Discussing the possibilities and future at the intersection of healthcare and commercial real estate
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This week’s episode of the podcast features an interview with physician and business entrepreneur Cherry Chen. Cherry is a co-founder of The Real Estate Physician, a real estate investing business, in addition to her day work as a physician and hospitalist specializing in internal medicine. We explore her entry into the investment real estate market as well as a medical office building that her business and partners bought via an organic physician network relationship. She describes how she made the transition from passive to active investing and notes that she is constantly learning.
[3:38] What piqued Cherry’s interest in real estate investment
As a physician, Cherry felt like she only knew about investments related to her 401(k) or stocks. While many people feel like they intuitively understand real estate, Cherry enjoyed digging into it and teaching herself about the tax benefits and other advantages of real estate investing.
[5:07] Valuable insight Cherry learned from her initial real estate investment
Cherry’s first investment was as a passive limited partner in a multi-family syndication. She felt relatively uninformed about all the specifics, but it prompted her to do more research. Being a full-time physician, she did not want to be active in real estate. As much as an Airbnb sounded fun, she really wanted her investment to go to work without her having to think about it.
[6:17] Going from a passive to an active investment approach
The more she researched, the more she wanted to know how everything came together. When she was looking for something to do with her money, she decided to learn more about active investing. She enjoyed learning about syndications, and she began partnering with people as active investors. They currently have $1.1 billion in assets under management.
[9:18] The day-to-day dealings of managing properties
When dealing with syndications, it’s imperative that you form a cohesive group to make the most of the little time you have. While it is not Cherry’s role to manage the assets on a daily basis, she is part of the team and participates in asset management calls. They stay up-to-date on what is going on with the properties, what projects they are working on, the occupancy, and unit turnover. She does not consider the day-to-day management her forte, nor is it what she wants to spend her time on. Her role is more investor education and guidance.
[12:15] The due diligence and underwriting required for Cherry’s medical office purchase
This purchase was a triple net lease that closed in December 2019. It came through an organic relationship with another doctor. As they talked, they realized it would make sense for their investors who are physicians. It would be easy for them to understand the investment, and participating in the triple net lease was a great learning opportunity for the members who went into that project together.
The building was already owned, so it was structured as a master lease. As a group, they didn’t have to worry about writing it or finding the tenants. It was structured in such a favorable way: a master lease, personal guarantee, triple net lease, as a medical office building near UT Southwestern. It made a lot of sense as an investment for Cherry and her group.
[13:22] Investing with a group of physicians
Cherry is a physician herself, and she enjoys investing with other physicians. They have stable and secure jobs and incomes, and they want to invest together wisely.
[17:10] The geographic scope of Cherry’s investments
Cherry is from Dallas, TX, and they have a lot of properties there. Fortunately, Texas markets have been great as a lot of people and headquarters are moving to Dallas, Houston, Ausin, and San Antonio. They are on the right side of that trend.
Trends are also pointing toward Florida, Georgia, North Carolina, South Carolina, and Tennessee. They also have properties in those states. In order to make investors feel comfortable, you have to mitigate risks where you can. In real estate, this means choosing well when it comes to location and tenants. You want to be where there are a lot of jobs, people, and economic diversity. That is how you put yourself at the best chance of succeeding.
[18:34] Cherry’s first job
Her parents own a giftware manufacturing business, and when she was growing up and through college she worked alongside them.
[19:19] What Cherry would do for a living if she were not a physician
Cherry enjoys teaching investors and helping people sift through a lot of information to come to an informed decision, so she thinks she could have been some kind of teacher. In addition, she really loves anthropology and history and could have gone into social anthropology.
[20:20] What Cherry listens to and reads for inspiration
She’s always educating herself on real estate investing by listening to podcasts and reading all she can get her hands on.
[21:57] Cherry’s daily routine for self-care
She sleeps a lot if she can, because of her hectic schedule. She also wants to start working out again, as the pandemic disrupted her usual exercise routine.
[22:57] Whether the desire to heal is born or trained
Despite the fact that she believes there are certain people who are naturally suited for being a physician, she also believes that it comes with a great deal of responsibility and requires a lot of experience.
[23:33] Whether leaders are born or trained
Cherry believes leaders are trained, and this is something she continues to work on. If you have a platform and are sharing information with people, then it becomes more of a responsibility. You are a leader, even if you are still trying to figure things out as well. There are ways to train and to become more effective in this role.
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