Financial Freedom Through Multiple Streams of Income
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Christopher H. Loo, MD-PhD: Today we have a very special guest Dr. Brook Choulet. And she’s calling us from Arizona. And as we have several types of freedom that we promote on the podcast. The first is financial freedom. Second is time freedom, location, freedom, emotional freedom. And so today’s guest is very entrepreneurial, you’ll hear all about her different endeavors. She’s quite active in various different areas. And so we’ll get started with her story. So I’m going to pull up her bio.
Dr. Brook Choulet is a Psychiatrist, Physician, Coach, Real Estate Investor, Entrepreneur and Speaker. She is also the founder of Choulet Wellness in Scottsdale, Arizona. She was raised in San Diego and graduated from La Jolla Country Day School. She then completed a Bachelor’s Degree in Liberal Arts and her Medical Degree combined at the University of Missouri, Kansas City, rigorous six year BA-MD program. She then obtained her medical degree at the age of 24 years old, two years earlier and pursued training in psychiatry at University of Arizona in Phoenix. She then continued her training in child and adolescent psychiatry through Creighton University’s fellowship program in Phoenix. She is currently in her last year of the program and had the honor of being nominated as vice chief fellow. She’s following in the footsteps of her mother and grandfather, where she will be a third generation adult, child and adolescent psychiatrist.
Aside from her productive career as a psychiatrist, Dr. Choulet has a passion for helping other physicians identify their career goals and grow their practices. She built her business during her residency training and began to expand and hire other practitioners while still in fellowship. She sees adults and adolescents currently in her private practice, Choulet Wellness, and focuses on using a combination of medication management and therapy using a modern approach to mental health care. Their concierge services include house visits and after hours phone texts availability, Choulet Wellness is currently located in Scottsdale, Arizona and will be expanding into Paradise Valley in the fall of 2021. Apart from all of these accomplishments, she’s also obtained her Arizona real estate license and now is an active real estate investor. So without much ado, we welcome Dr. Brook Choulet. Welcome to the show.
Dr. Brook Choulet, MD: Thank you. I’m excited to be here.
Christopher H. Loo, MD-PhD: You’ve done so much. And you’ve done so many different things in different areas. So your bio is one part, but tell us your actual motivations, your stories, how you got started, why you’re interested in so many different areas?
Dr. Brook Choulet, MD: Sure, yeah. So I do have a lot of different interests. I grew up in Cleveland, Ohio, I moved to San Diego when I went into high school, and my mom had done the UMKC six year BA-MD program. So I followed in her footsteps and went there. It led me to matching out in Arizona for residency, where I met my husband at the hospital and decided to stay here. So I’ve been here for a while. And I just have a lot of different interests, which led me down a few different paths. But my main career path is still psychiatry. But I do really enjoy real estate. So I was really wanting to get my real estate license and pursue that during COVID.
Christopher H. Loo, MD-PhD: That’s fantastic. So tell us, so your primary practice is psychiatry, but you’re doing all of these different entrepreneurial endeavors and skill sets. So a lot of our viewers are interested in entrepreneurship, a lot of people are interested in developing side hustles and side gigs. So what is the number one skill that someone can develop if they’re interested in becoming a physician entrepreneur?
Dr. Brook Choulet, MD: I think the number one skill would be time management, I think that I spend a lot of time throughout the day on so many different things. I think that really getting a good time management and an efficiency to workflow is essential. And right now I’m in a full time fellowship program in child psychiatry. So I think just being able to manage a lot of different things will allow someone to be able to pursue many different activities.
Christopher H. Loo, MD-PhD: That’s great advice for physician entrepreneurs. What are some of the barriers, especially from, from a physician standpoint? We’re so used to a stable and steady income we’re really motivated by job security. And we’re not really akin to taking risks. So what are some of the barriers for physicians to actually become entrepreneurs?
Dr. Brook Choulet, MD: I think one of the biggest barriers is just a lack of knowledge, right? In medical school, we’re not taught how to start a business or how to hire people or how to create an LLC. So I think the number one barrier is just that lack of knowledge. We’re really knowledgeable in medicine, but not entrepreneurial businesses. So I think a lot of self teaching goes into it and a lot of mentorship, and just talking to as many different people as possible.
Christopher H. Loo, MD-PhD: Yeah, those are some really good tidbits and pearls of wisdom. So let’s transition into talking about your different endeavors. So you’ve been doing a lot of things in terms of real estate. So a lot of physicians are interested in real estate, just because of the tax advantages. It’s a stable way to grow one’s wealth, to put one’s money, it’s cash flowing. So tell us what the difference is between having a real estate license and being an agent versus being a real estate investor?
Dr. Brook Choulet, MD: Sure. So I think when my husband and I first started out in real estate investing, obviously, you have to run the numbers, make sure that things are going to work out. So we ended up figuring that we were doing most of the work in terms of finding the homes, we just needed someone to let us into the homes and to write up the offer. And we were seeing how much in commission they’re making for us selecting the homes. And I’m like, this isn’t okay, I want to do this. So that’s what kind of led me to getting my license, which is for the listeners out there. It may seem really scary, but I did the full online course in a 30 day period of time. And then I took the state test two weeks later. So the whole thing took me about six weeks. I think all in all the buy into all of the fees in the classes was maybe about 1500. But my first commission check was 5000. So very quickly, you’ll make up the money it takes to become a real estate agent, but I think just the ability to have the commission come back to you, rather than going to someone else when you’re the one selecting the homes and doing a lot of the work was the biggest selling point to me.
Christopher H. Loo, MD-PhD: That’s really something I know a lot about. I’ve a couple of one of my close friends and colleagues, she’s up in the Seattle area. And she actually was a real estate investor. And she actually transitioned to becoming a real estate agent. So, in terms of just in terms of earned income versus passive income, tell us the difference between being a real estate agent versus real estate investor, what are some of the differences?
Dr. Brook Choulet, MD: Sure. So if you’re a real estate agent, then you definitely are more out in the field, buying and selling homes for people, you’re making your money based on the commissions from purchases and sales of your clients. Real Estate Investors are purchasing homes selling homes, but more so purchasing and holding for passive income. But I think the best is to be both a real estate agent and an investor because you’re not only making that active income from the commissions of buying homes, but then you’re also passively making that income from holding and managing those properties. So also another pearl that I figured out is that you are able to act as a property manager for your own properties. So if you register as a residential real estate agent, a lot of the brokers out there will not allow you to be a property manager, except for properties that you own yourself. So if you buy and hold homes as a real estate agent, you can actually be your own property manager, which is another cost savings.
Christopher H. Loo, MD-PhD: Those are some great advice and tips. What are some of the potential tax implications of being a real estate agent versus being a real estate investor, and tell us some of the pros and cons?
Dr. Brook Choulet, MD: Sure, so I will preface this by saying I’m not a tax accountant. This is just my knowledge I’ve picked up from doing this. But from my understanding, if you’re a real estate agent, and you have over a certain amount of hours annually that you do real estate related activities, you can file for a real estate professional tax status, which can be helpful. But some of the downsides, which I guess anyone would have to do, but on the commissions you earn for homes you’re buying for yourself, the commission you take is taxable. So you do have to pay tax on the commission. But the way I look at that is that you wouldn’t be getting that commission if you weren’t a real estate agent. So it is worth it to pay the taxes for that. But let’s say, you’re buying property for a friend, and you’re crediting them with some of the commission, you can actually write off the credited amount of the commission you’re giving as an expense of your business. So then you’re really only paying tax on the difference.
Christopher H. Loo, MD-PhD: So yeah, from what I understand being a real estate investor. So a lot of the income is taxed at passive income, portfolio income, which can be much less than earned active income. So for the listeners out there, earning active income is income you make from a job, business, selling real estate, that sort of thing. So, it’s good to be able to combine the two different types. You’re generating income from different ways, and you’re getting taxed in different ways, but then you, it gives you a lot more freedom and flexibility. So, that’s really fascinating.
So, a lot of real estate agents that I know get their license. It sounds like you did yours very quickly and very cost efficiently, but a lot of them have to go through these courses, and then they have to get licensed and certified. But then they have to sign up with, for example, like a broker or a bigger firm to start selling homes. So, in your experience, is it easier to do it the way you did it? Or is it sounds like there’s significantly less time and startup costs, but you still have to go out and sign up with a firm or start your own firm, but starting your own firm is also much like starting your own business as well. So tell us how once they got their license, how they would do it?
Dr. Brook Choulet, MD: Yeah, so in real estate, in order to, quote activate your license, you have to hang your license with a brokerage. And for me, I didn’t really understand that at the time, but what I can explain to others is, like, can you practice medicine without having a DEA number? Probably not. So, the way I did it is that I joined a brokerage called HomeSmart, which there’s a few different types of brokerages. One is like your classic Keller Williams, Sotheby’s, where, they really put a lot of marketing into their sails and there’s a lot of marketing involved. So they take a percentage of your commission. But in brokerages like HomeSmart, or My Home Group, I pay $25 a month to be a member of the brokerage or to be an agent for the brokerage, and then you pay a small flat fee per transaction. So if you don’t need all of the marketing, which someone like me, I don’t, because this is a kind of a side job that I do, and I kind of buy and sell for myself and friends, then it makes much more financial sense to join a brokerage, where you’re only paying $25 a month to have an activated license, and then you only pay $300 per transaction.
Christopher H. Loo, MD-PhD: So it sounds like the way it is. It’s sort of disrupting the traditional ways of becoming a broker and sort of using these platforms so that you can basically decrease your costs. And, talk about some of the overhead you can run your own home office or do you need to get all of your expenses, setting up that office space?
Dr. Brook Choulet, MD: Yeah, for real estate, there’s almost close to no overhead. So you can just kind of work from home, which then you can write off the square footage of your home office as a tax savings, you could write off your cell phone bill, since that’s the primary way that you communicate and earn your business. So I would actually maybe say that there’s negative overhead being a real estate agent, because I my only cost is HomeSmart brokerage monthly, which is $25 a month, and then you have to pay for your MLS access to look up properties, which is an annual fee, and then you have to be a member of the association. So here for me, it’s Phoenix Association of Realtors, or PAR. So there’s really minimal overhead, I would say the startup costs is what’s the significant amount, and that was only about $1500.
Christopher H. Loo, MD-PhD: That’s great for the listeners. So the barriers to actually actually doing something are actually much less with all of the new technology and all of the access and platforms. So I’m going to transition from different real estate now into your actual clinical practice. So it sounds like you’ve done a number of innovations in your psychiatry area. So one thing I wanted to discuss first is the concierge, your concierge wellness practice. So a lot of listeners are not very familiar with the concierge model. So tell us more about what it is and the advantages of why people are transitioning to that type of model.
Dr. Brook Choulet, MD: Sure, yeah. So concierge medicine, I think in broad strokes, is really just a higher level of access to care and cutting out the insurance middleman. So there’s a lot of different models to concierge practices, I think a lot of internal medicine practices have more of a retainer model where you pay one fee for the whole year, and it gets you a certain number of appointments and services. I kind of took a different approach with the psychiatry world because it seems unfair to tie someone into a psychiatrist for a year because it’s such a personal experience. And we really have to feel comfortable with that person. So I chose a fee for service model for my practice where it’s just an hourly fee. And so pretty much like however much or little they want to use us it’s really up to them. But we take on less patients and spend more time with them. They have our cell phone number, they have our emails and there’s no barrier to accessibility.
Christopher H. Loo, MD-PhD: Now that we know the differences between Concierge, how has COVID-19 accelerated or not impacted the idea of tele psychiatry, in your practice in general or in or in concierge psychiatry?
Dr. Brook Choulet, MD: Sure, yeah. I think that mental health needs have really increased during the pandemic. There’s not only people in the community but other physicians who are really high functioning, and executives that are really in need of mental health care, because it’s a lot of change and a lot of anxiety out there. I’m just seeing more and more anxiety, both in adults and kids, because now kids are going back to school. And I just had a conversation with someone this week. It’s like a whole new type of peer pressure. Like, why aren’t you wearing a mask? Tell me about that and make fun of kids wearing masks. So I think that the whole mental health field has just experienced such a surge in the last year.
Christopher H. Loo, MD-PhD: Yeah. And are you seeing a lot of changing towards tele psychiatry? Are you still seeing patients in person? Tell us more?
Dr. Brook Choulet, MD: Yeah, I see a combination of both. I do think that a lot of people like the ability to do tele psychiatry, but I do both in office visits and tele psychiatry, and then I’ll also go to some people’s homes who maybe can’t leave if they just had a baby or severe anxiety. So I’ll go to their homes and see them.
Christopher H. Loo, MD-PhD: That’s wonderful. And tell us about building your psychiatry practice. You built a practice where you’re hiring other practitioners during fellowship. Tell us more about that.
Dr. Brook Choulet, MD: Yeah, so I started this practice, I started planning for opening the practice at the end of residency, because, to all the listeners out there, it is a lot of work. There’s a lot of things that need to be in place prior to opening a practice. So I would definitely encourage you to start early, even if you are in training, and you think it’s too early, it’s never too early. So then the practice was kind of set up and ready to be opened when I finished up residency. And then when I transitioned into fellowship, I started getting a lot of calls. And I didn’t have the time and availability to see all these people. And I really wanted to deliver care to the community. So I started hiring other psychiatrists and therapists to be able to see those patients, since I just, I guess I didn’t expect it to grow that quickly. So I started needing a lot of help, which I guess is a good problem to have. But it really made me kind of quickly learn how to hire other people and how to run a practice.
Christopher H. Loo, MD-PhD: That’s wonderful. You’ve done so much. And you’ve given someone many pearls of wisdom. What are your final parting words for our audience?
Dr. Brook Choulet, MD: Yeah, I would say that my biggest, biggest piece of advice would be it’s never too late. Even if you’re in the middle of your career, towards the end of your career, it is never too late to start something if you’re passionate about it. It is so rewarding to go to a place where you have built and you have kind of put in the work to grow it. So I would just say like, just go for it. There’s no time that’s too late.
Christopher H. Loo, MD-PhD: Lastly, how can listeners contact you or follow you? In case they want to learn more about you and your practice and your work?
Christopher H. Loo, MD-PhD: Perfect. And for the listeners, all of the resources, and references will be included in the show notes. So, Dr. Choulet thanks so much for your invaluable wisdom and your time and thanks for coming on to the show.
Dr. Brook Choulet, MD: Thank you so much for having me. It was great to be here.
Christopher H. Loo, MD-PhD: Many thanks again for being here. If you’re new, you can find me online at Christopher H. Loo, MD-PhD, where I have links to other episodes or links to online resources that will support you on your financial literacy journey. I’ll see you there in on next week’s show. While I bring you thoroughly vetted information on this show regarding a variety of financial topics, I cannot promise you a one size fits all solution. This is why I caution you to continue to learn. Educate yourself and seek professional advice unique to your situation. If you want to talk to me, I welcome it. Please reach out via my website or email at Chris@drchrisloomdphd.com. I read and personally respond to all of my emails. Talk soon!
Editor’s note: This transcript has been edited for brevity and clarity.