Financial Planning and Investment with Justin Nabity, CFP

Many thanks to Justin Nabity, CFP, for joining me on this episode of The Art of Medicine with Dr. Andrew Wilner! Justin is a Founder and Partner of Physicians Thrive, a wealth planning and financial management service for doctors.

Justin explained that optimizing the physician's work contract is the first step in successful financial planning. Physicians Thrive has access to over 100 advisors, attorneys, and negotiating specialists to ensure that physicians receive appropriate compensation, whether employed or self-employed.

Next is a financial plan that for many people will include estate planning, a will, an emergency fund, power of attorney, disability, and life insurance options. Once physicians establish these basics, they can consider alternative investments, such as commercial real estate.

One step to financial independence is to graduate from trading "time for money," the traditional physician model, to other types of income that pay passively. Justin recommended the book, "Rich Dad, Poor Dad," as required reading for those interested in establishing financial independence.

During our 50-minute interview, Justin outlined the steps to become an "accredited investor," which provides access to alternative investments. These high-value real estate investments, such as apartment complexes, are not liquid investments. Investment in residential properties is another alternative, but it tends to have lower yields than commercial properties. 

Justin defines "hurdle rate" and provides more insights into commercial property investment. He also explains "opportunity zones."

Justin emphasized that physicians should support pending legislation HR10073, which would reverse Medicare reimbursement cuts. Physicians should reach out to their representatives in Congress and underscore the importance of this bill.

To learn more, please contact Justin Nabity, please check out the website:

https://physiciansthrive.com/

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Transcript

[Andrew Wilner, MD] (0:09 - 1:25)

Welcome to the Art of Medicine, the program that explores the arts, business, and clinical aspects of the practice of medicine. I'm your host, Dr. Andrew Wilner. Today, I'm pleased to welcome Justin Nabity.

Justin is a certified financial planner, founder, and partner of Physicians Thrive. We're going to talk today about investing, including alternative investments to the stock market. We're recording this episode on April 28th, 2025, and if you've been watching the stock market, you probably are dizzy or have a stomachache or both from the volatility.

Consequently, we're going to look at other options like commercial real estate and whether these are appropriate investments for physicians and other busy professionals. But first, a word from our sponsor, locumstory.com. Locumstory.com is a free, unbiased educational resource about locum tenens. It's not an agency. LocumStory answers your questions on their website, podcast, webinars, videos, and they even have a Locums 101 crash course. Learn about locums and get insights from real-life physicians, PAs, and NPs at locumstory.com.

And now to my guest, welcome Justin Nabity.

[Justin Nabity, CFP] (1:26 - 1:27)

Good to be with you, Dr. Wilner.

[Andrew Wilner, MD] (1:28 - 1:53)

Justin, thanks for taking the time out of your busy day. You bet. We're going to talk about a half hour here about, you know, not my favorite subject, but it does come up and that's, you know, money and earning a living and planning for the future.

And I don't know, I think it's like brushing your teeth. It's just one of those things, you got to do it or things are not going to be happy in your life. So what's your financial background?

[Justin Nabity, CFP] (1:54 - 5:14)

I'm glad you brought this topic up because you think about one of the most pressing or the most common areas of stress that people have in their life is the subject of money. And think back to school growing up, how much emphasis there was as a part of the curriculum. There isn't really a lot that is provided unless your parents, you know, invest in you to help you get some good disciplines.

You may come out finishing up your schooling and all that and not have a lot of a background, much of a background in this area. And so for me, I was raised in a family, third generation in financial services. So long history there.

I went to University of Nebraska, majored in finance and international business. So pursued the financial world in that regard, got into the industry and worked in financial services for a number of years, earned my CFP designation. And before that happened, I did start this company Physicians Thrive as a way to help physicians' families work through all the challenges that they have to face.

And one of the first ones being signing that employment contract that is usually 10 to 30 pages long. And that was something that I found from a mentor of mine who had been helping doctors for about 40 years. Just about every physician has to sign a contract.

And they never really reviewed or negotiated employment contracts before that first one. So they have no experience, no background, no training. They may or may not know an attorney that they can reach out to to help them with this.

And for our group specifically, one of the things that's different about us is that the financial planning process starts with the contract negotiation that you have with your employer. Or if you have your own private practice, it starts with negotiating the contracts with the insurance companies, the payers that pay you for the services that you provide. And so if we get one thing right with financial planning, it's getting you paid the right amount, whether you're employed or self-employed.

Everything else follows up from that very first step. And that's why we grew our team to become the number one group in the country reviewing and negotiating employment contracts with different specialists, attorneys, advisors, so that way every physician knows exactly what they should be making. And unfortunately, the databases that people know about only get about 20% of the physicians to participate in those surveys.

So think about that. You're trying to make a decision on what you should be getting paid when 80% of the market is not reflected in the numbers, it's a year old, and the best paying practices don't participate oftentimes. So the data that we're using is inherently flawed by itself.

You can still reference it, but we're finding success after success with these. We just negotiated it for a client and got her a $75,000 improvement. One before that, we got a $95,000 improvement.

We had a small group practice that got over $400,000 per year improvement negotiating with the health system. So the background is starting out with contract negotiation and compensation because physicians just don't have much experience or exposure. That's why I teach that.

[Andrew Wilner, MD] (5:15 - 7:22)

I'm going to emphasize that. I have a few personal stories. And in fact, we did do a program a while back with a fellow that does exactly that.

But the point I'd like to make is that your instinct as a physician, you get a contract is, well, I'm going to show it to an attorney. And of course, when I got the contract, that's what I did. But you need more than that because the attorney doesn't know what you should be paid.

They know it's legal. And it's important. I'm not saying you shouldn't send it to an attorney.

That's a very important step. But you need more than that. I've been self-employed.

I've been employed and currently employed. I hope it stays that way, at least for the immediate future. And I've been through a few rounds of contracts.

And I think now I could do a really good job looking at that contract or the loopholes and the things I need to insist on that aren't there. And frankly, it is an adversarial situation. The other side wants to pay you as little as possible.

And you want to earn as much as possible. So there's a tension there. And you can't really rely on the other side.

When physicians deal with each other, we tend to be upfront. We're taking care of our patient. There's no advantage to subterfuge or hiding information or not volunteering information.

You want to do the best you can and move on. But I've learned that the business world is a little bit different. So I think you offer a very important service by not only looking at a contract from a legal point of view, but also, well, what should you expect?

And if they're going to pay you less, there should be a reason like, well, you're going to get 10 weeks of vacation a year or something that mitigates the lower salary. But if they're going to pay you more, what are they expecting? I think that really offers a great insight into what is, as you say, it's the key to the whole thing.

How much money comes in every month is what's going to determine your lifestyle and your savings and pretty much your whole financial future.

[Justin Nabity, CFP] (7:23 - 10:06)

The role as a physician is to be the healer, to be the one to help the patient get to where they should be from a health perspective. And employers, they don't start out with their best offer and they're going to do what they can. And if we have generation after generation of physicians taking whatever is offered to them, because that's the problem that we find, is that residents and fellows, their first job coming out, they just sign.

They're grateful to have an offer. It's like, well, I'm jumping from my $50,000, $60,000, $70,000 to $250,000, $3,000, $4,000, $5,000 plus $100,000. They don't want to upset someone, don't want to offend or send the wrong message.

They don't want to give them the wrong impression or seem like they're going to be a royal pain in the you know what, when it comes time to make decisions. And so they don't want to jeopardize the opportunity to have the job. And so they tend to be shy, timid or reserved and don't have the confidence to be able to go through and have those conversations.

And we have this gender pay gap that's a real problem. And if a female physician is working and producing the same amount of RVUs as the male physician, there should be no difference in pay. If the production, the revenue is the same, there should be no difference.

And what I see time and time again is that women are less inclined to stand up for themselves and negotiate the way that they should. And it's consistently the outcome that we see is that they don't get the results that men get. Now there's a lot of men who are reluctant and reserved as well.

We have to do a little bit of coaching on the front end to help build the confidence. That's why we say if you have multiple offers, it's going to help you. And so for you, Dr. Wilner, you have been through this multiple times. You have more confidence. You know what you're worth. You know what you can generate.

You know what the downstream revenue is that you produce. We live in a day now where there are 10 administrators for every one physician. It's 10 to one.

It used to be that there were five physicians for every one administrator. So we've gone in the wrong direction as far as how the structure is set up. And it puts a lot of pressure on the physician to have to work more and more and spend less time with the patient.

And that obviously leads to worse care. And we know that we're not in a good situation from a quality of care standpoint because the amount of time that the patient gets the doctor is so small. And so we need to collectively come together as a community and start expecting things to change.

I was in Mexico recently with an OBGYN doctor and she was telling me that she's a part of a Facebook group of locums physicians, a female group even.

[Andrew Wilner, MD] (10:06 - 10:11)

Yes I've heard of that group actually. They're all OBGYN. I heard there's like a thousand of them.

[Justin Nabity, CFP] (10:11 - 11:50)

Yeah there's a ton of them. And guess what they've done? They've locked arms together and they said we're not going to accept less than x for a certain amount of pay.

And so they're getting offers and deals coming through and they're saying no. And guess what's happening? The places that are making these offers are changing their offers.

They're increasing to the level that they collectively have said that we're going to hold the line and say we're not going to accept less than this. And so they're doing their own version of collective bargaining as a non-employed group together to be able to hold the line. And it's just we're in a challenging situation with insurance companies and drug companies really calling the shots now in health care.

It puts a lot of pressure on you, the practitioner, to have to produce more and more in the limited amount of hours you have. And going back to the question about investments and the whole financial aspects, in health care you have to trade time for money. That's the challenging piece.

Most of your career is time for money. How do you get to a place where you can build income that can come in regardless of you are working or not? And it's challenging.

It's hard to have that something like that unless you have your own business, you have your own way of producing income, whether you're maybe a partner in a practice or you have some other avenue, maybe you're an owner in a surgery center. Those are very common ways in which you can get access to those. But if you can, as we were talking before we started recording, start making some steps, moving in the direction of investing into alternative investments that can pay you passively.

That's what, if you haven't read the book by Robert Kiyosaki, The Rich Dad, Poor Dad.

[Andrew Wilner, MD] (11:51 - 11:54)

Yes, I have read that. Required reading.

[Justin Nabity, CFP] (11:54 - 15:49)

It should be a required reading. I read that in college and I've never forgot what I read because it talks about the rich dad and the poor dad. The rich dad is the one who builds systems and processes that continue to get paid regardless of the time that is invested versus the poor dad is the one that goes to good school, gets a good education, gets a good job and just plugs the meter over and over again, just keeps on working, trying to save enough along the way, but has to show up constantly.

And that's kind of what healthcare is. You're not going to get paid in your specialty unless you show up to work, obviously, but can you take a few chips off the table and put that to work in places that are going to be able to build and compound for you over time? And it gets challenging because number one, you have to become an accredited investor first, which is a key criteria that you have to be aware of.

You're technically not allowed by regulations to start participating in these until you get to that point in time. And so if you're not familiar with what an accredited investor is, you have to have at least two years worth of income of $200,000 per year as an individual, or you could qualify as a household of $300,000 per year for the last two years with the expectation to continue on that income trajectory. If your income is going to go down, that can be an issue.

If you don't have that income, but you do have a financial net worth of a million dollars or more, excluding your personal residence, then you qualify there as well. So just about every physician is going to qualify after they've been in practice for two years. I don't really know really much of any out there.

Even the lower paid specialties, the numbers are getting to a point now where it should be high enough. So the sad thing is we have physicians that contact us after they've been in practice for 10 years or even 15 years, or that they want help with retirement and making sure that what they've saved along the years is enough to retire. And they didn't take steps to start investing into alternatives that could be paying them all the way.

And so that's the first You have to hit that status. And if you can start to do $50,000, $75,000 or $100,000 a year per year and start to squirrel away some money in these places, it can really be impactful to you. The challenge with these types of investments for those of you who haven't participated or explored these is that they're not going to be liquid like you typically would expect your Vanguard brokerage accounts is going to be.

So usually buying something, let's say like it could be commercial property, it could be an apartment complex or a duplex neighborhood or a warehouse where, you know, how many of you are a developer and can go find land to purchase, can develop the property, can then lease the property out and manage the property and then sell the property? That's a very difficult thing to do. We know many physicians who want to get into real estate and they'll pursue owning like single family units.

And so they'll have a bunch of properties like that, that they're essentially becoming the landlord. And so they'll own one and they'll get a second one, a third one, a fourth one. The challenge with those properties is that there is a lot of maintenance involved with those and keeping your tenens happy.

And then if you have a property management company involved, that's going to cost and take some of the profits away from the income that you would receive. And then the question is, what are you really earning on residential property if that's what this is? Because residential property, it can have some benefits to it, but the rates of return on it tend to be lower than what you would experience if you were into larger commercial property type of investments.

And so that's where it becomes a question of, well, how do you find these? Where do you go? And as you were saying earlier, you're getting contacted by lots of groups, right?

What's your experience been like with that?

[Andrew Wilner, MD] (15:51 - 17:24)

Well, I'm a neophyte. I've heard about these things. In fact, I did a program, episode number 46 with a woman named Veena Jetty, and she's married to a physician and that's her business.

She finds these investments and gets 30, 40, 50 doctors to put in 50,000 or more each. And then they buy some, you know, 30 million dollar building and then they fix it up or they sell it or they rent it. I don't know what they do.

And a couple of years later, you get some kind of return. I didn't have $50,000 lying around to give it a try. And I still don't.

But I was intrigued by the numbers and what you've discussed that, well, commercial real estate has a reputation anyway of being a higher yield investment than a residential property. And I think what, and since then, you know, I follow a physician on fire, the blog and the white coat investor, and this topic comes up there. So I decided, well, maybe this is something I should at least learn about as an option.

I think the other part of it that is very intimidating is it's, you're just sort of signing this pretty big check and handing it to a person who's not a bank. I mean, when I buy stock at Fidelity, I don't know, they could go belly up too, but they're a big organization.

[Justin Nabity, CFP] (17:25 - 17:27)

Fidelity is a known name. You're familiar with them.

[Andrew Wilner, MD] (17:27 - 18:15)

And Vanguard, you mentioned earlier. I mean, I know who they are. I'm still a little nervous when I send them money.

But, you know, just this company X that's buying a property in Idaho that I've never seen. And they're making promises to me on paper, you know, in this world of very sophisticated scams. It's like, well, how do I know this is the right thing to do?

I don't know what I'm doing. I know I don't know what I'm doing. So that's where guys, but before, I just want to stop for a second.

I had a burning question and that is back to the contracts. Does your company actually do any direct negotiation? Like, can I say, Justin, go talk to that guy for me.

This is what I'm willing to settle for. Will you negotiate for me or do you just coach me and then I have to go in?

[Justin Nabity, CFP] (18:15 - 19:01)

So we have two pathways. One provides you the review on the financial, the legal, makes recommendations, and then you would interact with the employer and make requests. And then we would follow up with you to go over their reaction and give some guidance on what you should be doing in that, as far as how you counter or respond.

But what we're finding is that positions just don't have the skills, the ability to receive that no. Because when employers start saying no to you, that's not the end of the conversation. Even when they tell you that this contract has been vetted by their attorney, is compliant with state law, they don't make any changes, and everyone else has the same contract.

And then they tell you no to your request. What are you going to do?

[Andrew Wilner, MD] (19:03 - 19:15)

Right. In fact, I actually did have that experience where I asked for something. They said, well, no, everyone has the same, we can't do anything.

Everybody has the same contract. We can't change that. And I really didn't know what to say.

And I didn't say anything.

[Justin Nabity, CFP] (19:15 - 21:26)

I mean, what could you say, especially if you're the first timer doing this? And for us, that's the beginning of the process to get them to a yes. Sometimes it takes five different rounds of you set the stage by building relationship with the employer.

And so when we get involved, what it does is allows you as a candidate over here, and then the employer over here, we come in the midst of this, we work with the employer to say, let's build a plan that gets Dr. Wilner to say yes. Because right now, as things stand, this offer is not at a place where it's probably going to work for Dr. Wilner. So let's together come up with a way to make this become more attractive and more on par with all of the other contracts, same specialty, same practice type, same region, same population, same really across the board, all these different things.

Because we know what the market is. That's one of the challenging things is having a Rolodex of contracts coming in every single year. We do more contract reviews than any other group does in the country and have historically done way beyond anyone else ever has.

And so we have not just these data sets to reference, we have all these contracts that we've reviewed that we can use as a surrogate comparison. And so then we're able to go through and find a way to work on some areas, make some progress. If it's a no, then we can pivot to go to something else, come back to it.

But it's a chipping away process. It's deliberative. It takes time to do that.

And our average increase is $38,400 when we do the negotiation. That's a per year improvement that we have across all specialties. I gave you some numbers before of that 75,000 we achieved for someone, 95,000 before that.

There are ones that come in that are smaller, but we do take on that role because we don't expect you to be experienced or trained in the art of negotiation, which it truly is an art. There's psychology involved, there's relationship building involved, and there's a strategy that's in play. And when physicians do it themselves, we find that the results that they achieve are at best half of what we achieve in terms of results.

It's a huge difference.

[Andrew Wilner, MD] (21:27 - 21:36)

So are you the one who does the negotiation and the doctor can just sort of call you up later and say, how did it go?

[Justin Nabity, CFP] (21:37 - 22:15)

So I have done them before. We have a whole team. We have over a hundred advisors, attorneys, accountants, negotiating specialists.

We're the largest group in the country. We have hundreds of employees across the country, clients in all 50 states, all specialties, all practice types. So yes, I don't personally, I can, if there's a situation where I would need to get involved, I can.

But we have team members that will run the process for each of our clients from start to finish because you have so many requests coming in. I'm leading the team in this regard, making sure that we're doing everything we need to do to stay in front of the landscape and the changes and giving our team the tools that they need to be successful for our clients.

[Andrew Wilner, MD] (22:16 - 22:33)

Yes. By you, I meant physicians thrive. All right.

So back to commercial real estate. And before we get back into the weeds, is this something that physicians who are very busy and other professionals, is this something we should consider? Yes or no?

[Justin Nabity, CFP] (22:34 - 25:37)

So I would say, generally speaking, the answer is yes. After you have done some basic planning first, you need to have an emergency fund. You need to make sure your high interest rate debts are paid off.

You need to make sure that you've got a financial plan in place with this being a piece of what that financial plan is. But there's certain key things like your estate plan, your will, your trust, your healthcare directives, your powers of attorney. There's some critical things you want to have in place first.

What happens if you pass away? What happens if you can't work? Some core basic planning strategies like that.

In the last six months, I've had two clients pass away. One of them had ALS. And for four or five years leading up to this, he was receiving $25,000 per month, growing with inflation, tax-free disability income, which allowed him to stay at home and receive 24-7 care.

So that way, he didn't have to be away from his kids. His boys could see him every day for the entirety of those years as he was losing his ability to function. And he did good planning on the front end.

With that, the family's taken care of because of the life insurance plan that they did. So step one, I wouldn't even think about the commercial real estate stuff if you don't have some of these basic things taken care of. Another client, the spouse passed away.

And so a dual physician household, they've got kids in the picture. They're financially taken care of. Doesn't mean that life's not going to be hard and difficult and stressful and emotional.

And it's going to be very difficult for this family. But I would say the answer generally is yes. But we want to make sure that you do some core things first.

You're going to have benefits available through the workplace, making sure you're utilizing those, making sure you're having a good tax strategy. Because so many physicians, they just turn over their tax documents every year to their CPA. And there's not enough CPAs, there's not enough accountants to do these tax returns for the number of returns that need to be filed each year.

So what happens is you have nonstop just churning these returns, getting them done as fast as possible. There's no proactive planning before the year is over to do good tax planning. Getting good tax planning before the year is over is key.

So I would say doing those things first. It's hard to find CPAs who will take the extra time to develop a strategy. Or if you have a financial advisor or financial planner like our team who will lead the direction, will even guide the existing CPA what to do.

There's so many low hanging fruit opportunities that physicians just don't do and CPAs aren't talking about. It's funny, I still hear today, I make too much money to qualify to contribute to a Roth IRA. My income's too high.

That rule changed so many years ago that you can contribute via the backdoor method. I don't even know why. It's like CPAs are in a vortex.

They got stuck with the law that it was back then and then they haven't ever moved on. And so they're still giving bad advice when it comes to small things like that. So there are some basic things, but to your point, go ahead.

[Andrew Wilner, MD] (25:38 - 26:01)

Oh, I was just going to say, I thought this was a perfect seg to tell us what Physicians Thrive does. It mentioned on the front end, you do contracts, get people set up. Now, do you have in-house or allegiances with CPAs and attorney?

In other words, do you do everything, wills, or are all of these kind of, how does that work? Yeah.

[Justin Nabity, CFP] (26:01 - 28:07)

Yeah. I love that question. So literally everything you will ever need for financial legal business planning, we do it all.

Now I don't personally, or not any one person on our team does everything because that would be too difficult, but we do have people in every seat on the bus that can do everything. Many of the aspects are in-house. So the financial aspects, the tax aspects, the real estate, the investment, the retirement, the insurance, those aspects.

Outside of that, we're not lawyers. So we do need lawyers to draft documents. We do have CPAs in-house, but we are agnostic.

So clients that want to work with their own CPA that could be local or from some other location or banker, like banking and financing, insurance, malpractice, business planning stuff, everything. We literally are a one-stop shop for everything. Student loan, repayment, refinancing strategies.

We're not a refinancing company ourselves. Those are the big institutions. We have advisory services to guide every step of the way of what to do with those, to have a very proactive debt repayment plan that allows for an expeditious approach to paying down debt efficiently.

So every single area we have covered, and we have a network of professionals all across the country. So whether that needs to be in-state or out-of-state doesn't matter. We have even buying and selling property for your own personal residence.

We have on-the-ground leaders in every single market to buy and sell your primary residence or your secondary residence. Or if you want to build a rental property portfolio, we have people for that too. So it's taken us about 20-ish years to develop this and it was difficult.

We had to learn through a lot of trial and error, giving people the benefit of the doubt, trying out different professionals, different teams. And we learned who not to work with and who delivers on what they say they're going to do. And it was difficult and it took a long time, but we have an established network.

[Andrew Wilner, MD] (28:08 - 28:13)

Well, I feel better now because I could have used you 40 years ago, but you weren't there.

[Justin Nabity, CFP] (28:13 - 28:14)

No, we didn't exist.

[Andrew Wilner, MD] (28:14 - 28:35)

I'm off the hook, but that doesn't mean that you might... I'm still working full-time, so it might still come in handy. And I presume that your fees, whatever they are, would depend on how many of those services and how complicated your portfolio is and so on.

It must be all prorated to whatever your needs are.

[Justin Nabity, CFP] (28:37 - 32:26)

Yeah, we're a fee-based group. And so we work as a fiduciary. Everything is on a fee schedule when it comes to financial planning, investment advisory, tax.

It's all up front. It's based on time and complexity. So that way, the more complex, the more advanced it is, then the more it is because it requires more time.

The more simple and basic it is for, let's say, the brand new doctor, it's going to be on the lower end of the spectrum. And then we put together a proposal in the front and so it's spelled out so you know exactly. But back to the real estate question, if you've got $50,000, which is probably the lowest you'll ever see to get into a truly legitimate option, $75,000 to $100,000 is where you're going to get into more favorable types of options.

Because here's the thing, to buy land and to build something that has the ability to have the higher rates of return and then to be able to flip it and sell it, it's going to need to be $10 million plus. $20,000, $80 million property for it to really have the ability to earn the returns that you're going to want to have from these types of investments. And the team who does this, they're not going to want to touch it.

It's a waste of their time if they can't earn 15% or more net of fees. Why? Because they'll have within it what's called a hurdle rate.

The hurdle rate is the rate of return that the property has to or the investment has to yield to the investor before the management team that is putting this together is going to earn a penny. They get nothing. They make no money.

They lose money if it's less than, let's say, 8%. So this thing has to earn 8% or has to earn 9% to make a percentage. And 1% is not going to be enough.

That's why that 15% is usually that lower end of the spectrum, that they're not going to want to touch it unless they're going to make 7% plus. They're not even going to be able to keep all of it. They'll split it with you.

And so usually within our group specifically, it's usually an 80-20 split where you get 80% of the amount above the hurdle rate and then the house gets 20%. That's their reward for putting this whole thing together. And so we're talking about large numbers because for them to go put all the teams together to scout, to buy, to develop, to lease, to then sell, like those five different steps that are involved in this, it's a lot of work and it takes three to five years usually.

The group that I'm in partnership with, they had a deal where they were working with a company who is, I won't be able to say the name on the recording here, but they're a brewery one of the biggest. They invested tens of millions of dollars with our group and they were supposed to hold the investment with us for 10 years to get the tax-free growth on the investment. And they sold within two years because they had an opportunity to sell that came so early and that was so good.

They said, we're going to shelve the tax-free gains to wait 10 years. We want the gains now. And we'll either manage the capital gain taxes now, or we'll just roll it into the next project and defer the gain in the next project that we'll do for an exchange.

So there's no taxes now. And so that's rare. We don't expect that to be the norm, but that was a well into the two digit range.

And usually the projects that we're interested in pursuing are going to be 20% plus rates of return, which are not guaranteed. There's risk of loss here. Fortunately, our team's never had any loss on any of the deals that they've done.

We have a whole team of 40 plus people. All they do and work in is the real estate side.

[Andrew Wilner, MD] (32:27 - 32:40)

Let's talk about that because I think loss is a high in the mind of anyone who's going to dish out a hundred thousand dollars. So what are some red flags I should look for in all these emails I'm getting where they want me to invest with them?

[Justin Nabity, CFP] (32:41 - 34:13)

So it comes down to how do you vet them and how do you evaluate if they are legit, number one, and do they have, do you have a way to verify what they're telling you is true? And do you have somebody who can go through and review and analyze the subscription agreements and all of the documentation and everything that's there within the deals to make sure that you're not signing up for something that you don't know, because what's going to happen is we're probably going to send you a docusign. They'll summarize it to you.

They'll have some supporting material for you, and then you're going to have to go through and review everything. So how are you going to do that? Well, if you're doing this by yourself, you don't have an advisory team backing you like in a personal board of advisors, like we function with our clients, then you're going to want to have an attorney who specializes in this area review and advise and consult with you to make sure that what you're being told and what you're being, you know, pitched does in fact line up with what is being offered to you. And is this their first project that they're doing? Because it sounds great.

Let's get a bunch of doctors together and let's go find this commercial broker who says they can find a property for us and who's going to put this fund together or something to be able to buy this land and to develop on this. But have they done it before? And do they have a team in place that's dedicated full time to do this?

This is not something that can be done casually. So that would be a key piece of this. Can you go visit some of the projects that they're building currently?

Can you go watch? Is there a video? Is there footage?

Can you track the progress being made?

[Andrew Wilner, MD] (34:15 - 34:30)

But there was that old concept of swampland in Florida. I don't know if you remember that, but you know, people were being offered these home sites that turned out to be really not very, didn't exist for retirement.

[Justin Nabity, CFP] (34:33 - 36:39)

So yeah, I think getting track record, being able to see examples is key. And is this something that they have a strong history in and what is their team like? So that's a key distinction that you'll want to have that you'll use as you're going through and evaluating these.

And, you know, start small, start with something to begin with, get your feet wet, get familiar with the process and getting a K1 associated with the project and what that's like. And we find that this tends to be a snowball sort of thing. Physicians love real estate.

It's a hot topic. We hear about it everywhere. Most of us just want to be owning property of some kind and you do one and you get a feel for it and then do another and then more and more.

Going back to your question, should you consider this or when should you consider this? There's some core foundational planning steps you want to pursue first. And then once you get into the place where those things are nailed down and this is individualized for every physician family.

But from that point forward, you need to be in a position where you can afford the risk of a potential complete loss. Not likely to happen when you're buying real property because property usually is going to have value no matter what to some degree. There might be some loss in value for a period of time.

And yes, we've been in a challenging interest rate market. That's been something I think that's put a lot of investors on the sidelines being concerned about being able to find the way to make a deal work. And that's true for developers too.

It's been hard, but now it's opening back up a lot more. We've been consistently doing deals all the way throughout the COVID situation. We have a bunch of projects all across the country that we're doing right now.

And we usually have a series of them every year that we're doing. And so there's all those that are being completed, like the ones that have been invested in that are being built, launched right now. And we have all these in the queue lining up that are coming to us.

We're getting solicited opportunities to buy from all over the place. It didn't used to be that way. It used to be that we had to go scout these.

Now they're coming to us nonstop.

[Andrew Wilner, MD] (36:39 - 36:48)

And the key thing- That's something that you should self-congratulate. That means that people recognize that you're doing a good job.

[Justin Nabity, CFP] (36:50 - 37:27)

Well, we have an amazing team that does that. I don't head up that team. It's led by some amazing people.

And so the inflow, we're turning away. It's like 30 deals coming in. We do maybe one out of 30 deals.

And the numbers are getting higher and higher than that as far as what we say no to. Because there's some very specific criteria. We even had cases where we had all the money raised and we were about to pull the trigger on a project, but something showed up right at the tail end that was not good for our investors.

And we said no to it. So we're very obsessive about what the criteria is that we use to make sure that it's going to work for our investors as well as for the leadership team.

[Andrew Wilner, MD] (37:28 - 37:44)

All right. Two quick questions. We were talking about numbers.

So if I get all excited about this, what's the least amount of cash you need to take me seriously? And what kind of timeframe are we talking about? When am I going to see the return?

[Justin Nabity, CFP] (37:45 - 41:19)

So you're going to probably, like I said, $50,000 is going to be the lowest that we'll see. And that's pretty rare. $75,000 to $100,000 is more likely to be...

It opens up the doors. The more you have, the more options that you'll have access to. We have the lowest minimums for the types of deals that we're doing of any group in the country.

So that's very helpful. It is going to be a three to five year hold. And so it takes about two years to get this thing built and begin leasing.

And that's why they want us to get the property, the buyers of our projects, they want us to get to a place in time where the revenues and cash flows are such, where there's enough occupancy in these properties before they're going to want to purchase these. So it takes about, like I said, three years, a year or so more beyond that two-year mark, but it can take up to five, depending on the market and what's going on. There are cases where we're doing opportunity zones, which may be something that you've heard about.

But an opportunity zone is where you take capital gain dollars from an investment. It could be a stock, it could be a business that you've sold. Any money that you've earned above what you invested, just the gain portion of it can go into an opportunity zone.

And those are designated zones around the country that the governors have in their states saying, this is prime location that we want investor money to come in to rehabilitate, to expand. We want to just revitalize the area. And so they incentivize and attract money to come in.

And it says that we'll delay the tax that's due on that capital gain money. We'll defer that tax later. And if you hold the money for 10 years, if you hold that project for 10 years and don't sell out, 100% of that money is tax-free.

That's what I was talking about earlier with that beer company. They invested in a deal with us because they wanted the tax-free growth. And so we worked it out with them to have them invest.

I think it was all at the stake. They were the only investor in this project. And what happened is the return was so high from somebody who wanted to buy it early because they saw an opportunity to hold it and they bought them out early.

So that one is a 10-year hold to have a tax-free upside. And think about Roth IRAs being attractive for many positions, especially younger ones, all that growth being tax-free. This is the way to get the largest amount of dollars to grow tax-free because you can only put so much money into a Roth.

They're so small. You can put a little bit into a 401k or a 403b per year, but this is not very much. You can literally put huge tranches of dollars into these.

You can put millions of dollars into these and have them all grow tax-free. It's a fantastic tax shelter. But traditionally, most people will get into doing a three to five-year hold.

And let's say the market's not right at five years to sell. What do you do in that case if you were planning on it? You're hoping for, hey, I want to get out of this one to go into maybe a few others.

You might just need to wait a little longer and collect the income from the property because you are an owner of the property and you're collecting your income from it. And not to mention, because of all the depreciation earlier, most of that income you're going to receive at the beginning is going to be tax-free. So you invest, you have tax-free income coming in, return of basis essentially is what's going on, and there's depreciation that's taking place.

That's really where that tax benefit is. And then you have the potential for upside in the future.

[Andrew Wilner, MD] (41:19 - 42:04)

All right, Justin, I'm going to put the brakes on this because you have confirmed what I suspected that I don't know anything about. And I have a lot to learn that there's a whole world out there to learn about. And as you say, before people launch into this kind of investment, they make sure they got their foundation set up.

And if they lose their job tomorrow, they're still going to be able to eat and pay the mortgage before they start tossing $100,000 at real estate projects with a five-year timeline. That sounds like pretty good advice. So before we close, is there anything?

Yeah. So how can people get in touch with you? What's the best way?

[Justin Nabity, CFP] (42:04 - 45:45)

So best way to get in touch with me is you can just Google my name and Physicians Thrive. You can reach out to us through the website, email address, justin.nabity at physiciansthrive.com. And then one other thing I was going to mention to you is what we were talking about earlier, which is HR 10073.

And that is legislation in D.C. We talked about at the beginning, physician compensation being such an important piece of your life. It drives everything for you from a financial planning perspective. And for so many years, we've seen nothing but cuts to Medicare.

Medicare reimbursement just continues to slash. And it's like they celebrate that the cuts are less than they were thinking that they were going to be. But there's nothing to celebrate about that.

We should be up in arms about this. You think about all the professions that exist. Healthcare is in the top professions as the most important professions that exist for each one of us.

And yet we're treating physicians nowadays like they're factory workers. They're not the star player on the field like they used to be. In the 1980s, 80 percent of doctors were in charge of making decisions in health care.

They had their own practices. Now it's like 25 percent of doctors are in that direction. About 80 percent are pursuing employed positions.

So the decision making has been stripped away from physicians. It's been completely eroded as far as leadership in health care. That's why only 5 percent of doctors are in the leadership positions within health care.

Ninety five percent are administrators who have never been to medical school, have never seen patients. So I say all that because I'm very passionate about this problem, which is they continue to slash your pay every single year. All of your reimbursement is triggered off of the CMS cuts.

And I'm bringing this up because H.R. 10073 is a bill in D.C. right now. It's in committee right now. And there's over 200 congressmen who have supported this by letter.

You can Google it. You can see the letter, all the congressmen who are supporting it. It's left leaning Democrats and it's right leaning Republicans.

You have every flavor of a politician involved in supporting this legislation. And it's to reverse the cuts, get you some points back. And enough is enough.

Like I know we have a lot of transition happening right now, but the one place that should not continue to be diminished is the quality of health care. And I can tell you that I see firsthand from my own family and from my own situation, I've seen health care quality decline because I get so little time with my physician because they're only allowed to to do business for seven, ten minutes. Like, how am I going to get enough help to understand what's going on inside of my body in that limited amount of time?

The exchange of information can't happen in such a small window. And we can get back to more time with the patient if we start increasing pay for physicians. This is the one area that shouldn't be cut.

The facility fees shouldn't be increasing. The mid-level fees shouldn't be increasing while the physician fees are reducing. That makes no sense.

You are the star player. You're the most important person on the team when it comes to delivering care. And we should treat you like it used to be, where you were really handled with a white glove treatment that existed back then.

And we've just seen it change so much. So that's my takeaway here. Please go contact your congressman.

Ask them to support this. My congressman supported it within a week of me reaching out to him to get involved. There's so many things out there for them to support.

If you get involved, you reach out to yours, and you're the physician, they're going to respect your input. There's an easy way to do it on the website. You can fire off a request.

I did it for my wife and I together. And boom, like that, my congressman got on board supporting it.

[Andrew Wilner, MD] (45:45 - 45:47)

Tell me again that HR?

[Justin Nabity, CFP] (45:47 - 45:48)

HR 10073.

[Andrew Wilner, MD] (45:52 - 46:55)

10073. You can Google it. I think you're preaching to the choir, at least from where I sit.

And I think that's wonderful. And for those of you who are interested in health care policy, I've done a couple episodes on this program, transforming health care, one with a former congressman who was one of the authors of Obamacare, and one with a medical student who's quite interested in health care policy. And more recently, just a couple weeks ago, I interviewed a fellow named Dr. Mark David Monk, who also got very involved with health care policy. He was a volunteer in Africa in the Flying Doctors and saw the incredible health care disparities. But when he came back to the US, he was shocked at the health care disparities he saw back in the USA, having been away for a while. So it's a pretty important topic.

And I would also encourage everybody to reach out to their representatives and give them your opinion on physician compensation.

[Justin Nabity, CFP] (46:56 - 47:49)

If I may, one final thing. I have a meeting later today with a representative who is the one who helped, their group helped create the union at UIC for the residents and fellows. They had phenomenal results.

I met one of the founding four physicians that were a part of that committee that got that to happen, and he introduced me to the group that helped them get that going. And they saw dramatic increases and improvements in so many different respects. So if that's something that you're interested in considering or exploring, please reach out to me so we can have those conversations, because there's a lot that can happen for the benefit of patient care, as well as quality of life when, you know, burnout and stress and so many other things are rampant in health care.

We ought to get one thing right, which is moving us in the direction of reducing some of these burdens on your back.

[Andrew Wilner, MD] (47:50 - 48:02)

Justin, this has been a wide-reaching conversation, and even better than I had in my mind. So Justin Navity, thanks for joining me on The Art of Medicine.

[Justin Nabity, CFP] (48:03 - 48:03)

Thank you.

[Andrew Wilner, MD] (48:04 - 50:18)

And now a final thanks to our sponsor, locumstory.com. Locumstory.com is a free, unbiased educational resource about locum tenens. It's not an agency.

Locumstory exists to answer your questions about the how-tos of locums on their website, podcast, webinars, and videos. They even have a locums 101 crash course. At locumstory.com, you can discover if locum tenens make sense for you and your career goals. What makes locumstory.com unique is that it's a peer-to-peer platform with real physicians sharing their experiences and stories, both the good and bad, about working locum tenens. Hence the name, LocumStory. Locumstory.com is a self-service tool that you can explore at your own pace with no pressure or obligation. It's completely free. Thanks again to LocumStory.com for sponsoring this episode of The Art of Medicine. I'm Dr. Andrew Wilner. See you next time. the University of Tennessee Health Science Center, Memphis, Tennessee. Views, thoughts, and opinions expressed on this program belong solely to Dr. Wilner and his guests and not necessarily to their employers, organizations, or other group or individual. While this program intends to be informative, it is meant for entertainment purposes only. The Art of Medicine does not offer professional financial, legal, or medical advice. Dr. Wilner and his guests assume no responsibility or liability for any damages, financial or otherwise, that arise in connection with consuming this program's content. Thanks for watching. For more episodes of The Art of Medicine, please subscribe. www.andrewwilner.com