Tomorrow, November 20, is the night that WCI founder Dr. Jim Dahle will answer all of your questions about real estate investing and whether it’s the right asset class for you. Join us at 6pm MT for our free real estate investing live session, What Doctors Must Know About Real Estate Investing. That’s where you can learn about how to choose the right real estate investments for you, how to maximize your tax deductions, and how to avoid common mistakes that derail returns. Curious to know if real estate is a good fit for you? Join Dr. Dahle tonight at 6pm MT and ask him yourself!

Stocks have had a heck of a run the last few years, with 2023 returns of 26% and 2024 returns of 24% for US stocks. International stocks took over in 2025, earning 6% in the first quarter and 12% in the second quarter. Meanwhile, real estate experienced headwinds with a rapid 4% rise in interest rates in 2022. Direct investors have faced challenges with the prospect of refinancing variable interest rate debt at higher rates, and syndications have made desperate capital calls and have lowered projected returns. Even though the Fed has cut the interest rate by a combined 0.5% in the final few months of 2025, it’s no surprise that the appetite for real estate among WCIers and others is much lower than it was five years ago.

However, experienced investors know that FOMO should not be the motivation to invest and that the best returns often come from putting money in good investments after a period of more muted returns. If you’ve been considering an investment in private real estate, let me provide a little bit of experienced advice.

Recognize That Investing in Real Estate Is Optional

The first thing you should know is that this is going to take a lot more work than building a portfolio of 3-5 index funds across a few investing accounts. High-income professionals don’t have to invest in real estate, much less private real estate, to be successful. There are plenty of multimillionaires who have simple but diversified, low-cost portfolios. If there is something you find attractive about private real estate, such as

• High returns
• Low correlation with stocks and bonds
• Tax-free spendable income
• Other unique tax breaks

know that you had better value it enough to deal with some additional expense and hassle—at least when purchasing the investment and at tax time. You’ll be giving up some regulation and some liquidity and possibly even some diversification. You’ll be paying higher fees. It needs to be worth it.

Be Rich

My second tip is to be rich already. This is not a game for a novice investor just out of residency. If you’re still paying off student loans, you probably don’t belong in most good private real estate investments. It’s just a function of diversification and investment minimums. For example, if you want 20% of your portfolio in real estate, the funds you would like to use offer $100,000 minimums, and you think three is the minimum number of different fund managers you need for adequate diversification, that suggests you need a portfolio of $1.5 million before you get into this game.

Some might get there with lower investment minimums or a higher real estate allocation, but for the most part, this is a game played by multimillionaires. Private real estate is best used once you are rich, not to get rich. Some people try to get in “early” with undiversified portfolios managed by inexperienced operators. Guess how that works out most of the time.

More information here:

Comparing Private Real Estate Lending Funds

The 18 Downsides of Private Real Estate Investing

Be a Real Accredited Investor

Most passive private real estate investments require their investors to be accredited investors because these investments usually endure and pay for less regulation than publicly traded companies. The legal definition of an accredited investor is generally someone who has had an income of at least $200,000 for each of the last two years or has investable assets of at least $1 million. I find that definition inadequate. Here is mine:

1. Be able to evaluate the merits of an investment without the assistance of an advisor, accountant, or attorney AND
2. Be able to lose your entire investment without it affecting your financial life in any significant way.

Leveraged real estate properties can and do go to zero all the time. You need to have the ability to own enough of them that this doesn’t cause you any real problems when it does occur.

Know Where You Fit on the Real Estate Spectrum

In our No Hype Real Estate Investing course, I introduce the concept of the Real Estate Spectrum or Continuum. There are all kinds of ways to invest in real estate, but perhaps the most important thing is to match your method with your own level of interest and expertise.

For example, I think building a small empire of short-term rentals, especially when combined with locum tenens work, is the fastest pathway for a doc to reach financial independence. But it certainly isn’t for everyone. It requires some entrepreneurial initiative and some risk. It’s a second job, at least for a while. If you like liquidity and diversification and don’t mind giving up control, tax benefits, and returns, you may, like me, find yourself further on the right side of the spectrum. Others will be in the middle or even on the left side. Like when choosing a residency, the most important thing is fit. If you want a high level of control over your investments, you’re not going to like a real estate fund/REIT, whether privately or publicly traded.

More information here:

How to Start Investing in Real Estate

The 7 Worst Ways to Invest in Real Estate

Use Real Estate Investing Funds

I’m amazed at how many people choose an individual syndication as their first real estate investment. The typical minimum investment for a syndication is $50,000-$100,000. The typical minimum investment for a private fund is also $50,000-$100,000. If this is really your first time, why in the world do you think you’re better off with one property (like with a syndication) instead of a dozen (like with a fund)? Even if you like that level of control, are you really ready for it? How about you make your first individual syndication your fourth private real estate investment instead of your first?

Don’t Try to Shoot the Lights Out

One of the things that draws people out of a boring old index portfolio and into a private real estate investment is a pro forma that suggests the investment will deliver 18% returns. I would caution you AGAINST making an investment with a pro forma like that for your first investment. Potential high returns come from taking on a high level of risk. That might be market risk, development risk, the risk that the value-add plan doesn’t work out, a relatively high amount of leverage risk, or variable interest rate risk. Those risks do show up in real estate; just ask the people making capital calls in 2025 due to taking on a large amount of variable interest rate debt in 2021.

Why not take a little less risk with your first few investments? If you want to invest on the equity side for the tax benefits, why not look for syndications (or better yet, funds) that have a lower debt-to-value ratio and/or only fixed-rate debt? Maybe you only make 10% instead of 13%, but sometimes the return of your principal matters more than the return on your principal.

Better yet, consider investing on the debt side. For the life of me, I cannot figure out why more people are not interested in private real estate debt funds. Here are my own personal returns from this asset class over the last few years:

• 2017: 6.71%
• 2018: 9.13%
• 2019: 15.84%
• 2020: 7.61%
• 2021: 7.67%
• 2022: 9.47%
• 2023: 9.10%
• 2024: 9.92%

It’s had stock-like returns with way less volatility, secured by actual property in first lien position. What’s not to like? (The answer is tax-inefficiency if you must know, but at least there’s the 199A deduction.) The only question most people have when they see that is, “What happened in 2019?” The answer is that one of my private debt funds went public. Since its yield was much higher than comparable public investments and was similar to publicly traded funds, I figured the price would go up quite a bit as soon as it was listed. It did, and I sold it after a couple of months for a pretty nice gain, boosting returns for 2019 to higher than one should expect with a real estate debt investment.

You can also pick a fund that offers a little more liquidity than most, in case you find you really don’t like this stuff. With some funds, you’re on the ride for 7-10 years, but others will let you off after a year. Why not choose one like that for your first one?

Pick Someone with a Track Record

Few private real estate companies have a track record as long as I would like to see. We only have one on our sponsor list and in our portfolio that goes back to the 20th century. You don’t want to be somebody’s first investor. The White Coat Investor doesn’t offer a real estate investment vetting service. Companies pay us for an introduction, not a recommendation. But the longer they’ve been on our list, the more WCIers have invested with them without sending us enough complaints to take them off our list. That’s worth something.

There’s no guarantee an investment from someone on our list can’t go to zero (and they have), but if you’re just starting out, why not start with someone that you know lots of people have invested with for a long period of time? Our list has one company offering turnkey investments, one company offering syndications, and a bunch of companies offering funds (both equity and debt)—exactly where most private passive real estate investors should be starting out. I’ve had WCI conference sponsors tell me attendees told them, “I’ll see if you’re still here next year before I invest.” Most incompetence and fraud seem to show up within the first year or two of a company’s life. Why not skip that time period, just in case?

Do Some Due Diligence

There is a huge variation in the amount of due diligence that can be done on an investment. You can do background checks on all the principals, talk to all the former investors, call the auditor and go over the audit results, and fly out and walk around the office and the various properties. Most of us don’t do all that. But why not start with actually reading the Private Placement Memorandum (PPM), paying particular attention to the sections on risk, leverage, fees, and liquidity? The more of these you read, the better you get at identifying when a sponsor is inexperienced or taking on more risk than you would prefer. It doesn’t take long to Google the name of the company and its officers with words like fraud, scam, bankruptcy, conviction, or judgment. We all deserve the presumption of innocence until proven guilty, but it’s better to be surprised before you invest than after.

Go over the track record and ask questions about anything interesting there. Talk to other investors, either in person or online. Most of these companies have regular meetings for investors. Watch their webinars. While all of your real estate investing education shouldn’t come from sponsors, you can learn a lot from them. Make sure they have some skin in the game. While they don’t have to go broke if you lose money, you certainly want them to be feeling your pain. Search for and ask about them on online forums, Facebook groups, and subreddits like those offered by The White Coat Investor.

Diversify Your Real Estate Investments

Diversification protects you from what you don’t know and from what you can’t know. If you’re like me and you own 12,000 stocks via index funds, 12 properties probably don’t seem like very many. And two or three is nothing. Dozens of properties seem like the bare minimum to me unless you’re the only owner, and even then, I hope you get to dozens as soon as possible.

More information here:

You Can Dial Back Real Estate Risk

The Minimum Investment vs. Diversification Dilemma in Real Estate

A Tale of 2 Sponsors: How My Real Estate Investments Have Had Vastly Different Results

Sit Back and Chill

If you, like most private passive real estate investors, are investing in funds and syndications, the control is out of your hands once you have made the decision to invest. For years. You might as well relax. You’re paying all these fees so you don’t have to spend your time taking toilet calls and worrying. So don’t. These companies give lots of regular updates, but I really only want to hear from them when something is going wrong. Most of the in-depth or webinar updates are just sales opportunities for the next investment anyway. I don’t pay too much attention until it’s time for me to invest some more money.

Yes, I think they ought to send me something every quarter, but no, I’m probably not going to read the update for every investment every quarter. I don’t read the annual and semiannual reports for my index funds either. Read that stuff before you invest, not after. You can probably get the quarterly reports for a prior fund to give you a sense of how they will be communicating with you on the new fund.

Who Are Syndications Right For?

Those who haven’t invested in private real estate tend to call all investments “syndications” or “syndicates,” sometimes with some sort of negative comment about how they’re all scams sucking money out of you. But if you’re going to invest directly into real syndications (i.e., individual properties) instead of funds, you’d better have a really good reason to need to do due diligence at the property level and give up easy diversification. If you want to be invested in a dozen or two dozen properties at a minimum and you’re using syndications with $50,000-$100,000 minimums to do that, you’re going to need a pretty large portfolio allocation.

Private passive real estate makes up 15% of our 20% real estate allocation. The rest of our portfolio is invested in boring old index and index-like investments. As you can tell, we like our portfolio both boring and passive, so our real estate portfolio tends to look similar to our stock portfolio that way. Try to see the end from the beginning when starting in private real estate investing.

Interested in exploring private real estate investing? Make sure to sign up for the free White Coat Investor Real Estate Newsletter that will give you important tips for investing in this profitable asset class while also alerting you to new opportunities. Start your due diligence with those who support The White Coat Investor site:

What do you think? How did you get started in real estate? What does your due diligence process look like? Where are you on the real estate continuum?