family home  and that worked out well. And then I bought another single family home, then  a duplex and then three more duplexes then

09:48
I kind of scaled up from there. Yeah. I mean, that's excellent strategy. I love that approach. So what came next in your real estate journey? I think the, the thing that became difficult about that honestly, was that when I got up to about 30 units,  I had a second job. You know,  I was, I kind of had three jobs because I was working 50 hours a week at Kaiser. I was commuting 10 hours. was

10:14
sort of running this social media platform I created called the Norwegian doctor. And then I had this real estate portfolio also. And honestly, it was really, really difficult to do on top of that, know, full-time position at Kaiser. So,  you know, I made a number of changes. Now I do locum tenants. So I do, you know, 25 % of my time in medicine now as a locum tenant.  And I  moved progressively more towards passive investments into large syndications.

10:44
because that's a way that you can endlessly scale your real estate investment without necessarily  having to manage the  minute to minute decisions of property management, et cetera. Yeah, absolutely. I mean, that's super impressive. And I know a lot of  our listeners are probably wondering about the initial capital needed to get into these investments. How did you find these investments? Yeah, I think that  that's one thing where physicians are blessed.

11:13
And you know, know, this being married to an orthopedic surgeon, it's like, despite the salary stagnancy, you know, still physicians are blessed because we make over six figures.  And if you have a budget and you stick to it, you can put aside money to make investments like this. think one thing that we both know about real estate, it does take more capital than just buying like a single stock, but you  you essentially put aside money, you save it. And then once you build up.

11:41
to a down payment and sort of like an emergency fund for the real estate, then you can buy a house or you could build up to $50,000 and invest into a syndication. Yeah, absolutely. And I love that because just looking at our current portfolio, a lot of the initial investments definitely came from some liquidity that I had when I left my corporate job.

12:03
um I was able to fund it through Roth IRA that I had accumulated over, you know, early on in my career. And of course my husband does have a pretty decent salary and I did use some of his bonuses,  annual bonuses to invest in additional investment properties. But just like you, Danielle, we started with  single families. We fixed and flipped.  We eventually realized what we liked.

12:30
about our investment strategies and what we didn't like. And we really just tone in  on the stuff that we really liked. Right now we're  predominantly focused on vacation rentals and also syndications as well. So commercial properties only because it's just an easier way to scale.  And for us to be able to retire my husband, we have to figure out how we can create that additional stream of income and do it quickly.

12:58
And so syndication was,  I thought,  was the best option  or the best approach that we can use at the moment to get to that point. So I did use partners as well. had partnerships in some of our investments. So I'm curious, did you do this all on your own or did you also have partners as well? Yeah, I think uh that is the thing about real estate investing. It's kind of a team sport.

13:24
And you know, this is the same thing as medicine. You know, you need a lot of people on your team to deliver effective care to patients. But I would say my most important partner was my spouse. After the excellent point, it's super important because like after the initial investments went well, before I decided to risk more of our net worth into real estate, I

13:51
definitely uh made sure to make sure that my wife was on board with it because  I wanted to make sure that we shared the same vision of a more financially free future. And she was okay with the additional risk of real estate because I would say in general, you do experience a bit more risk in real estate compared to uh just an index fund, you know, for like the Vanguard 500. So I think that was, she was the most important partner to get on board. But then,  you know, certainly now with

14:20
larger scale multifamily investments, you're relying on an operational team to institute a renovation plan. You're relying on the property managers  and everything from the lawyers to the bookkeepers to CPAs are super important. Yeah, that's definitely really important to uh emphasize because, you know, we can think about  when we used to invest in single families versus commercial deals in the commercial deals, you do have a team of professionals behind you.

14:50
versus single family, you're kind of just doing it  at the risk of your own knowledge and experience  and also trying to find these tenants who will take care of your property.  No one's going to take care of your property the way that you're going to take care of the property. So um finding that tenant base is incredibly hard. So that's  super cool  that you're doing all of this.

15:15
What about the tax benefits? We haven't talked about that.  I think partly why I got into real estate is twofold, is being able to create that additional income, but also reducing our expenses.  And I know that it's a huge advantage of real estate investing. So what about you, Daniel? Yeah, I mean, that was definitely a huge motivation.

15:38
You know, for the real estate and that's really the main reason why I moved from stocks to real estate, because at the time I was living in Southern California  and you know, unfortunately it's a super high tax state. So, you know, for a large portion of the year, you know, pretty much half of every paycheck was going to pay taxes, right? So that's the bottom line. Um, so yeah, I have done,  I've done sort of the same sort of gamut of real estate investing as, as you have, uh, we're very similar on that.

16:09
You know, there's some benefits  that kind of stack the more you invest into real estate, like with syndications,  but that doesn't necessarily like cancel out the physician income in terms of  taxation.  So short-term rentals is a very accessible way of achieving tax benefits. you know, obviously we're not CPAs and I think we should save this for like a full episode, don't you think?  Absolutely. And I was going to say that.

16:36
You know, you guys will hear a lot more on all of the various tax strategies that we have implemented, but not from us, our mouth.  We can give you the experience, but we will be inviting a professional to talk a little bit more about that. You know, things like cost segregation studies and 1031 exchanges, which  is one that I'm doing right now.  but overall.

16:59
Real estate investing is  a great way to generate that additional income for  us and our family. And I hope that you guys will find benefits  of  finding other revenues or other streams of income to offset, whether your liabilities, your  expenses, to create additional  advantages to work a little less. Yeah, I think tying it all  back to our initial thoughts here, it's like,

17:29
There are many ways to generate additional streams of income, um, as a, a doctor. And I just think it's super important because as, as we've seen, you know, there's a lot of problems with medicine in the U S today. It's like with the salaries going down compared to inflation with the loss of autonomy and control because of private equity and, uh, insurance companies and. Basically majority employment, basically, you know, for us, I think real estate has proven to be a really

17:58
good way  of generating that additional income, but there are other ways. But you know, I think that the important part is  that you start taking control over your financial future so that you can get that control back. And especially in the current climate with the volatilities  in the stock market,  I am  shifting a little bit more  out of my portfolio, stock portfolio and into real estate and

18:25
You know, I know that some investors is all in on real estate or all in on stock portfolios.  But for me, I still want that diversification.  know, real estate is just one topic that we talk about, but there's certainly other investment strategies that you can look into as well that can potentially have, you know, different  tax advantages or other,  you know, efficiencies. But

18:52
Let's talk a little bit about the risks because I  am super passionate about real estate, but it is  isn't without its challenges.  What do you think are some of the risks that you have experienced in investing in real estate? Yeah, I think that the risks  are, you know, we alluded to the fact that it's probably a little bit more risky than other things because the risks of real estate, you know, the bottom line is your

19:18
you're risking a little bit more capital than when you're just buying individual stocks. So  there's a risk of losing capital. um And if you're doing it actively, there's probably some legal risk to it too. So um it does have to be, I think, uh a pretty measured decision. But when you think about all the benefits of real estate investing, that was a risk that you and I were both willing to take. I um can't wait to get.

19:44
into it in future episodes about the different benefits and you know, from taxes to cash flow to, know, inflation protection, there's so many. So I do think that there is  risk discussions are definitely a big part of this. So I think what really financial freedom means to wrap this up is that think outside of the box and see what additional streams of revenue or streams of income you can generate outside of your medical practice.

20:12
But it's also about  shifting of mindset, right? It's thinking, you know, how to get out your medical practice  or  have your spouse to contribute that additional stream of income like I have for my family and for my husband. Daniel, what about you? What are your thoughts? Yeah. And I think it's important to remember that, you know, if you're putting more attention and capital into additional streams of income, it doesn't mean that you

20:41
don't love medicine. doesn't mean that you're going to practice medicine less. It just means that you have control over that decision, which I think is really important. I enjoy practicing medicine more than ever now because I've made it sort of my own. You know, I have my own schedule. It's under my control and it still allows me to do everything else I want to do. Yeah. But I think that's what it's about. It's about the autonomy. Yeah.

21:04
And like Dr. Thomas Burns said in his book, you want to be  a  rich doctor with choices  rather than a poor doctor with money.  So thanks for tuning in today, everyone. If you found this episode helpful, please make sure to subscribe,  leave a review  and share it with somebody you think needs to hear it.  remember financial freedom isn't a dream. It's a decision. So let's get there together.