Helping Doctors Invest In Apartments – Rajkumar Venkatramani

 

Why is it so important to have multiple streams of income? The founder of REIDOC Capital LLC has some insights into the diversification of income streams. In this episode, Rajkumar Venkatramani believes that when the stock market goes down, operating in a business outside of the stock market allows you to get through that market’s downturn. He also shares his journey into real estate and extends his expertise to help doctors invest in apartments. If you want to understand why you should need a secondary source of passive income, then this episode is for you! Tune in to this episode now.

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Watch the episode here

 

Listen to the podcast here

 

Important Links

• REIDOC Capital LLC
• Ethan Gao – Previous Episode
• Doctor Syndication School
• Rich Dad Poor Dad
• Coaching as a Leadership Style
• Freedom at Midnight
• LinkedIn – Rajkumar Venkatramani

 

About Rajkumar Venkatramani

Rajkumar Venkatramani (“Raj”) is a pediatric cancer researcher, oncologist, real estate investor, entrepreneur, founder, and manager at REIDOC Capital LLC. Raj went to medical school in India and trained in London, Illinois, and California. Raj has a master’s degree from the University of Southern California and an MBA from the University of Massachusetts.

Raj owns and manages several rental properties in Houston and has invested in multifamily syndications for more than 5 years. He has invested both as a limited partner and a general partner in more than 1200 apartment units.

Raj met his wife Gita in London. They have 2 children. They live in Houston, Texas. Raj is passionate about giving back and supports several charities in India.

 

Helping Doctors Invest In Apartments – Rajkumar Venkatramani

I’m excited about this show. We were in Dallas at a conference, and we saw our guest there.

We got to meet him in person.

We’ve known Raj for a while, but we got to meet him in person. He’s a lovely guy. We’re looking forward to the show. Why don’t you tell our audience a little bit about our guest?

Let’s dive right into things. I’m going to say his full name. It’s Rajkumar Venkatramani. He goes by Raj. He’s a pediatric cancer researcher, an oncologist, and a real estate investor. He is the Founder of REIDOC Capital LLC, where he helps his fellow doctors invest in real estate passively. Raj has invested in more than 1,200 apartment units. We believe this interview with Raj will be beneficial to high-income earners, learning why it’s important to have multiple sources of income. Thank you for being on our show, Raj. Welcome. We’re happy to have you.

Welcome, Raj.

 

 

Thanks, Ava and August. It’s my pleasure to be here.

Raj, let’s get right into things. Could you tell us about your background? Start in real estate, please.

As you mentioned, I’m a physician based out of Houston, Texas. I was born and raised in India, trained in the UK, came to the US for further training, and became a pediatric oncologist. I’m what we call an academic doctor, where my main focus is research. I mainly do research on sarcomas in children, which is a type of cancer that occurs in muscles and bones. For the longest time, that was my main focus. I didn’t care about anything else. Similar to everyone around the age of 40, you start thinking about, “What are the things out there?” You’re thinking about the children growing up, family, generational wealth, legacy, and those kinds of things. That’s what led my journey into real estate. I’ve been involved in real estate since 2017.

We’re going to get more into it as well. A lot of busy professionals who are high-income earners don’t even think about anything else. They’re just so busy with their profession and with their trade. They don’t even think about generational wealth or alternative sources of income. That’s something we’re going to get into more on our show.

 

 

Raj, as you’ve invested as an LP in the past, maybe you could let us know when you realized you could invest in syndications and also share with us some of the questions you had initially.

Traditionally, our focus for wealth building generally is saving. That’s how our parents have taught us. Save as much money as possible. When I came to the US, the only things I knew were the 401(k) stock market and those kinds of things. Around 2017, I didn’t spend a lot of money. I save a lot of money. I hate debt. I pay off my mortgage twice the amount required every month because I’m from India, and we hate debt. That’s how we are bought up. You should never have debt in your life.

In 2017, I started looking at my net. At that point, I was six years out of my fellowship. I’m not spending much. I’m living like a middle-class person, and my net worth isn’t increasing. Everything is in the stock market. What happens if the stocks go down suddenly? I thought, “I need to diversify outside of the stock market.” That’s how I started thinking about real estate. I was very busy. My kids were small. My wife was working in a different town. She’s also a physician. Being active in real estate was not an option for me at that time point. That’s why I started looking into passive investing in real estate.

 

 

I came across a physician education website that talked about real estate syndication, and there was a company advertised on that website, so I called up this company. To be honest, initially, when I invested, I didn’t understand it completely. This physician website recommended this company. I wanted diversification, and I called this person. I could not wait to get out of the conversation because it went on for about an hour.

I remember driving my kids to swimming, and I was talking at the same time. I said, “Fine. I want to diversify. Here’s my $50,000 check, and set it out.” That’s how I started. Every year since then, I’ve been investing passively in real estate, but every time I learned more about real estate. That’s how I gained more knowledge about passive investing and how powerful it can be, especially for busy professionals, high-income owners, and those kinds of things.

You find this interesting, Ava, but let’s focus on your initial communication. You were at a juncture in your professional career in your life when you were looking for other sources of possible income, investments, or diversification. You researched online and learned about an educational course through physicians that provided these passive investment options in real estate. You connected with this investment group that they suggested.

You were on an hour-long call learning the basics, but you made the decision to invest, but you don’t fully understand how that business operates or the mechanics of real estate private equity. Why did you still decide to invest even though you didn’t fully understand the company, and your relationship with that sponsor, syndicator, or investment firm was not cemented for a long time?

Like many of my investors currently and my colleagues and myself, it’s based on the trust of the website. The physician who ran the website recommended this company, so I trusted that person. I thought he was knowledgeable. That’s what made me invest. It’s more a recommendation from this person and physicians. In general, if some other physician recommends something, they trust them more. I was in the same place. I said, “This physician who knows more than me is recommending this company, so it must be good.” That’s what made me take that initial step.

That makes a lot of sense. Raj, quick question for you. Have you invested in a single-family other than your primary residence?

There’s one on my records. I had three houses in the past. I didn’t want to deal with tenants, toilets, and termites, so I sold them. Those would have been perfect houses. For example, my wife lived in a different city, so she had a house, and I had a house, but we sold them. I hadn’t had a single-family or rental home until early 2022, when I bought a seven-unit property in Houston. Before that, I was an accidental landlord for about six months because one of my townhomes didn’t sell. I’m a typical novice landlord. Whenever they call me for something, I feel really bad and immediately run over there to try to fix stuff.

It’s the doctor in you that does that.

I didn’t feel it was worth my time to want a single-family home and take care of these things. Now, I have a property manager for the seven-unit property, but I still have to make decisions every day on some other things. Even though I’m not directly dealing with tenants, the decision fatigue is real. I have seven-unit property. They always send you something. Even though I’m not losing money on the property, I’m probably going to sell it whenever I can. I don’t want to deal with the issues.

Let’s go into the next question here. Maybe you can tell us about the advantages of multifamily versus single-family.

I fully believe in it. That’s why I’m doing that as well. There are a lot of multifamily advantages, especially for busy professionals like my colleagues. One we already talked about was they don’t have the time to deal with this tenant, toilet, and termites. Being an expert in multifamily, I tell my colleagues that this is like going to med school. You cannot just jump into it and become the expert. The people who do this have done this for a long time. They have a construction background. They have developed relations with brokers. Those things take time to develop. We are relying on those experts. We put our money in, but they know what they’re doing. We are relying on experts to conduct this business. It’s not real estate. It’s a business.

For me, the advantage of being a busy professional is you don’t have to deal with anything. You just review the K-1 statement once a year and then get the returns. Doctors, in general, tend to invest in three things from my point of view. 1) Diversification. 2) High returns. Consistently, multifamily has performed about S&P 500 or long term. Even during recessionary times, it has performed very well. 3) Tax advantages. When you’re a high-income professional, you have a lot of issues with taxes, and there are not a lot of places you can save taxes, but multifamily and real estate provide those advantages. Those are the three top reasons why physicians invest in real estate.

 

Cashflow as well.

Another one to that is that it’s backed by a tangible asset too.

It’s something they can feel and touch. Aside from the syndication part of it, differentiating single-family and multifamily, I’m sure you know about this, but the economy of scale of a single-family is not there. You have a tenant that moves out, and you’re at 100% vacancy. You have a twenty-unit building. If one of your tenants moves out, you’re at a 5% vacancy. Another advantage is about lower cost of management. Financing, in some bizarre way, is easier in commercial real estate than it is in single-family. At some point, you tap up, but in commercial real estate, as you scale, you can bring on key principles and loan guarantors. We had our past guest, Ethan Gao, who provides those services. I want to touch on that as well as far as the advantages of multifamily and single-family.

Here’s one thing in that I was talking to a potential investor. When you start off with one single-family, everyone feels good. They buy a new property, whatever it is. The tenant is good, and the rent starts coming in. When they go to the 2nd and 3rd, that’s when they realize how much work it is, plus they started seeing some tenants not paying rent. As you said, if you have one bad tenant, the cashflow for the whole year is gone. You’re not making any profit. It may take 2 to 3 years for you to recover from it. Those are the typical things we don’t see in multifamily, so I completely agree with that. It’s a higher risk if you have a single-family, and it’s very difficult to scale.

When I started out, I said, “I’m going to buy ten houses, one house per year.” Ten dental, and then I’m going to retire based on it. It’s like I’ll get $10,000 per month. It didn’t work out that way, and finding out something which works is very difficult. It’s a lot more work than what I’m doing now with multifamily.

Some high-income earners are reading this and saying, “I already make a lot of money. Why do I need a secondary source of passive income?” What do you usually say to them?

A couple of things. For doctors, in general, people think they’re wealthy. It may not always be true. They’re high-income earners, but that’s not equated to wealth. You are exchanging time for money. If you work, money comes in. If something happens and you’re not able to do your work, what’s going to happen next to you? You don’t have that exchange of time with money. The majority of physicians understand that inherently, and there is always a worry. Even though they are earning a high income, it may not be sustainable.

Doctors are high-income earners, but that does not equate to wealth because you only exchange time for money. Click To Tweet

The situation in the US in the last few years was that people have realized that there’s been a lot of cuts to reimbursement for doctors, especially. The reimbursement hasn’t kept up phase with inflation. That’s another worry because this high income is not sustainable for the long term. That’s another reason for looking at other passive income.

On top of all those things, COVID-19, when it happened, has put so much stress on the healthcare system, and everyone has started rethinking their priorities. When they’re young, the doctors usually don’t think about dying, but when COVID-19 comes, there is a real possibility you could die, and you start thinking about, “What’s going to happen to my family and my kids?” It’s those kinds of things. It is important to bring in these other streams of income as an insurance policy.

You don’t want to be stuck to your work because you need that money. That’s what I tell my physician friends. You want to be a physician because you love it and you want to serve the patients. Money should not be on the back of your mind saying, “I need to do this because I need the money.” You’ll not be serving your patients. Having passive income releases you from those thoughts, and you’re able to perform well on your primary job, which is taking care of your patients.

Let me ask you something that came to mind aside from our questions. A few years ago, when we got started in this syndication space, a lot of people didn’t even know what syndication was. Even commercial real estate brokers who were in this space weren’t sure what syndications were, who are these syndicators, these barbarians who were coming in and buying these assets and bringing hundreds of investors. In the fraternity you’re a part of, in the cafeterias, in the communications you have with physicians, is it becoming more common to people know about syndications, or is it still a mystery?

There’s a certain proportion. They know about it, but it’s still a huge mystery among physicians because almost all my investors are first-time investors in syndication. I go to my colleagues, and very rarely, I have someone say, “I already have invested in multiple syndications.” A lot of my time is spent explaining what syndication is and educating them. It’s all a mystery to them. It takes time. I talked to some people, and it takes about six months for them to understand before they start investing. There are a lot of doctors who don’t know what syndication is. A lot of them think about real estate as a single-family rental. That’s what comes to their mind because it’s simple. Syndication is a mystery for most people.

Many doctors don't know what syndication is and consider real estate a single-family rental. Syndication is a mystery for most people. Click To Tweet

We’re going to get into the course that you’ve created as well.

It’s great for you to be spreading the word because you can help the masses by going out there, educating what syndication is, and then people can set themselves up for this alternative source of income. Raj, what is your advice to others who want to start investing in multifamily? Should they start investing as a limited partner first?

 

 

I always recommend investing in a limited partner first. That’s how I started, and most people start that way. I encourage them to learn more about it. You can only learn so much by watching videos or watching podcasts, those kinds of things. You have to be involved in it. Always start as a limited partner, and then you start seeing how it works and what kind of reports you get. You can interact with people, go to meetings, then educate yourself. It’s not appropriate for everyone, but if you want to get involved, then you can do an active space as well.

It’s not as easy as it looks. There are a lot of moving parts that go on. We’d love to know. Tell us about your why in wanting to start a real estate investment firm.

We mentioned your real estate investment firm earlier. Tell us about your why. You’re a super busy professional. Not just busy. You’ve passively invested, own real estate, and believe in the asset class. Now, you have a real estate investment firm, and you’re partnering with physicians and others. What is your why?

My personal why for investment is my children. I started off stepping back. When I grew up, I wanted to start a business. That was always my passion for it. The situation I was in, my family’s situation, this was the best path for my career, plus I like doing what I’m doing. That’s one thing. Most of the why was I wanted to show my children that there are multiple ways you can be because a lot of children of doctors tend to become doctors. I don’t know if you have noticed, but I want to show them that that’s not the only way. You can be an entrepreneur, and you can do great things as an entrepreneur. That is my personal why. I wanted to build wealth, legacy at a later time, and those kinds of things.

 

My children see what I do every day, and then they get into it. My daughter made a Canva presentation for REIDOC Capital and then sent it to me. It was funny. Single-family home says, “REIDOC Capital can give you this.” That was a topic. She is seven years old. I want them to see it. Here’s the other reason. It’s when I bought the seven-unit property in Houston. Everything that could go wrong went wrong in that. Part of the reason is they assume physicians don’t know anything, and then you can exploit them.

Here are a couple of examples. I have a seven-unit property. I went for the property myself. The realtor didn’t do anything about that. He sent an inspector he recommended. The inspector spent about three hours looking at the seven-unit property. I was with him the whole time. He sends me a bill for $3,500 for that inspection. I didn’t know anything about commercial real estate, so I asked my realtor, “Can you recommend a lender?” He recommended a lender who sent me a bill for $6,000 for appraisal, which I had to pay immediately for them to do that price. That’s a second hit.

The seven-unit is a detached house. The inspector said that one of the foundations was not good, and then the realtor got a contractor who told me it was going to cost $17,000 to fix this foundation. I didn’t end up paying any of those things because I got an actual foundation guy who said, “This is fine. I don’t know why they told you the foundation is not good.” This is just an example of what happens. As soon as they know you’re a physician, they assume you have a lot of money and start coming up with all these things. If you don’t have the knowledge, you get exploited.

My personal why for starting this firm is to help my colleagues, educate them, and be someone who can discern between good and bad investments for them. They don’t have the time. That is the value I bring. I invest my own money in all the properties we invest in so that they have the conference. I bring them along with my investments. That is my why for starting this firm.

Having gone through those difficult times, being an active investor makes you a stronger and more experienced GP to be there and support your investors.

That’s incredible, Raj. Please tell us about the course you have created for physicians, Doctor Syndication School. I would love to hear and learn more, and I’m sure everybody else would love to learn more.

This came out of the same thing. When I started this firm, I was talking to these investors. I usually have 30 minutes to talk to them, and it’s impossible for us to go through everything about multifamily. One of the missions for me running this firm was educating the doctors. I started seeing common questions they asked every time, and I felt like I didn’t have enough time to address those questions. That is one of the reasons for starting this course.

It’s 60 different video modules they go through in a four-week time period. Each module is 5 to 10 minutes. It’s not a half an hour thing because physicians are very busy. I made sure that it’s bite-sized pieces there, and then it can be completed in four weeks. At the end of four weeks, they will know how to assist the limited partner investment opportunity. They’re going to spend $50,000, $100,000, sometimes $200,000 of their money. I don’t want them to be like what I did the first time, which I didn’t know anything about, and then I just gave the money to someone.

 

 

How did that deal go?

It worked out well. It got sold this 2022, but because I know more now, I did find some problems with the way the business plan was handled. Through COVID, everyone went up, so the deal went up. I’m happy, but it could have been done better. I know more now, so I can assess that. That’s the reason for creating the Doctor Syndication School.

I have a few more questions about it. It’s a four-week program. The main idea is teaching. Can someone who’s not a physician take this course as well?

Anyone who’s looking to invest as an LP can take this course. Not only video modules, but you also have worksheets, how to attend a webinar, what questions you need to ask in a webinar, what a PPM is, and what things to look for in the PPM.

Do you mean an investment webinar?

It’s an investment opportunity webinar. When people get this opportunity, the first thing they’ll attend is the webinar. I say, “These are the things they discuss in the webinar. These are the things to look for in PPM. What is an operating agreement?” We go through all those things step-by-step with real-life examples. We also go through actual deals we have done in the past and then go through how the deals are structured, why, and those kinds of things as well.

 

That’s very smart. What is the cost of the course?

It costs about $999 or $1,000 to take the course.

That was great. We got to know our friend, Raj, and all the stuff he’s doing. It seems like he’s a busy guy and is going to continue to be very busy. We love to watch him grow and bring him back on the show, but let’s get to the next segment of the show, Ava.

Let’s do it. The Ten Championship Rounds to Financial Freedom. Raj, are you ready?

I think so.

First question, who was the most influential person in your life?

It’s my mom. I lost my dad when I was ten, and she has been a strong person in her life. When we lost our dad, she hadn’t finished high school, then she went to high school at the age of 30, got new skills, and went to work, so she kept our family together. That’s why she’s one person who influenced me the most.

She’s my hero, too. How many siblings do you have?

I have one older sister.

What does she do?

She’s a software engineer back in India.

Next question, Raj. What is the number one book you recommend?

There are a lot of books I’ve read. I don’t want to go Rich Dad Poor Dad because that’s one that everyone recommends. The book I have read is not related to real estate. It’s, Coaching as a Leadership Style. That’s the one that has helped me the most with interacting with other people, those kinds of things. It opened my eyes to the things I’ve done differently in the past and how I can do them differently now. That is the book I like the most.

Thank you for sharing that. If you had the opportunity to travel back in time, what advice would you give your younger self?

Start in real estate sooner in any form or the other. You don’t have to do multifamily or large-scale stuff, but from the beginning, as a young person, you should start in real estate as soon as possible. That’s what I tell my son, “When you’re eighteen, you’re going to buy something.”

 

That’s your goal. Next question, what is the best investment you’ve ever made?

My education is the best investment I have ever made throughout my career.

What’s the worst investment you’ve ever made, and what lessons did you learn from it?

This is another story. I worked in the UK, saved a lot of money and came here. I opened a bank account, I went and stood in front of the teller. They look at my account, and it’s cash. They say, “Look at that person sitting over there. You should go and talk to him.” I didn’t know anything about it. “He’s an investment advisor. You go and talk with him.” He said, “You should invest. You’re 25. You have so much money. You should invest in this thing.”

I had no clue about investment. Whatever this guy says, I assume he has my best interest in mind. I put that money in, and it didn’t do well. The other thing I did is I looked at this Morning Star recommendation. They recommended, “Buy GE stock. It’s going to do well.” Those are two different investment advisors. I bought the stock at $38, and then six months later, it was $8. As a young person, I learned a lesson, so I’m not going to deal with these stocks and those things anymore. That was a good lesson to have upfront when you’re starting out.

Next question, how much would you need in the bank to retire now? What’s your number?

Do you want the exact number?

It’s a trick question. People answer it differently.

I can tell you I have enough to retire now because my expenses are low. I’m a simple guy. I don’t go out much. My requirements are minimal. If I need to retire, I can retire now.

The way some of our other guests answer it sometimes is that they see the total amount and what would be the residual income from that. Let’s say $50 million. What would that equate to? Other guests also talk about it is not about how much money you have in the bank. It’s about how much passive income you have coming in.

I didn’t know if it was a technical question. For me, when you grow up without enough money, it doesn’t matter. What I have is a lot of money compared to what I had before. I’m used to a lifestyle where you don’t have a lot of money. For me, the main reason is I want to get my kids through college. After that, I don’t have any expenses myself, so I have enough to retire now.

When you grow up without enough money, it doesn't matter because you have a lot of money compared to what you had before. Click To Tweet

Thanks, Raj. If you could have dinner with someone, dead or alive, who would it be?

My childhood hero. It may be a cliché, but Gandhi. When I was very little, I read a book called Freedom at Midnight. That influenced me a lot throughout my life. Everyone calls him Mahatma. He’s a great politician, number one, for bringing so many different people together and fighting against the British without violence. I would like to meet him.

You both were educated in the UK, so that’s interesting as well.

If you weren’t doing what you’re doing today, what would you be doing now?

I have very few talents, to be honest. It’s nothing about art or creativity. I don’t have any of those talents. I’d probably be hustling somewhere. I’m good at hustling or being persistent.

Earlier, we were talking to him. He won’t actually be a businessman, and he made it sound like he just fell into being a doctor and a specialist as well, but now he says that, “If I had a chance, I’ll go and hustle and be a business person.” The story about me is that my mom always wanted me to be a physician, particularly a surgeon. That’s what she always wanted. I wasn’t doing well in academics, so I’m like, “This is not going to happen, mom.” I ended up getting into real estate, but now I see a lot of doctors who want to get into real estate. I’m like, “Mom, look at this. You always want to make me a doctor. All the doctors want to be what I’m doing. Maybe, after all, I made the right decision.”

This is my favorite question. I love asking doctors this. Book smarts or street smarts?

My wife always says I’m street-smart. She’s much smarter than I am, but she’s always amazed at how I am able to survive with limited knowledge. She says, “You’re street-smart. That’s why you survive.”

There you go. Raj is street-smart. This is the last question, Raj. If you had $1 million cash and had to make one investment now, what would it be?

I’ll probably invest in my firm, REIDOC Capital. I have so many other things I want to do with it. That’s what I would invest in.

You would invest in growing the firm, not invest as an LP investor. It’s to reinvest it back into the firm the same way you’re invested in your education.

Yes, that’s what I would do.

That’s what I would do if I had $1 million as well. We appreciate you being here. Thank you for your transparency and for sharing all your journeys and your stories about your life. Tell our readers how they can reach you if they want to connect with you.

I’m on LinkedIn. You can search REIDOC or Raj. I will come up, or they can go to my website. It’s called REIDOCCapital.com. I have a free eBook for physicians which explains what passive investment is. They can get that on the website as well.

Thank you so much for being our guest, Raj.

Thanks so much for having me, Ava and August.