Doctor Money Matters

Episode 23 Doctor Money Matters.

Eric Tait, MD MBA

Please excuse any errors as this transcript is machine generated by Google Voice recognition services. There has been no editing.

Welcome to another Doctor Money Matters episode. In this episode I talk with Eric Tait, MD, MBA, an internist and asset manager who started his own investment firm. We discuss why physicians need to achieve financial independence. Dr. Tait’s has a very well thought out perspective on the future of medicine and we talk about how he separated his financial success from the practice of medicine. Eric was influenced by his work for an insurance company while obtaining his MBA. This experience helped him realize how physicians are viewed as just another labor cost center. As physicians we generally don’t think about how we are viewed by the people who pay us. (Remember for most of us it’s not the patients who pay.) He then realized he had to become financially independent as soon as possible and developed a systematic approach to achieving this. We do this when doing a procedure or reaching a diagnosis and I think its valuable in the investment world also. Ultimately he chose to use real estate to achieve his goal of financial independence but he talks about how he analyzed different asset classes and arrived at this decision. We also briefly talk about his views on cryptocurrency and then how his fund works. Finally we discuss some of the successes and mistakes he has made as an investor. It’s great to see fellow physicians taking charge of their own financial future rather than having it handed to them. As always the discussion on this show is for your education and entertainment only and is not personalized investment advice. Please do your own diligence prior to investing in anything.

I want to thank Dr. Tait for being my guest on this episode of Doctor Money Matters. I hope he inspired you to analyze your own mindset about your investments and your financial future as a healthcare professional. Ultimately, I will still lean towards simple investment approaches but I enjoy learning about different options.

Eric’s company can be found at Vernoville.com and he just started his own podcast recently called The Physician’s Road. Please be sure to check it out. Please let your friends know about this podcast by sharing it on text, whatsapp or whatever social media platform you are on. More episodes of this podcast are available at www.doctormoneymatters.com and Apple Podcasts, Google Play, Stitcher, etc. All episodes are also now on YouTube (Audio only) and Facebook. You can follow me on twitter @drmoneymatters Please consider joining the Doctor Money Matters Facebook group. Thanks for listening and please leave us positive reviews and continue to share this podcast with your colleagues. Some other physician hosted podcasts that I recommend are: Docs Outside The Box The Hippocratic Hustle The Happy Doc Doctors Unbound The White Coat Investor There are many others, so please support your physician colleagues.

Transcript

Main Intro 

Intro Outro: 
[0:18] Welcome to another episode of Doctor Money Matters podcast and this episode I talked with Eric Tait MD MBA and internist and asset manager who started his own investment firm.

[0:30] We discuss why Physicians need to Achieve Financial Independence dr. Tate has a very well-thought-out perspective on the future of medicine and we talked about how he separated his financial success from the practice of Medicine.

[0:43] He was greatly influenced influenced by working for an insurance company while he was obtaining his MBA.

[0:49] He realized how Physicians are viewed as just another labor cost centers as Physicians we generally don’t think about how we are viewed by the people who actually pass remember it’s not usually are patients who pay us it’s the insurance company.

[1:04] Eric then realized he had to become financially independent as soon as possible and develop a systematic approach to achieving this.

[1:13] As Physicians we generally do this when doing a procedure or reaching a diagnosis for a patient and I think it’s a valuable skill to transfer over to the investment world as well.

[1:26] Ultimately Eric chose real estate to achieve his goal of financial Independence but he talks about how he analyzed the different asset classes that are available and how he.

[1:36] Came to real estate to achieve this goal.

[1:40] We briefly talked about his views on cryptocurrency and then about how his investment fund works.

[1:48] We finally discuss some of the successes and mistakes that he has had as an investor.

[1:54] It’s great to see our fellow Physicians taking charge of their own financial future rather than having it handed to them and I hope this episode inspires you to do the same.

Tarang Patel Do: 
[2:05] Okay welcome to another episode of The Money Matters podcast today is dr. Eric Tait the practicing internist in Houston Texas who also has its own asset management firm Asset Management.

[2:19] Eric welcome to the show.

Eric Tait Md Mba: 
[2:21] Thank you so much for having me I appreciate the time.

Tarang Patel Do: 
[2:24] You said I hope hurricane Harvey didn’t affect you too badly.

Eric Tait Md Mba: 
[2:28] We got lucky kind of an RN House in Houston or garage flooded came up to our door and then received it we were fortunate some of our neighbors ended up getting flooded and our neighborhood is close to Winter by you so it doesn’t usually flows in the streets but not,
into the home so we had some damage in the neighborhood and then some of the investment properties that we have we got very lucky because we have,
fairly spread out geographically in Houston and only one of the homes actually flooded completely but it had flood insurance was in a flood plain so I just got this just got the settlement from that and so we’re in the process of rebuilding that,
everything else is pretty much a fixed at this point.

Tarang Patel Do: 
[3:04] Wow.

[3:05] That’s that’s great because that’s I know a lot of people are going through some hard times they’re obviously Miami Florida and Puerto Rico so I’m glad to hear that you guys kind of you know we’re able to handle it and you guys got the insurance settlement quick that’s that’s awesome.

Eric Tait Md Mba: 
[3:19] We’re lucky but you stood still has a ways to go pee people don’t really realize it over a hundred thousand properties have been affected in some people lost everything and so the people are still donating please there are so many many needs an in Houston area.

Tarang Patel Do: 
[3:33] Unfortunately all these things happen simultaneously and right after the other and I I think people forget that you likely that a while the damage happened first it was a pretty significant amount of damage so absolutely Houston in the back your mind as well,
so let me ask your background tell me about your training and then what kind of got you into the financial quote.

Eric Tait Md Mba: 
[3:57] Absolutely sounds really from Mount Vernon New York suburbs of the city went to college in Atlanta at Morehouse College,
then came to Houston to the Dual degree program in MD MBA program at Baylor College of Medicine and Rice University then down to the coast in Galveston for residency at UTMB Galveston and then practicing internist and,
really it all started in business school when I take my first kind of accounting classes and really learn how the stock market works and Kyle,
we practice capitals of United States and it left me wanting and so I really want on a journey into really,
invest my own money that’s really why I went to business school wasn’t really any more complicated then,
and I was going to be a doctor my wife is a position and where we going to put this money that was going to ultimately benefit us as soon as possible and so it really wasn’t no more complicated than it really just.
A biology major trying to learn Finance Adam on the Fly.

Tarang Patel Do: 
[4:55] So you have the interest positions are notorious for not being very financially savvy so he went to business school concurrently with your training.

[5:04] To talk a little bit about what you learned there that gives you an advantage over the average position.

Eric Tait Md Mba: 
[5:10] Not so much Advantage I would say more reality check so my concentration was in Healthcare Management and Entrepreneurship and so one of the things that I worked on when I was,
between first and second your business school when you were doing internship as I work for a large well-known Insurance Company.
Back in the Northeast and I worked as a network medical director and actually got published doing some of the early paper performance trials and so this was a.
Summer 2001 and so if you understood where the tea leaves were you understood,
what was happening in medicine and so the biggest thing that I realize was that if it isn’t we tend to be in our own bubble and we tend to be a captains of the ship.
But to the outside world especially when it comes to resources resource usage resource allocation amount of GDP this being spent in our field.

[6:06] Our importance as a relates to the system is not.
Either understood or respected outside of medicine and that to me was the biggest eye opener and let me down the pathway of how I look at finances because.
I was going to be a position I’m going to college want to be a physician my uncle wanted same color as he was in position we have other family members that go back or Physicians and sold that did not change for me.
But the understanding that Physicians don’t control the system even though the system doesn’t work without us I knew that I couldn’t be financially tied to that kind of model which,
usually meant I had to divorce my financial life.
To my professional life and that’s not something the most Physicians have ever historically had to consider and one that ultimately because we’re not training it could be very disconcerting.

Tarang Patel Do: 
[7:00] Absolutely so this is a very interesting mindshift that position now are really starting to feel a little bit more but you had this realization probably at a much earlier stage is it most of us do because like you said.
What’s the weather so focused in on getting through the medical school part getting through your residency and you see that it’s sometimes hard to grasp the external factors that are occurring outside of of your little Silo that you’re in so.

[7:29] Once you realize that this is the new reality for Physicians of the whole.

[7:35] Were you in your career and what kind of steps could you take at that point.

[7:40] To what you said you divorced the financial aspects from the reality that you discovered there.

Eric Tait Md Mba: 
[7:46] It was pretty,
early on in so I was fortunate that I had mentors early on and between my first and second year of medical school we had a lot of collective time so I didn’t elect it with a community-based position next week I meant or mine I actually went to practice with him for many years I had a residency and,
I watch basically his life trajectory and kind of how would that unfolded always with a backdrop in the back of my mind understanding that okay,
he was a pretty good life but I see these forces that he can’t control that are around him and the greatest thing that.
Physical gave me what’s an understanding of systems right systemic thinking when it relates to just.

[8:27] Providing services for people and the biggest light bulb was really the understanding that.
If your client patient whomever is not the person paying you then the market itself everybody wants to know about Maroon forces.
Then the market doesn’t really matter because the people who are the beneficiary of your service don’t determine your value which is worth what it is in any other business,
and that’s why I tell people medicine is not a business at best it’s an indentured servitude because as long as you’re in a third-party payment model someone else is always in a determine your financial worth and someone else is going to determine how you practice.
And so most of us went into medicine with very idealistic.
Ambitions and in points and it’s not just about the financial side it’s also about the actual how we practice and how we have to take care of patients is really dictated.

[9:22] Through finances to the payment model and so understanding that and,
getting early introduction to that as a med student always let me understand as I was going to training I always watched what was happening,
on the insurance side on Medicare side on the Medicaid side because I knew was going to have direct impact on how we were going to ultimately practice.

Tarang Patel Do: 
[9:43] Let’s talk about that because the early on so what kind of steps did you take maybe while you were in residency or you know when you first got out.
To ensure that you would not be necessarily tied to his practicing medicine as the way you’re going to make money the rest of your life.

Eric Tait Md Mba: 
[10:02] So what I did was,
during business school I went on a quest for what I say business models so what business models out there could,
keep me financially stable while being a position I meant to say his medicine is a jealous mistress most of us don’t have a whole lot of extra time.

[10:21] If we’re going full-bore in the practice and so you know,
I had to look at and figure out okay if that’s the same I’m practicing hundred percent of my time 60 hours a week my wife and I what ways could we invest and make money.
In that process so we went down the stock trading side of things right but I just come into the school so I had to learn kind of how the stock market works and realizing that underline Market fundamentals of business,
does not determine stock price then you learn about the capital asset pricing model and you learn about all the in efficiencies it there there that really emotion.
Rules just as much as our company’s actually doing and sector rotation and what money. Money is moving into what sectors and how that moves the market so to me that you were actually didn’t make a lot of sense to put a lot of my wolf there any look it okay.
What about franchises and things of that nature but if you look at some of the,
major franchises if they have a lot of initial net worth and then used to spend a lot of time figuring out and being in there so I won’t name brand names but many of them have their own schools and universities that you have to go through like while after I can work,
and so then I just said okay where in the world is most of the wealth held and so for me the easiest and lowest hanging fruit was just real estate in so I had happened to buy a condo when I was in medical school and then I just said well let me just write it out while I’m in residency,
and once you get that first check that you don’t actually have to work for it’s very addicting I should say and so,
once you begin to get paid without you having to constantly put your labor in and don’t get me wrong we work hard and trying to find project in those kind of things but when you can get paid.

[12:02] And you don’t have to keep putting in labor inputs for on consistent basis at least that is a full-time have a job.

[12:09] Completely shut your mind and so then I went to search for things where I could either leverage my medicine degree.
Vino, physician that allows me access to these particular projects that will generate income or,
hey what other kinds of businesses and what real estate released have two things can I invest in that are going to generate income without me having to physically do that work on a consistent basis and so it really just do with a two bedroom one bath condominium but I want to listen to.

Tarang Patel Do: 
[12:35] Okay the real estate freshly single family homes or condominium things like that is a pretty common for people to think about as alternatives to stock market investing and traditional equity.
But then you mentioned something else I things interesting you mention what you could do as a physician what kind of access that you had as a position.
Tell me a little more about that because anyone can get into traditional real estate investing.

Eric Tait Md Mba: 
[13:01] Let me do the Caveat Emptor on the front end so many physician projects.
Where the dumb money in the deal meeting the you know that the dumb doctor deals right out that the good the greatest thing I’ll be honest with you the greatest thing about business school was learning income statement balance sheet and cash flow state.
You don’t need to go to business school to know how to read though so you can basically get it off of YouTube but.
I don’t want doctors to run headlong into doctor deals right that just there’s more money lost and probably nothing else in the world but there were the ability to leverage when I like to say is leverage our labor.
Because I like to divorce my life doll from my labor which is why I like passive income.
But if we’re going to be Physicians there ways that we can move up the economic value chain it’s hard or nowadays than it used to be but when I had the ability to invest in the main hospital where I was practicing and I did this when I Lewis first got out,
looking back it was the greatest deal in the world,
but it did give me ex back brakes give me some of the things that were beneficial and gave me some experience as well so,
being a physician at the hospital or we have the ability to invest in that facility in based upon the original management team and what their plan was which they were able to accomplish but based upon the plan,
I was willing to take that risk now I’m not saying go out there and then invested Hospital especially full-service acute care hospitals near Capitol sucks in terms of the amount of capital they need to keep running but,
I was early in my investment World they gave me experience to understand that and so that was put on to my experience resume.

[14:33] There was an insurance plan that came into the city they wanted to party with Physicians which allowed us to sit at the table and see the money come in from,
it was a Medicare Advantage plan to be able to see the money come in and filter through the plan and then be distributed and so we had a direct hand and being able to create our own networks and,
that wasn’t. That’s probably the best investment I’ve ever made in my life in all honesty in terms of the total return that I’ve gotten to the amount of money we put in and so,
I was going to see those patients ID way I was still going to send the patient to the hospital I was going to do anyway I looked at project that did not change the way that I practice medicine.
To try to lever up my ability to move up the value chain now I was not one brought in new service lines into the practice just to make more money I don’t like changing my practice patterns,
Revenue say I don’t regret anybody else who does that as long as they’re within guidelines but anytime you have the ability to take the labor you’re already doing,
and because as Physicians where the bottom of the food chain economical we get what’s left over after everybody else is eating at the trough in all honesty.

Tarang Patel Do: 
[15:40] Going to a little bit more about that because I think that is a difficult concept for most positions particularly ones who are just fresh out of training or entrained understand so tell me a little bit more detail about the.

Eric Tait Md Mba: 
[15:52] Since they were labor now we have a professional code we say an old I mean there’s all those things right but ultimately at the end of the day we are labor and we are labor and the people who Avail themselves of our services do not,
so that means there’s a massive disconnect because we do not control the dollars that flow into the industry so if you’re a business person you control the dollars that flow into your company we as Physicians no longer control the dollar is it fluid that’s,
our predecessors control those doubts and the abuse that the government,
in private insurers took the persons away from positions we’re never getting the person’s back right and so because of that.
We will pay labor but we are laboring on the list and especially as we think about these payment models in the future they are not going to revolve around 3 for service and so if we’re talking about a bun.

[16:41] I mean you know Cole Global Capital payments are Global Payments that surgeons get that’s a form of rationing right as form of economic rest so.
Listing the ACO models the acos and money comes into the system and then it filters through and if there’s anything left over at the end then that will get kind of distributed.
Well imagine that old model across all of Medicine.
I’m hurt and I have no inside or knowledge of this but I’m personally convinced and if you look at the tea leaves then.
We are being pushed into employment models to better control our Behavior we’re going out to all pick teams were going to be on.
Each of the major cities are regions are going to team up with a large entity of some kind some of the movie physician run some of them will not be and the money is going to come in and fill out the top and then it would have to be distributed based upon some Valium system.
To take care of all the patients so it’s going to really move to a population base model I think.
I can’t tell you is going to happen tomorrow but ultimately the end we are just part of the team in that process we are not going to drive that process.

Tarang Patel Do: 
[17:45] Can you explain it very well I think that’s one of the toughest thing because as you said we all went into medical school idealistically to take care of patients and that’s the course what we still are doing.

[17:55] Traditionally we were AA much more.

[18:00] Valued part of the team not just financially and I think that’s being denigrated a little bit and also.

[18:07] The control aspect is obviously being taken away and I think that,
has contributed a lot to not just the financial issues that business in space but also a lot of it burn out that position to facing because that those powers and the control aspect is being eroded away,
overtime but I want to get too far along into into that bar because I have had other shows about that aspect but,
you basically mentioned it that’s why it’s very important for positions to achieve.
Financial Independence as early in their career as they can and and real estate is one way that you done it.

[18:45] Let’s talk a little bit about your experience as well as you found it burning Vlasic management your investment company what you’ve done with that and then some of the deals and things like that that you’ve done that’s part of that company.

Eric Tait Md Mba: 
[18:57] Absolutely and it’s not just real estate because we have other Investments as well really my mind it was more so one of.
Casual and I don’t want people to think that oh my god I’ve got to replace all of my income before I can be financially free that’s not the case I always argue it if I can cut positions basically they were closed by a quarter,
is replacing whatever that missed income would have been that you would reduce an epidemic of burnout,
immensely right so it’s not like you’re trying to replace all of your income because if we just could ratchet down the amount of work that we’re doing as Physicians you have a happy or populous of Physicians and I think that that would translate,
John a metaphysical level to a healthier Society because what did you say about society when it’s Healers,
are all disgruntled and more than half of them would would lie depression if they could and I also want to say on the real estate side real estate is just a means to an end right in the end there’s no magical quality to it the magical qualities about it is,
that there are,
tax laws written specific waste banks will give you 80% of the money to buy these assets and you can put your individual investment dollars can go further.
And the Natural Market forces of inflation help.
So if I can do the same thing with stocks if I do the same thing with bonds and there was a kind of know you that allow that then I’d be all in those things really it’s just for me real estate is the highest and best use,
the dollar to achieve income replacement.

[20:27] But if you can find a business to get into do that and you have the requisite knowledge of understanding how to evaluate that business,
and do that again I just think it really is the easiest thing right because all of us have a have a passing familiarity with it we’ve all lived in something that can be rented and so that’s how I started it was just you know I wasn’t,
a tech guy that say hey let’s go do DC stuff I was like well you know I can understand this want to do it so we just bought single family homes about small apartments,
12 to the downturn when people running from Real Estate.
That’s what understanding what you’re investing in is so important because during the economic downturn was The Best Time Ever to buy pretty much anything that had.
Solid economic footing Americans have to buy everything on sale except for Real Estate so,
we back at the truck now in hindsight I would have backed up the truck on apartment complex not on single family homes but you know hindsight is 20/20 and so we did single family homes apartments and then in roughly 20,
13 2014 and we just have to visit in college wanted to,
join us and see what we were doing and talk to Security attorneys today just all you do is look at ICC no University to make x amount of dollars which,
as Physicians it’s really not an issue that’s the whole accredited investor peace and we can go into that if you want to and,
we just decided to start doing larger projects because what I found was a larger project,
actually tend to be safer because you have more eyes on the deal any of us can go out there and buy a single-family home or condo or even a small apartment complex when you’re buying a hundred apartment complex when you’re doing a 300 Hotel.

[22:06] You got a lot of experts in the room looking at it to say hey,
what’s happening what are the numbers look like what are your contingency plans and so you have a built-in team of people who are already going to be looking over your shoulder in that process and so that’s really kind of the natural progression of most.
Real Estate Investors they start kind of only small individual things realize I don’t want a million rules to deal with an AC units in those kind of things I’d rather just be in a larger project that has better,
economies of scale so we just took that natural progression up and then brought in outside investors along with us but,
ultimately running real is how I invest my family’s money I just allow the people to come and join us on the ride.

Tarang Patel Do: 
[22:49] So you mentioned that you basically went from like a lot of people start out with single family homes smaller apartment deals in any has your acid-base is increase your own as well as outside investor you started getting involved in these.
Can you talk.

Eric Tait Md Mba: 
[23:07] Oh yeah I mean so we are larger apartment so I will say to have professional management at least in the markets that were in you need to have 85 units or hire someone even argue 200 but,
you don’t have to go that high and then also right now because real estate United States is,
pretty well fairly valued it’s not really a bubble but you’re not going to get a discount but if you’re looking for something to get a discount you have to buy something that’s crappy and you can fix it up we’re in the process of a major renovation on an apartment complex here in Houston.
And you know that’s that’s one model right and that just great tax breaks it has the ability to deliver that up but then you always want to be in heavy lifting kind of projects for me I didn’t,
also want to be just tied to the United States you know some people think investing outside the US is risky I would argue that having all of your economics,
eggs in one country basket one political systems basket and one currency basket.
Is it risky as well we started to look across the globe to see where we could invest that has basically the same,
laws around properties the u.s. does and that’s pretty common law countries and then also were on an earlier growth trajectory because in the end.

[24:19] You know if you’re only going to go for 5% return you might as well just by AT&T and get there for sand do in a call today if you want to get it higher.
Risk-adjusted return you’re gonna have to go into markets that are growing faster than the United States for us.
We wanted to get exposure outside of the us as well because we diversify across asset classes I don’t know what’s wrong and say hey I’m in the stock market here and then I like,
real estate and private businesses so I’m going to diversify in those assets across geographies and,
political systems and monetary systems and so,
so we’re in the hotel brought it down the Caribbean and we’re also doing Farmland down in Central America in companies in Farmland we try to spread our.
Assets.
Cross mini geographies and across many asset classes as long as we can own land and there’s a good cash flow stream behind what it is we’re doing.

Tarang Patel Do: 
[25:15] Let me ask you this because this is a tough thing for Physicians to be like you would mention earlier,
any deals for Physicians where you said dumb money but basically the capital and whether it’s a good investment or not we just don’t know really how to evaluate that,
so when you’re looking at mean and then you you’re adding another complicating factor which is.
Not in the u.s. necessarily which is I agree with you which is great for diversification of risk services and probably a much better chance to get a good return.

[25:46] How are you able to evaluate those kind of deals.

Eric Tait Md Mba: 
[25:53] It’s actually one that I’ve turned his head to let me turn it on his head then I’ll tell you how we do the evaluation process so.
If most docs if they’re doing the traditional boglehead or white coat investor those things there in index funds well 60% of the money that’s made.
And the S&P 500 is made overseas so by default you’re already invested overseas that’s number one,
more than half of your earnings coming over seas you’re already a foreign investor right many of these companies are not even domicile here anymore so people already doing it.
Do you understand if they’re doing it that’s number one number two.
There’s nothing that I invest in that I myself have not gone to either the country the place would have you multiple times to actually walk.
And B and spend and,
do parody market analysis there’s no project that I have myself and not walked and I’m not gone to that place and then in that place or have ties to that place,
in some way shape form or fashion and so I end up doing more to deal gence then the person who owns an index fun most of the time and I’m talking to investors I know more about the portfolio that they own,
then they know themselves because I went to business school stock market because I have to be well-versed in everything my investors are doing.
So when they come to me and say what what’s going on here what’s Happening Here I tell people all the time don’t put your money in anything that you can’t fairly value yourself.

[27:21] So you can’t tell me what price you’re paying for something why are you investing it that’s why I turn the Assumption on his head,
I can give the valuation pretty probably we do I can show you what the valuations are I do a,
an hour-long presentation to any investors to what it is what the inputs are with revenues coming from with the threats of it are would like to call a sensitivity analysis is so we’re looking at these occupancy versus so in the end.
I always tell people you’re going to know more about a product that you’re not even in then what’s probably in your own portfolio right now and that’s a coming up on me.
As a person putting the project together.

[27:58] To teach and I would say anybody who was asking for your money or anybody was saying hey yes you can come in and join us if they can’t give you that confidence,
it’s clear,
did you understand how it’s going to work and how might not work and what the threats are and what the opportunities are you shouldn’t be investing your money and I believe that for your 401k or IRA and all of those things.

Tarang Patel Do: 
[28:20] Pratt right that’s that’s a that’s a good answer I think you’re right.
Bad place to put your money in the stock market in index funds and I think it’s the best on average if you don’t want to have much to do with it and don’t want to do anything I still think that’s a good place to be but.

[28:36] I do think that most people don’t realize the risks and most people don’t realize what they’re holding it just kind of what they’ve been told to do so.
That’s very very good answer let’s go into a little bit more about your you mentioned you don’t just do real estate and some of what you do is what’s considered alternative investment what is the term alternative investment mean.
What place does that have in most positions portfolio.

Eric Tait Md Mba: 
[29:03] It’s actually an oxymoron statement right so historically anything that’s not.
Typically in a public market stocks or bonds is considered alternative but let’s think about that realistically okay so when I say we’re going to buy farmland for a home if you really think about it.

[29:21] That’s kind of real right it’s not all turn if it’s only thing that you know 5000 years ago the things that were talking about buying people bought.
I don’t remind stocks they were it’s really what I call the Wall Street indoctrination process right so they want everyone to think that just passively investing in these paper slips.
Is what’s normal and what is safe and that anything else that is not that is alternative and it’s risky.
And so it’s really a marketing play more than anything else.
In my estimation about how they set up in people’s minds the ability to continue to keep capital for themselves and not allow people to have control over their own capital and so pretty much anything that’s not.
Stocks and bonds.
Is considered alternative so we’re so I can go talk about Commodities we’re talking about real estate private Equity DC investing all those things are considered quote-unquote alternative now the ironic thing about it is.

[30:22] All the times to be able to invest in those portable Alternatives you have to be at a certain wealth or income status.

[30:29] And so interesting Lee enough and it’s and it’s funny the person just put out a tweet you also in case you’re not going to be touched great middle class vehicle.

[30:38] I got in trouble because that’s exactly what it is it’s a great middle-class vehicle because wealthy people don’t use it.

[30:45] And so from that standpoint the wealthy are all in all Targets right if you look at the tiger 21 club which is a,
professional investment club with branches around the country based in New York if you look at their allocation for the third they was in the third quarter.

[31:00] It’s 54% real estate and private businesses it’s less than 20% Publix.

[31:08] Can people with investable assets of 10 million or more.

[31:12] I’m so fancy look at and it’s 21. Com they looked at before the allegations and you know the really wealthy.

[31:22] Do not do what the middle-class and upper-middle-class do.
And that’s just a simple fact right so I’m you know I’m not that smart so I didn’t do it real with people do right I’m just going to I’m going to I’m going to marry their asset allocation and for me it’s so far as work.

Tarang Patel Do: 
[31:38] Okay so let’s go a little bit into that because it’s bad for you,
what’s a I’m a couple years out in a primary care field making by middle-class income is obviously not delete level money.

[31:54] I still think that investing you know in your 401k and things like that for the tax purposes is a good idea what point should I start looking into these alternative quote-unquote alternative Investments to be made but maybe.
They may not want me because I’m not quite at that level yet so how do I look for these things obviously your company is one but how do I look for these things and what.

[32:18] Time for me to start investing in.

Eric Tait Md Mba: 
[32:21] I Got This Were Meant to remind you guys are with your personal investment philosophy you got to figure out what you want your financial life to look like what do you want your resources in your assets to do for you,
you start there because I don’t we why don’t I don’t ever tell people what to do I can just show people what I do.
And give them a rationale behind why I do it and if it resonates with them cool come along we’ll see if you were going to get from a personal standpoint if you fit right we’re not going to fit personality-wise I can’t,
we’re not going to close so we can start there right what do you want to do because you can’t get somebody who grew up.
Either working class or lower middle class we now comes into money so now money has a whole lot of connotations around it there’s a whole lot of psychological bags and if you have a spouse there’s a bag is on that side potential is well good and bad right,
and so ultimately it’s about going within yourself one trusting yourself I’m big on.
Potential investors trust in themselves and trusting their guts not.
Turning a raw we’re all very highly School professionals with decent amount of common sense of humor we are so I won’t be able to trust themselves first and foremost and then really sit and figure out what it is they wanted and if what they want.
Is not going to be accomplished by doing what they’ve been told to do they have to decide that if the ultimate outcome of that.

[33:48] Is psychologically scarring enough to want to change into something different because to do if it’s what we do we have to stand alone right.
I don’t have 401k I don’t have our break but they look at me like I have three heads and so you have to be willing to stand apart from everyone else,
to say you know what, that’s not the road I’m going right and so I don’t cuz you know I don’t know what he’s doing me so I’m not telling people.
But having a clear understanding what I wanted to do what I said this we have a baseline expense ratio in our household we’re not going to go above that if we want to improve our lifestyle then we’re going to have to buy assets that increase our income without us having to work harder.

[34:29] And so every dollar that was above that Baseline expensive just you know Pandora loans and pay our mortgage is it doing that.
Goes towards increasing our income.

[34:40] And that’s just our personal investment philosophy right so you just get the tax breaks we keep more money we’re going to generate income that’s just our philosophy start with a philosophy before you go to financial planner before you start doing anything.
Figure out what you want your money to do for you because people do the mental fallacy of of mental accounting that’s a.
Economic accounting fallacy you don’t have 401K money in 529 money in savings account and checking account you have a capital.

[35:12] And that capital is all the same you’re just categorizing two different things and singing a different job so it really doesn’t it’s all the same time.
And it could all do the same things for you now course you need to have a savings you need and I tow my busted you can invest with me if you don’t have disability insurance if you have kids if you don’t have term life insurance.
You must protect your income first before you can do anything else but after that it’s completely up to you.
It’s completely up to you and so that’s how I built my life and then.
I think every investor should do that before they do anything with your money is figure out what they want their money to do for them and what kind of Life they ultimately want to live how long do you want to be working how long do you want to be working full-time,
all of those things and figure out are you putting yourself in a vehicle that can make that actually happen or not.

Tarang Patel Do: 
[36:02] That’s I think that’s a great answer I’m it so it’s really important to get the mindset like that you describing before you do anything because,
most of us are just so you know if you come out you do your training you do your work and you save a certain percentage and blah blah blah and you know that’s it but you’re absolutely right.

[36:20] The thought process that you’re describing there is invaluable and I think that most of us would do well to really understand what we’re doing what we’re working for why we’re doing what we’re doing.

[36:32] Before we just commit ourselves to career of doing that and just kind of blindly following it so I really and I like the way you described that because if I listen to take one key points from this I think.
Think about what you doing while you’re doing it how you’re doing it and where you want to be I think those are the things that you describe that you know.

[36:52] Key to financial success successful life and in it and many with.

[37:04] Where to buy listeners event people I like.

[37:08] Been talking about recently and that’s all this talk about.

[37:17] Appreciation of cryptocurrencies what are your thoughts about that.

Eric Tait Md Mba: 
[37:22] I have not studied it in-depth so let’s start there so I don’t like acid have a super informed opinion but I always try to look at,
the world through principles right and so specific principles and things of that nature I have different thoughts around cryptocurrencies based upon what someone is trying to accomplish with them right,
I believe they’re probably great trading Vehicles you can trade them kind of like a quantitative Trader on price action so I think they’re great for that I don’t think that they’re,
a long-term investment and my rational around that is there’s really no limit to how many cryptocurrencies can be created,
so you have no natural Supply breakpoint that I like to see an investment I like to invest in things where there’s an increasing demand,
and a decreasing or static Supply and I just don’t know enough around like I’m talking to a friend who’s a minor and he says essentially blockchain and Bitcoin are.
Have to go hand-in-hand.
I’m not convinced of that necessarily I don’t know blockchain technology has to but he’s an expert more than I am so he tells me that then I may have to go with it but when I see all of these big companies saying that they want to create,
platforms and the issues computing power which you know if we know what is Moore’s law so all I need is,
a ton of network computers around the globe and a power that I can create a same kind of model then it’s like okay there is no natural breakpoint.

[38:51] I don’t see it as a worldwide usable currency usable money because money has some very specific characteristics.
Baby won’t go into here but one of them being intrinsic value and so there’s no intrinsic value their of any kind whatsoever and so I think it’s perfectly fine to trade the stuff.
And just speculating it but in terms of just putting it and setting it up for getting it I don’t really believe in any setting and forgetting it unless you’re getting paid on a cash basis so I don’t even believe instead of getting it for stops right.
What was someone real estate but even then you know we can get paid to write out dips so.
From that standpoint I don’t think it’s an investment I don’t think it’s money I think it can be currency and I think it can be traded.

Tarang Patel Do: 
[39:34] I agree with you in the sense that I don’t invest in myself I don’t have a very strong understanding of that I understand a Bitcoin the currency itself has some theoretical limit but I just can’t see why there is.
Bitcoin or one of these above.

[39:55] Each other and so I’m sure you were a newer cryptocurrencies will probably have additional features and and so I just don’t see the inherent value of a yet I like the idea of a decentralized currency and and digital.

[40:09] Transactions but I just don’t see that one of these has a dominant.
Position but like you said it can be traded people who have bought it the last few years I’ve done incredibly well but as far as long-term goes I I just have no idea what.
The future hold in terms of cryptocurrency.

Eric Tait Md Mba: 
[40:24] Yes hopefully hopefully doesn’t have made money taken in one of the table and they’re just playing with house money.

Tarang Patel Do: 
[40:28] I put agree I would agree with you should totally about that go to Alaska I want to talk a little bit about your your phone or your asset management company Burnsville.
Since you.
Started it you started it in 2007 as a private investment for you and your wife and then you open it up like you said later to outside positions your colleagues what kind of performance have you had since since you opened it up to other investors.

Eric Tait Md Mba: 
[40:58] Turn outside investors most apart that we have done at this point in time have been kind of either new bills or renovation projects so the returns are mostly going to be capital gain wise and so it’s not you know.
I don’t discount capital gains but we tend to lead with cash flow in terms of what we put out there and so I would say it’s a hotel project for the early investors were probably up.

[41:23] Unknown 35 40% on a capital gains basis so that’s probably 12 to 14% from that standpoint if we count the little bit of tax laws we’ve been able to give just from appreciation,
maybe a little couple take higher than that on our apartment projects what capital gain standpoint I would say,
I so I so don’t tell me all the games I have to go back on a tax basis is not a 27% return last year just from the tax law cereal to give from that standpoint,
and then we just don’t need the farm farm fun and so we have had our first harvested with that so that nothing there that is open Maybe,
two or three months ago.

Tarang Patel Do: 
[42:08] Okay it’s our people investing as a you know just as a set amount into vernonville and then divided up or are they investing in individual projects with in Burnsville.

Eric Tait Md Mba: 
[42:20] Great question so,
right now because we’re relatively early and I’m not asking for that much trust for my investors shit we are not doing what would be considered a semi blind where the money just comes in the road enville and then I allocate it as I see best that’s,
yep. That’s a lot of faith now granted that’s what people do with mutual funds but we won’t talk about that,
no actually invested get to choose so we create actual Vernon Hills the management company,
are there actual individual investment funds under a grown adult so you get to decide yes hey I want to be in that hotel project I don’t want to be in the farm yes I want to be in the apartment so people get to choose what they’re in so,
it’s very much a menu can say yes this no yes,
kind of situation so you know exactly what you’re investing in I don’t have that much latitude in terms of taking the money and saying we’re going to X Y and Z we do you know in a min max raise on a very specific thing.

Tarang Patel Do: 
[43:12] And also on the flipside let me let me ask you this what’s.
What is a financial mistake whether it’s a stock trade or a real estate Investments that you learned something from the sky changed your philosophy of worship.

Eric Tait Md Mba: 
[43:29] Got how long do we have Okay so,
the hospital project that we didn’t put a fun together that was my money into a project I learn about Capital efficiency and the lack thereof for in hospitals and big kind of projects like that and so you’re always going to be competing.
With dividends versus Capital capex are capital expenditures to maintain the facility so I learn to be,
to look at parties that had Capital efficiency in them in terms of what we’re doing from from a real estate perspective so not a lot of extra incremental dollars to maintain the acid.
Then we had a real estate deal didn’t go well no outside investor money this was my own money right.
peak of the market we were buying condos and we were using as kind of Personal Care Homes for people who are drug addicts or or mentally challenged and so that projects.
Couple of mistakes on that project one the person we’re buying from Pat’s of other Financial issues that cross collateralized the property with other projects and so as we were buying it he lost control of it was control of the insurance.
Our insurance went through the roof it just it just got crazy from that standpoint on the flip side the person who we were using as the,
manager to bring new clients in she wasn’t very reliable and didn’t have a good source of steady clients and so that let me understand from an operational standpoint one you need to control you need to control the hold of you from from outside,
so on the top side the bottom side is you have to have experienced operators if you’re going to be an operations type business so.

[45:07] Apartment complex really isn’t operations heavy,
hotel in Airbnb is operations heavy going into those projects you can make sure that your operator has a platform on which,
to really get clients through the door and then stock trade we invested in a private bank that was targeting Hispanic community in North Carolina right before the downturn so once.
Real estate dried up that make dried up got some soon to buy another again just wanted something I put outside investors in from that standpoint so I can go on days and days and days.

Tarang Patel Do: 
[45:39] Garibaldi.
Learning from failure is the failure then I think that’s an important trait in a investor.

Eric Tait Md Mba: 
[46:00] Absolutely and I will tell you I asked that question of of my prospective investors,
because they have to understand that they’re going to be ups and downs in this and so I’m very upfront I ask them what has been your biggest failure in your life and how have you overcome that because I’ve known as had a major failure I don’t want you in my prayers.
Because we’re going to have issues they’re going to come up right and I need to know how you react,
in the downturn right now you know how you’re going to ultimately be what is your temperament like and how you answer that question and so I think so anyone who knows me who’s invented knows that I ask that question back of a potential investors.

Tarang Patel Do: 
[46:34] I think that’s actually a really good point is bad we want to know from you but you also like you had mentioned earlier.
When you’re talking about developing that mindset that’s a question that you should definitely ask yourself before you do anything else but a little bit.

[46:53] For the average investor for every position what’s more important.

Eric Tait Md Mba: 
[47:00] Lori question pens on what they’re trying to accomplish in so if you got a in Ojai income-earning physician who loves their love their lifestyle and is an act like a cash-based business associate dermatologist or plastic surgeon. Grading come and they’re like well I’m really trying to set up for my kids and great-grandkids inside my state together,
and it’s going to be appreciation all day long,
and we would put them in a project and appreciation heavy project and if it’s the everyday person who hates their job and was like listening to get as free as possible and it’s going to be cash flow and so it really is,
you talk to me understand in my company is not about me and our projects,
it’s about the prospective investor what they’re trying to accomplish because often times we won’t have something at and I was at the referral into my friends were also syndicators and say hey this is what they looking for look at this call them they’ll have something for you because in the end it’s all going to come around,
and so that’s why personal investment philosophy and looking at your whole financial pictures a whole,
is much more important in trying to find a deal deals are ubiquitous right what what I would argue investor the trying to find is someone that they can.
Mentally Vibe with,
that is going to give them what it is they’re looking for in terms of help learning about finances and learning about those types of things to me it’s more important that you’re going to find someone that you can grow with.
Then it is to say pierce the best deal out there in this what I think the best product is and use the number this is a relationship game in the end,
what miners have is the ability to call me up on the phone and ask what’s going on and then also have my Rolodex at their disposal.

[48:37] And so that’s very different kind of situation then kind of sight unseen type of investing.
And so that’s why I would say it’s really about what you’re trying to accomplish and then you will then gravitate towards the projects that will give you that,
and the first nursing a cross with a p a financial planner or an independent person like me should be going through this with you to say listen what is this look like what do you want to do what is it where is it that you owe somebody want to be and then we’ll put you in the thing that does that.

Tarang Patel Do: 
[49:06] Good good I think that’s some great advice there outside of the financial World in your clinical practice and you’re also running Burnsville what are you doing.

[49:21] Do you have any free time.

Eric Tait Md Mba: 
[49:23] I want if I should tell on myself.
Right now I’m sitting in my pajamas looking out the window talking to you after I leave here I’m going to go exercise and then the next with my calendar what do I have less than I have a meeting at 6 so I see places one day we.
And then because I have income coming from multiple sources I don’t have to do investment projects to make money.
So I only do investment projects that move me and where I want to replace my money.
And so I don’t think I’m going to take one of the project for the rest of the year we’ve got a couple of friends are going to finish funding through the end of the year and then we’re going to.
2018 and a bunch of strategic plan and figure out what it is we want to do for 2018 so I end up having I’m busy but I’m busy based upon my own schedule I set up when I’m going to.

[50:13] For me the whole point of investing was to have time Freedom was it didn’t mean I was going to retire didn’t mean I wasn’t going to still work hard what it meant was I could structure my life in a way that I wanted to structure.

[50:27] And so that’s really for me I’m you know I have the ability to I was at my house when coming to bed weekend going on New Orleans from New Orleans investment conference going to see what’s going on in the mining and metals space and so,
I’m busy but I’m busy in the things that I want to be busy in.

Tarang Patel Do: 
[50:42] Awesome we’ll dr. Tate I think that’s where a lot of us are trying to get congratulate you,
for being able to achieve that in a very.

[50:58] Will definitely benefit from 10.

[51:01] Adjusting your mindset to thinking about where they want to be and how they want to get there more about you and Fernando.

Eric Tait Md Mba: 
[51:11] Oh absolutely bear with me cuz I know Hernando’s a funny name but I’ll spell it out so it’s easy to email me at Eric Eric,
at vernonville. Com in and let me spell that for you vernonville is V as in Victor he is an Eric r as in Robert,
it is a Nancy always an octagon and as in Nancy V as in Victor,
eyes and indigo Ellison Larry Ellison Larry and Eric. Com so going to go.com and you can go to run to go.com.
Or you can just Google my name Eric Eric tasty AIT I’m sure I’ll come up and married ways so easy and then if you want to call the office it’s one eight seven seven.
66833.
11 again +1-877-668-3311.

Tarang Patel Do: 
[52:05] Perfect links to your website your email on your phone number on the show notes so any of our listeners can just easily access apparel or like you said Google you as well,
I want to thank you Eric really great information great advice and we look forward to seeing what’s happening with vernonville in the future I’ll definitely come back and check in with you in a few months and see what what’s new and exciting up there.

Eric Tait Md Mba: 
[52:27] Okay well I appreciate the time hopefully this was been helpful for your listeners again we just try to try to add value to the world as much as possible.

Tarang Patel Do: 
[52:34] Awesome all right.

Intro Outro: 
[52:36] Okay thanks for listening to another episode of the doctor Money Matters podcast I want to thank dr. Eric Tait for being my guest I hope he inspired you to analyze your own mindset about your Investments and your financial future as a healthcare professional.

[52:51] Eric has a very well-thought-out philosophy and I appreciate it getting to pick his brain a little bit about how he achieve that philosophy so.

[53:05] Ultimately for myself I still believe lean towards simple investment approaches but I do enjoy learning about the different options out there.

[53:14] Eric’s company can be found at Vernon Vernon Ville, and I’ll put a link on my show notes and he recently started his own podcast called The Physicians road which will also be linked on the show notes please be sure to check it out.

[53:28] Please let your friends know about this podcast by sharing it on WhatsApp or any social media that you’re on.

[53:35] Again please join our Facebook group and Doctor Money Matters.

[53:39] And remember the show can be found on Apple podcast Google play Stitcher and YouTube now.

[53:48] You can follow us on Twitter at Dr Money Matters and on Instagram as well at Doctor Money Matters so thanks for listening please support all of our fellow physician podcasters including air right now.

[54:00] And leave all of his positive reviews on iTunes it really helps get us.

[54:06] How to move up higher on the iTunes ranking list so thanks again and another episode will be coming soon.

Main Intro