There are many paths towards financial freedom, but one sure-fire way remains consistent, and that is the path of real estate. Whether through active investing or through passive means, real estate is here to stay. In this episode, Craig Curelop and Zeona McIntyre discuss walking the path of financial independence with Christopher Loo, a financial coach, entrepreneur and doctor. Christopher talks about how he discovered real estate and his journey towards freedom, as well as what’s in store for the future. Learn more about becoming financially independent by tuning in today.
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Cracking The Code Of Financial Independence Through Real Estate: An Interview With Christopher Loo
I’m here with Z Money. How are you doing?
I’m great. It’s all good. You forget we are the same.
Your name doesn’t matter. Z Money is your new name. We are going to change it. We are going to go to the doctor. Is it the doctors you go to change your name?
It’s not the doctors but our guest is a doctor.
He’s going to shed some good information. If you are a physician or know anyone that’s a physician or wants to get a physician into financial independence, Chris has got an amazing story of battling the haters. He’s got a great story of getting started in real estate. He made an interesting switch from going into real estate to going into stocks. I thought that was quite interesting. What did you think, Z?
That is an interesting step because usually, it’s the other way around that people do stocks, get into real estate and realize they like it better. I always like seeing how people have different paths. I really liked Chris’ story. He has a lot of experience. He was so fortunate to buy at the best time and continued to buy throughout that period. He’s created impressive cashflow for himself. In his story, he talks about having to be brave, overcoming a lot of naysayers, and his community and family. A lot of that was inspiring.
This is another reason why I love how we do this show, Z. It’s because it shows that everybody’s story is different. There’s not one way to hit financial independence. There are lots of different ways. Chris offers a unique take, so let’s bring him on.
Chris Loo, welcome to show. How are you doing?
I’m doing well. Thanks for having me.
Chris, thanks so much for coming to the show. We have been looking forward to having you all in. Why don’t you tell us a little bit about where you started in your financial independence journey? Where did you first hear about financial independence?
I first heard about financial independence in 2002. Interestingly, I was born on the cusp of Gen X and Millennials. Back then, finances were important but the predominant way of thinking about financial independence was through a safe, high-paying, secure job. My parents are first-generation immigrants, so they pushed me and my brother to become doctors and physicians.
At that time, that’s what I excelled at and pursued. I went into the medical profession. It was interesting because in 2001, I was a medical student, and all of a sudden, the planes hit the World Trade Center, September 11. A lot of my friends opted to, right out of graduation, work for Wall Street and Silicon Valley. Right after that, I saw a lot of them getting let go.
That was my first wake-up call as to why a job is not very secure in this society. That’s when I came upon the book Rich Dad Poor Dad, and that was in 2002, and I started from there. I read that. I read Multiple Streams of Income, which is talking about diversifying your passive income streams. From there, it exploded. I have started investing in real estate and stocks and equities.
Interestingly, I was sharing with the audience that it was September 2008. That was the next crisis. I was a physician in training in my orthopedic residency training. I was miserable. I hated my job. I was so unhappy. I took a leap of faith and quit my soul-sucking physician career. I set out to become an entrepreneur. I was telling you that I became a millionaire through real estate and financially free eight years later through stocks and equities. That’s my story in a nutshell, and I’m happy to answer your questions.It's not the healthiest thing to push your kids into a profession, just for the sake of stability and jobs. Click To Tweet
It’s interesting that we hear these stories a lot from people of a certain age or from certain backgrounds whose parents are pushing them to be doctors and lawyers. You are lucky, you had the aptitude for that. Have you seen people that are not necessarily science-based? How does that work? Is it a big fail?
Coming from my background, what school you went to, where you’ve got your undergraduate degree, what degrees you have, and what profession you have been touted. Parents like to brag that their kids are doctors, lawyers, work on Wall Street. It’s not the healthiest thing in this world because now, we have an information-based age as opposed to an industrial age. A lot of these careers that we are seeing now are in artificial intelligence, technology, creatives, writing, author, speaking, also influencers.
These are careers that we did not see years ago. It’s not the healthiest thing to push your kids into, say, a profession for the sake of stability and jobs. What’s interesting is that 2020 was a wake-up call to the entire world, the planet. Now, people are seeing different options. Not only are there different options but it’s a lot safer to pursue one’s passions, interests or calling as opposed to following the traditional mode of thinking.
That has been a great wake-up call that people are starting to say, “Time is maybe limited. Let’s do it. It feels important to us.” Going back into your story, it sounds like Rich Dad Poor Dad was a catalyst for you, as it has been for many people. Was there something specific in that book that jumped out to you and made you maybe look towards real estate?
The one big key takeaway that I’ve got away from Robert Kiyosaki from that book was the difference between an employee and the difference between self-employed, entrepreneur, and investor. The takeaway that I realized was that the path that I was on, I was following my parents’ dreams as opposed to my own. It was setting me up to be an employee. As a physician, there’s a higher earned income but you have no control over your time, the amount of taxes that you pay, and your job. A lot of insurance companies have these mandates, so you have zero control.
From there, it was interesting because I started studying all different ways what financial freedom was. I am the Founder of the Financial Freedom for Physicians. We have a website, blog, podcast, YouTube channel. There are four types of freedom that I came upon. One is financial freedom, where you don’t need to trade your time for money where you are using your time for better uses. There’s also location freedom. You can live, work anywhere in the world. There’s also emotional freedom. All of these types of freedoms are composed of allowing oneself to be happier. In the past, it was how much money you made, what was your net worth, and that has been shown not to equate with happiness.
I started studying there. From there, there were two main key avenues that individuals became financially free, wealth and independence. One was through real estate and the second one was through stocks and equities. The third one was starting your own business. With 2020, and we have Gen Z, Millennials, now there are a lot of different other ways. There’s the creative economy, influencer economy, social media. Now there’s blockchain technology, artificial intelligence.
You are unpacking a lot. I want to dive into the first thing you said about your parents wanting you to be an employee. If you haven’t read Rich Dad Poor Dad, you’ve got to read it to know what we are talking about but it’s that square. I know what you are talking about. It’s the ESBI. The Employer is in the top left. Self-employed is the S. B is in the top right, which is a Business owner. I is an Investor. Through that square, you are basically becoming more passive.
As a doctor, you are an employee of the hospital or I don’t even know who pays you as a doctor but you are an employee of somebody. You are making a lot of money but you are still trading time for money. Your parents seemed that they had a pretty big influence on your life to become a doctor. How did you go away from their advice? Was that hard going into, they said? Was there any pushback there?
What’s interesting, there were tons of pushback. It was one of the points in your life where you have to buckle down and know yourself. I give this story all the time. In September of 2008, I mailed my medical school diploma back to my parents. I told them that I was quitting my medical career and wanted to do something that was more productive and healthier. Their response was outraged and a lot of dysfunctions.
I didn’t get that from my parents but also got it from my colleagues, friends, mentors. They all thought I was crazy. I was doing something stupid. I was throwing away my future. You have to look at it. You have to zoom out from the eagle eye view. You look at it in terms of the 20, 30, 40-year game plan. In that one instance, you have 40, 50, 60 years for your career if you want it to do something meaningful. I had to buckle down and ignore the naysayers.
I started executing. I didn’t tell people my plans. I showed them the results. Since September of 2008, many years later, they all see my progression in my success. Now they say, “Why didn’t we support you back then? You could have done much better.” When people look at you, and you are an outsider, a disruptor or doing something different, one is either they ignore you, which is the worst type of response. The second is they will hate on you or push you down. That’s usually the fewer the driver. Lastly, when you make it, they will celebrate you. Those are the three stages.
I love that you said that because I went through those things, too. It doesn’t sound like maybe to the same extent. My parents are fairly supportive but they were questioning, “Why are you doing this? Why are you living behind a curtain?” My grandfather took me down and berated me, called me a miser and was like, “What the hell are you doing? Are you going to treat your family this way?” I was like, “No, this is not a linear path that I’m going to get cheaper. It’s the bottom of my cheapness, and it’s going to build a great foundation. That way, you can live a good life later on.”
It sounds like you saw that. None of your friends saw that. I want to say to the audience, put on your suit of armor and get ready to get shot at and sorted out. People are going to lash at you, the people that you love. It’s hard to push through that and look at the numbers. That’s why it’s so crucial to be involved in some communities where people are doing this, too. I totally agree. Z, what do you think?
I was wondering if we have seen the bottom of your cheapness, Craig? I feel like it’s a bottomless place.
Maybe it is. I hope I have climbed out from that bottom.
It depends on the category.
I want to commend you for that because it’s hard for a lot of people to see out of that. To recap, in 2001, you are a doctor, in 2008, you quit being a doctor and started getting into real estate in 2008.
I bought my first property in 2008. From 2008 to 2016, I was buying subsequent properties. From there, I’ve got my financial freedom, financial independence. From 2016 onwards, I have started Financial Freedom for Physicians trying to spread the word, get awareness. I have written four books. I have spoken at FinCon major conferences and mentored coach the next generation.
Let’s take it back to 2008. There’s obviously a lot happening here. You are transitioning careers into real estate among the biggest financial real estate collapse since the Great Depression. Let’s get into that first deal. In 2008, it happened. Is it a house hack? What were you doing?
I did a combination of things. I can get into numbers but I did a combination of house hacking, per method, and short-term rentals. Those were the three main generators of my profits through real estate. House hacking is one of the best ways of achieving financial freedom and independence. BRRRR Method is pretty okay. Now, you can make more through short-term rentals as opposed to being a long-term landlord using Airbnb, Vrbo.
Why don’t you take us into the first deal you have ever done?
My first deal ever was in 2008. This was back in New Jersey. The interesting thing about this property was that I chose it because it was in close proximity to my hospital. I was up on the East Coast. It was undervalued in a counterfeit neighborhood. I bought it for a long-term play because I was going to be up there long-term for my training.
I figured to put that money in a property as opposed to wasting it on rent. I did it. The purchase price was $115,000 with a 5% down payment. From there, the amount financed was approximately $95,000. It was financed when the interest rates were coming down. Now interest rates are about 0.5%. Less than 1%.
This was financed back in 2008. The rates back then were like 7% or 8% but I’ve got a rate at 5.88%, so 30-year, 12 payments per year. Initially, without any renovations or anything, my gross monthly rent was $925 per month. That gave me a breakeven cash-on-cash return. It was breakeven. With repairs and renovations, so a new kitchen tiling, bathroom, flooring with approximately $20,000. I was able to increase the gross rental income to $1,530. That brought me from a breakeven cash-on-cash return to an 8.2% cash-on-cash return. I know we can go through the mechanics from there.
It sounds like the mortgage was around $925, is that correct?
Do you mean the mortgage payment?
The total payment.If you want to do something meaningful, you have to buckle down, ignore the naysayers and start executing. Click To Tweet
The amount paid to the bank, so principal plus interest is around $667, but then you also have to add in, for example, maintenance fees, insurance, taxes. The total expenses were around $925.
When you say maintenance fees, are you saying HOA fees or are you saying the budget for maintenance?
It was about breakeven before you put in the repairs. You were saying house hacking. Is this something that you were living in and renting out rooms? How were you doing it?
It was a 2-bedroom, 2-bathroom. I lived in one room and rented out the other room. Back then, I was using Craigslist and email as well. From there, I was renting out the other room and collecting rent that way.
Was one room rented for $925?
Yes, before renovations.
After you did the renovations, you put $20,000 of renovations, made it all pretty. You rented that same room for $1,530 or is this the whole place?
That one room for $1,530.
That’s expensive in terms nowadays, never mind in 2008.
In my unique selling proposition was to market it to nurses, doctors, physicians, dentists that were working at the hospital. I developed a good reputation as a good landlord, a trustworthy landlord, and always keeping things up-to-date. That allowed a better type of clientele that I was able to rent to.
I have a question about the climate of the time because, in 2008, I was still in college or something like that. I wasn’t in real estate but I imagine there was a lot of fear. I’m curious if it felt clear to you that there was nowhere that it could continue to fall or if it was very up in the air and people were thinking, “Buying now is dangerous because what if it continues to lose value?” What was it like when you started?
From my standpoint, when I was starting out this career, I was thinking it was full of opportunities. I looked at it from the lens of optimism but there was still a lot of fear. This was my first investment, so there were a lot of challenges that I learned from that I brought to my next series of investments. Back then, I looked at it in terms of optimism. I thought real estate, if you take care of the property and you manage it well, most often it appreciates in value. “The best time to buy real estate is yesterday. The next best time is today.” That was my thinking in many years down the road. With that amount of fear, people walk away, selling, that was my opportunity.
I’m curious, you mentioned some challenges. What are some challenges you experienced with this deal that you were able to take in as experience to the next deal?
I break it down into a couple of categories. The first one was tenants. I alluded that this property wasn’t a gentrified area. This attracted a lot of bad tenants. Luckily, I didn’t have the worst tenants but I did have a lot of challenging tenants. That was one thing. “How to do proper tenant screening, run a background check, run a credit check, how to interview tenants.” The other issue I had was because it was in a less than ideal location. I had to learn how to market it better and how to make that property stand out, as opposed to people overlooking that area. That’s one area.
The second area especially was with property management. The property was built in 1984. It had a broken down AC, the kitchen tiling needed a replacement, the wooden flooring needed repairs. It had a lot of challenges in terms of me being able to increase the rent from $925 all the way up to $1,530. That’s why I put so much into the renovation. If I could add that extra value and force appreciated, then I could make it into a decent, respectable property, then I could charge more for rent.
The second area was in financing. How to fight your property taxes? How to get your property taxes down, lower, negotiate with the bank? How to refinance your property? How to cut expenses? All of these things. Initially, I would have tenants that left the heater and AC on all day. I learned how to push those costs back onto the tenants, as opposed to me bearing that cost.
Chris, you are learning all these lessons at a crazy time. It’s 2008, BiggerPockets is around but no one has heard of it. At this time, it’s only Josh in his underwear, in the basement, coding or whatever. Brandon was not involved. There are no podcasts. How did you learn how to screen tenants? How to find a property manager? How to manage your property manager? There are no resources out there.
The first thing was through real-world experience. I executed. My main goal was to generate cashflow, cash income. As Robert Kiyosaki says, “You want to make sure that the rent is paid, the checks coming, make sure you are paying your bills.” That was my main motto. From there, a lot of challenges come up, and you learn how to deal with and manage them. I’m always in a constant state of self-improvement. The other thing is, there’s always the library. There were books. That’s how I mainly did it. There was also the internet as well.
Back then, the main way of sharing information was through blogs. The blog was being very popularized but the main thing was through books. I would go to the library, check out those books, read it, see the key ideas and write them down and implement them. That’s how I educated myself. The other way I did, was through networking and the community. Finding like-minded individuals, going out with them, sharing knowledge, and exchanging value. That’s the other way.
There are so many great ways to learn. Obviously, BiggerPockets is an amazing resource. There are many good resources out there. I know The FI Team has some good resources. Z has got great resources on Airbnbs but the networking events and the people you meet are going 100% trump anything you do. Almost all the advice I have taken is from people telling me. I love that.
Chris explained the deal where he was facing meeting the 1% Rule while living in the property. That is not going to happen now. Don’t try, go and replicate what Chris did in 2008. He gets rewarded for being risky and doing something that no one else was doing in 2008. Chris, I commend you for that. Why don’t we get into maybe the 2nd, 3rd? I know you did a house hack, the first thing, even though the term house hacking didn’t exist back then. What did the second one look like? Maybe talk to us about a BRRRR that you did. Again, probably before the BRRRR even existed.
This was an interesting deal as well. After I quit my lucrative medical career and I have moved from New Jersey back to Houston, that original deal that we talked about that was a fully rented long-term lease. This one here, I bought in the Houston area. The beauty of the Houston area at that time was, I will give you an example. This property here, 1,000 square feet, a 2-bedroom, 2-bath, and with decent condition. Not run down or anything. You could buy for $70,000 and the rent for the 2 beds, 2 baths in itself in decent condition, worth $1,500 and the reason why I chose the Houston Texas Medical Center.
This area is prime for students, doctors, residents, dentists. It’s all close to hospitals, scientists as well. That’s why I targeted it, and it was the best time. I go to the bank and apply for a loan. I wanted to put $20,000 down so that at that time, it was probably about a $15,000 down payment. The funny thing is I applied for a loan from the bank, and they declined me.
They say, “It’s because it’s too risky. You have one property. It was right after all these regulations.” I was like, “Screw it.” What happened was I reached out to friends and family, colleagues and I raised the whole $70,000 for that unit. I eventually paid them back within 1 or 2 years. I paid it and basically refinanced the cash and paid back the investors. That’s what I did.
That taught me a lot that I didn’t need the banks and that I could go out and raise. There were alternative ways of raising funding. Let’s go through this one here. This one was also a house hack because when I moved back down, I was living in one room, renting out the other room. Again, cash-on-cash return when I was living in it was breakeven.
All the expenses from that one room, which was a gross monthly rental income of $525, covered all of the expenses because it was a fully paid unit. From there, I house hacked it. After that, I’ve got married two years later. I moved out of it. That whole unit was generating a monthly cashflow of $1,250 before we paid. That rose the cash-on-cash return to 9.2%. I know you have questions.The best way to start out in real estate is through friends and family. Click To Tweet
You did $70,000. You didn’t put any of your own money into that, is that right? Did you raise the entire thing?
Personally, I put $10,000 or $15,000 of my own money into it and went out and raised the rest. That was through family, friends, colleagues.
That is such a great way to build off if you can’t get a bank loan. Some people don’t have a W-2 job. They are getting into their 1099 career. This is how you raise money. How did that conversation go with your friends and family? The same ones that were crapping all over you for getting into real estate a couple of years back?
The best way to start is through friends and family. What I had going for me on my side was that the real estate market was cheap. It wasn’t a huge risk. A friend could pay $5,000, $10,000. The worst they could lose was $5,000. It wasn’t something like $200,000 or higher. As I said, the best way to raise this money and funds is through friends and family.
You have a good relationship with them. You have a good rapport and trust. The best thing about it is if you can demonstrate a good track record, they will be more likely to fund your next venture. I mentioned that after two years, I refinanced the property, paid back my family and friends. They were able to loan me more funding for the next venture. That’s the best way. Again, I had the pricing on my side.
I get it right. Friends and family trust you. Certainly, the highest conversion but how do you even approach that conversation? Let’s say I’m one of your family members. Come to me and tell me why should I give you money?
It’s tricky because you have to approach the subject in a way that’s tech-full because you don’t want to feel like you are scammy or trying to borrow money and not return it. Like you said, sometimes you approach it gently. My approach was that I would take them out to coffee or to lunch and approach them and say, “The real estate market is this way.” Demonstrate a lot of knowledge about what’s happening in the field and talk about your track record, your successes. 9 times out of 10, they will say no, which is fine. You are not always going to hit a home run and get a yes all the time. My success rate with funding was usually between 5% and 10%, which is acceptable. You have to say, “I’m raising money for this investment property. Are you interested?” Go from there.
It would be best if they almost tell you, “I’ve got the extra $5,000 or $10,000. I would love to give it to you and see what you can do with it.” How did you structure this with your family and friends? Did you pay them interest-only? Was it a mortgage, and you will put a balloon? What was the structure of the deck?
It depends on the individual. One was a payback lump sum plus interest after 1 or 2 years. That was the most common way. The other way is you can pay them monthly. For example, let’s say you borrow $10,000. Back then, the interest rate was 3%, 4% in ’09 or ‘10. You amortize it, so every month, they get a check. The thing is, if you do it, they are more likely to say yes if you amortize it over a monthly period, as opposed to getting your lump sum back after 1 or 2 years. Some of it is also interest-only. It all depends on what the conversation but the variety of ways was interest-only, balloon payment, monthly payments. Also, one way was you could give them the loan back plus whatever percentage of the profits when you went to sell the property.
I’m curious about the complication involved because it sounds like $70,000. You put in $10,000 yourself. Maybe you needed some of that for closing costs but do you have ten people in the deal? Some of them you are paying back monthly. I totally get that when we are starting, it’s about the hustle and the making it happen. Maybe you don’t do this stuff anymore but did you find that it was a little bit cumbersome with bookkeeping and all that stuff?
You have to be detail-oriented and organized. Excel back then was what I used. Now it’s Google Spreadsheets but as I said, I spend a minimum of an hour or two every day on my finances. I’m looking at the numbers. I’m naturally organized and detailed but if you are ever taking money from investors outside, you have to be very meticulous and honest in your dealings for you to be successful. If you develop a bad reputation where you don’t pay back investors, that’s going to haunt and bite you back in the ass in the future.
You bought this thing for $70,000. Did you do any rehab to it?
This one here was carpet flooring. I changed that and put in some wooden flooring. The reason why I like wooden flooring is because it’s easier to clean and you don’t have to replace it as much. One renovation repair set you up for 10, 15, 20 years. I only had to put $1,500 on this one in repairs renovation. I fixed up a little bit of the bathtub tiling, some new cabinets, made it a little bit more respectable and decent. Like I said, originally, when I was house hacking it, it was $500 per month for that single room. I was able to increase the rent to about $625 per month after the rehab, the renovations, and the repairs.
You bought it for $70,000, you put $1,500 into it. Did you do that work yourself or how did you get it cheap? That feels cheap.
That’s another advantage of living in a low cost of area living. Back in Houston, the cost of the materials, the labor, and everything were inexpensive. That’s why I was able to make such a great profit. Now, you may not get such a good deal.
That is a testament of the time because, in 2008, no one was buying houses, especially flips. Contractors were super out of work. They will do anything possible to get a job and $1,500 to them back then, it was probably like, “I’ve got a $1,500 job.” Again, nature of the times. Now, BRRRRs don’t work as easily because contractors are very busy, and they don’t need that extra work. $70,000 down, $1,500 in rehab, did you ever get that thing refinanced or reappraised?
I did refinance it. I did cash out refinance. I did a cash out refi in 2013 and bought the place in 2009. Back then, the property had appreciated from $70,000 all the way to $100,000. I was able to pull out that $70,000 and get my money back and pay back my friends and family. That’s what I did. Now it’s sitting at a 3% interest rate. I didn’t refinance it, even though the Fed had kept dropping the interest rates.
A cool thing to tell people about refinances because sometimes they can be predatory and a little bit of a trap. I’m not always a big fan of them but a cool thing for people to know is that you can get a free refinance. It doesn’t have to go through the same lender either. The reason for that is if you are doing one of the current interest rates, they usually won’t give you the best of the best but you can do one that’s a little bit higher.
Say the best interest rate you could get now is 3% but they might give you 3.2% for free, so then you are not paying that $3,000 to $5,000 a month in closing costs and everything. Loans have a lot of money built into them. We don’t see that, so the loan officer is still getting paid. You don’t have to feel bad for them but it’s a great thing to know about. It’s not necessarily the same for cash out refis. Those are a little more expensive but if you are looking to lower your interest rate, this is a cool trick to know about.
It’s great that you mentioned that because if you shop around for rates and lenders, you can cut your costs and save a lot of money.
Chris, it sounds like you’ve got into real estate investing, credit back before it was cool, 2008, 2009. You did the House Act before it was cool. You did the BRRRR before it was cool. You were cool before it was cool being cool. Why don’t we jump ahead a little bit? We are coming towards the end here. I know you mentioned you are investing in real estate every year from 2008 to 2016. Were you doing the same strategy and building a portfolio? Where did your portfolio lay in 2016?
In 2016, I had eight properties, and all of them used the same strategy, the BRRRR Method, house hacking, short-term rentals, and Airbnb from 2013 to 2016. That’s when it was in vogue. From that ten-unit portfolio, I did the same thing. I focused on single-family, condos, medical students, medical professionals, and that was my strategy. There are a lot of different strategies. There are short-term rentals, commercial real estate, real estate syndicates, development. My advice is to focus on a cookie-cutter, simple approach that you can take action on.
Real estate is interesting because real estate, building wealth takes time, and it’s extremely slow. If you are interested in getting rich quickly, real estate. The only way you can generate cashflow quickly to real estate is either through being an agent or you are raising funds, commercial real estate or your developer. Building wealth through land lordship takes time. It takes a lot of work.
I’m glad that you mentioned the piece about becoming an agent because it’s true that sometimes to combine with being an investor, doing something like being an agent is a great opportunity because of the cashflow. It’s an active business that you can be part-time and lucrative. You can be smart with it and pour money back into that, into buying rentals because you get an opportunity to see the market and see a lot of homes coming in and out. Get an idea of what is a good deal and what’s not. Craig and I are both agents but it’s a cool opportunity, even for a little while, while you are building your portfolio.
Chris, where were you at? How much passive income did you have in 2016? That sounds like you made your switch.
From real estate, my passive income approximately was $10,000 per month.
That seems to be the number that a lot of people shoot for. You made your goal at $10,000 per month, then what happened?
From there, I had my net portfolio, was a millionaire. I had a passive income of $10,000 per month. From there, my idea was to grow, reach and scale. I also was very frugal. I saved a lot. I had a high savings rate and invested a lot.Nine times out of 10, people will say no, which is fine, you're not always going to hit a home run and get a yes all the time. Click To Tweet
Did you hit a millionaire in 2016 with $10,000 of passive income?
Yes, that is correct.
I want to touch on that because there’s this thing that I like to look at, which is your passive income to your net worth ratio. You had an extremely high ratio. $10,000 times 12 months is $120,000 a year while having a million-dollar net worth. That’s like saying, “Instead of the 4% Rule, I’m going to use the 12% Rule.” That is incredible. I want to point out that that’s what real estate can do.
I know everyone talks with the 4% Rule, super safe and all that but real estate. You did the 12% Rule, basically $120,000 a year. That’s got inflation baked in because with inflation increasing, rents are going to increase. Your property values are going to increase. All that good stuff. I want it to make that point. Congratulations on becoming a millionaire in 2016 and that you are hitting your goal of $10,000.
It’s impressive because getting to $10,000 in that short time and also through a real estate can be hard to do. I’m very curious. Craig, do you know off the top of your head what your cashflow is on the properties that you own?
I can give you a rough estimate. On my rental properties, I probably have around $7,000 or $8,000 a month.
You are not there either.
Not with my rental properties. I’m less efficient than you were in 2016, for sure.
Even for myself, I’m probably around $6,000 or something like that. I have been selling some properties to trade up for short-term rentals but short-term rentals are not consistent. It is important to have a variety there because, in the slow season, you are not going to be making that exciting cashflow that you might be making in the high season. Chris, I’m impressed.
It sounds like you moved away from real estate in 2016, and you said you went into stock. What was your thought process there? Why did you do that? How did you do that?
One of my rationales was I had made my first million in real estate, and I wanted to make my next million through another strategy. Equities were the easiest way to get into. I also wanted to have a more passive approach to building wealth as opposed to buying, managing houses, rentals, and tenants. I wanted something more to focus on building my paper assets. That’s my main strategy. Back then, the bull market was from 2009 to 2021. The house hacking helped me to save a lot of money. Whatever savings I made through house hacking, I had high savings and poured it into the equity market. That was when the bull market was still underway.
You were still house hacking at this time. You didn’t sell your real estate. You only held onto it and decided you weren’t going to buy anymore?
My strategy was to buy and hold real estate, and keep my expenses low, have a high savings rate, and build my portfolio and my net worth.
You are saying you have $10,000 a month of passive income from your properties, you are not working at this time or are you working?
I was doing consulting, so I did have some earned income as a physician and as a consultant with different hospitals and businesses but that was more of a side hustle. That was side income and having an earned income. My main focus and my main goal were through investments and through business.
You are putting all your money into, I take it as an index fund, is that right?
Initially, I was doing it through index funds because I understood the market a little bit better. I started choosing individual companies. The safest way, if you are interested in equities, is to save 20% of your earned income or whatever your portfolio, your passive income. Take that 20% and put it into a low-cost index fund, and you dollar cost average it over 30, 40, 50 years. You are bound to reap your rewards. That was my initial strategy. Once I started to feel more comfortable in choosing and looking at companies and where trends were going, I was more comfortable in investing in individual companies.
A quick recap, Chris. You found out about financial independence in 2002. You were a doctor from 2002 to 2008. You said, “Screw this. I want to go into real estate.” 2008 to 2016 was real estate. After 2016, you stopped expanding your real estate. You hit your goal of $10,000 a month, then you started systematically buying index funds, then eventually, stocks where you felt more comfortable. Where do you lie now in 2021?
In terms of my strategy?
What are you doing now?
What I’m doing is I have built my social, my influencer audience. I have written four books. I have spoken at numerous financial conferences, high-level conferences targeting high net worth individuals. I’m an author. I have also started the Financial Freedom for Physicians, blog, podcasts, YouTube channel. Mainly my mission is to spread awareness the word about the importance of starting financial literacy early, start saving, investing early so that when you are in your 20s and 30s, you can be more financially free.
Chris, we are heading to the end of our show. You’ve got an amazing story. Before we head to the Final Four, are there any parting words of wisdom you want to say to our audience?
I have appreciated the time on the show. It’s the first time that I have been able to share specific detailed numbers, my strategy, and my vision of where I’m going. You can always reach out to me. My website is DrChrisLooMDPhD.com, and I’m happy to answer your questions.
Let’s head into the Final Four. Chris, are you ready?
Z, kick us off.
Chris, what are you reading now? It seems like you were reading a lot at the beginning.
What was interesting is I finished a book called How the Internet Happened. It’s a fantastic book. I am a connoisseur of history, especially when it comes to economics, history, business, finance, and technology, and how it all intertwines. It talks about the early stages of the internet, from the early TCP/IP protocols all the way to email, to search, smartphones, social media. Now, where we are headed is towards blockchain, artificial intelligence, NFTs, crypto. It’s a fantastic book if anybody loves history.Start investing early so that when you're in your 20s and your 30s, you can be more financially free. Click To Tweet
What is the best piece of advice you have ever received?
Best piece of advice is your finances are extremely important. Growing up, a lot of my friends and colleagues got the message that finances are not important, and they are important. It’s almost like going to the gym, working out, and developing your health. You have to work, study, learn and work on your financial health. That’s one of the best pieces of advice. If you have your financial health, your freedom, independence, you are that much better.
No one is going to help you financially like you with yourself. You can hire financial managers and stuff but they don’t have your best interest in mind. They always have their own best interests in mind.
Chris, what would you say is your why for doing what you do?
My why is to spread my mindset in my motivation for financial freedom. If I can get the word out that financial freedom is much different than having a job or job security and stability, and opened people’s eyes to the idea that the world is changing and where we are going in the next 20 or 30 years is going to be radically different from the last several years. I’m trying to get on these shows, share my story and put the content out there, get people aware that you have to start working and building your financial literacy in your independence.
Chris, last semi-serious question. You seem like a smart guy. Have you ever been caught cheating on a test?
No, I have not.
Have you ever cheated on a test and didn’t get caught?
No, I have never cheated on a test.
Z, have you cheated on a test?
Totally. I don’t know. Maybe it’s cultural.
I’ve probably got cheated on more tests than I have been cheated on.
I’m not that bad, Craig.
They are reminders. Chris, you are a good man. You mentioned it before but where can people find out more about you?
Reach out to me on social media. I’m on LinkedIn. You can type in @ChristopherHLoo. Go to my website, DrChrisLooMDPhD.com. You can search YouTube, Financial Freedom for Physicians Podcast or Spotify, and Apple or you can reach me at ChristopherLooMDPhD@Gmail.com.
Chris, thanks so much for coming to the show. Shedding Financial Freedom to Physicians nationwide. I love it. We will talk to you soon.
Thanks so much.
That was Chris Loo. Z, what did you think of Chris?
I thought it was a great story. I love how he was like, “I’m going to make my first million in real estate and hit my goal there,” then I assume another million through index funds or investing in companies. He’s turned around and said, “Now I’m going to put all this direction, clarity and organization.” I was very impressed with how organized he was into giving back. He’s going back to his community, where he started physicians teaching them all about financial independence and real estate. I love seeing that. I thought it was great.If you have your financial health, your freedom, your independence, you're that much better off. Click To Tweet
I thought he’s got an incredible story. He’s extremely efficient with his cashflow to net worth ratio, 12%. That’s high. Amazing for him. Again, I wouldn’t expect to get there in these times. He bought a great cash line in time, so kudos to him. I love his story, from real estate to stocks, to now giving back and building a brand. You can tell that he was a hustler at first, then obviously, it’s no secret that stocks are a lot more passive than real estate is. He decided not to grow his real estate portfolio even though I’m sure he could. It’s a bug and addicting. He’s like, “I’m done with that. I’m going to go into stocks, so then I could focus on building my own brand and focus his time there.” I love that. I love his story.
It can be distracting with real estate because even if you say, “I’m going to take the portfolio I have and improve it,” which is something I have been doing. Selling the cheaper homes, putting more money into bigger homes, and having less of that. It is time-consuming, and there are costs associated with it. Sometimes being a buy-and-hold investor and saying, “I hit the number of properties I want and the cashflow I want and I’m done.” There’s something to that. He’s pretty crafty.
Your cashflow will go up over time. I’m sure it’s not still $10,000. Over the years, I’m sure rents have gone up. Mortgage payment stays the same. Maybe your taxes and insurance increased a little bit but not as much as the rents. Huge fan of real estate for many reasons. Z, you want to take us out of here?
Thanks so much for reading. If you love this episode, please share it with your friends and family. You can always leave us a comment, rating, a review on Apple, Spotify, or all the things that you listen to.
- Chris Loo
- Rich Dad Poor Dad
- Multiple Streams of Income
- Financial Freedom for Physicians
- YouTube – Financial Freedom for Physicians Podcast
- How the Internet Happened
- @ChristopherHLoo – LinkedIn
- Spotify – Financial Freedom for Physicians
- Apple – Financial Freedom for Physicians
- Apple – Invest2FI
- Spotify – Invest2FI
About Christopher Loo
Dr. Christopher Loo is a surgeon, serial entrepreneur, investor, author, consultant, executive coach, and keynote speaker. He received his MD-PhD from the medical scientist training program offered jointly through the Baylor College of Medicine and Department of Bioengineering at Rice University.
Dr. Loo achieved financial freedom by the age of 29, and F.I.R.E. in 2016 through his multiple passive investment income strategies. After traveling the globe for a year, Dr. Loo started his consulting company in 2017 to spread awareness about the importance of financial literacy among the physician community.
Dr. Loo is a 4x Amazon author including “How I Quit My Lucrative Medical Career and Achieved Financial Freedom Using Real Estate”, and is the Host of the Financial Freedom for Physicians Podcast. He has been a contributor to KevinMD (over 2k shares), Doximity, MedPage Today, SoMe Docs, SEAK, Passive Income MD, the White Coat Investor, Board Vitals, and FinCon in 2021.
Dr. Loo has his own monthly career success membership program along with a rapidly growing 900+ member private Facebook group “Financial Freedom for Physicians”, and has been named by Board Vitals as one of the top 50 MD’s to follow in Instagram.