In this special episode of Beyond Bitewings we're sharing our favorite conversations with a few experts who discuss how dental practice owners can create generational wealth by thinking beyond their day-to-day income.

Ash is joined by former guests like Paul Montelongo, Eric Miller, and Nathan Turner as they share practice advice and non-traditional options when it comes to investing your hard-earned income.

In this episode, they unpack traditional and alternative investment strategies designed specifically for dental practice owners. From stocks and bonds to multifamily syndicates and mortgage note buying, this episode covers what you need to know to make your money work for you beyond the dental chair.

Discover how to evaluate different investment options, set up multiple revenue streams for your household, and ensure you're properly compensating yourself as a business owner. The episode also features a practical look at passive investing, how to navigate business plans for real estate syndications, and the ins and outs of buying mortgage notes.

Key Topics Discussed:

• Approach to investing for dental practice owners
• How multifamily syndications work for passive investors
• Typical hold periods, returns, and distributions in real estate syndicates
• Defining the role of limited partners (LPs) and their rights
• Structuring practice owner compensation and ensuring proper payment
• The importance of generating additional revenue streams beyond practice income
• Overview of investment options: stocks, bonds, real estate, and insurance products
• Mortgage note investing: process, returns, and investor protection
• Reporting and payout timelines for investors

Welcome to Beyond by Wings, the business side of dentistry, brought to you by Edwards and Associates, P. C. Join us as we discuss how to build your dental practice, optimize your income, and plan for your future. This podcast is distributed with the understanding that Edwards and Associates PC is not rendering legal, accounting, or professional advice. Listeners should consult with their business advisors before acting on any of the information that is shared. At Edwards and Associates, P. C, our business is the business of dentistry. For help or more information, visit our website at e and associates dot com.

Hello, and welcome to another episode of Beyond Bitewings. My name is Ash. And in today's episode, we will be talking about investing. You know, owning a dental practice isn't just about setting your own schedule or calling the shots. It's about creating a legacy that extends beyond your business. One that provides freedom for you and your family. True financial freedom doesn't just come from the success of your practice. It comes from making smart investments that secure your future.

Now at some point, you'll step away from the day to day operations, so it's never too early to start thinking about where to put your money to work. But where should you invest? While traditional options like stocks and bonds are always on the table, many practice owners are exploring alternative strategies such as multifamily syndicates and mortgage note buying. Well, in this episode, we're bringing together some of the best investment insights from experts like Paul Montelongo, Eric Miller, and Nathan Turner. Whether you're just starting to think about investing or looking to diversify your portfolio, this episode is packed with valuable advice to help you build lasting wealth beyond your practice.

Let's talk a little bit about the multifamily syndicates, right? So typically when you acquire a project after you have raised the funds that you're looking for and you go through with

the deal, how long do you typically keep it before it's sold

to another investor? Traditionally, these are five year business plans. Okay. Historically, though, on our track record is we hold for about thirty three months. Okay. But they are based on five year business plans. Right. If it would go into a sixth year, it would just be because it makes sense or maybe the market is telling us it's not quite ready to sell. Right.

But the other side is true also. You know, we can have a five year business plan, and what's happened up until now is the market tells us, okay. Your property is ready to sell for optimal value at 33, 30 4, 30 6 months, that sort of thing. And so then then we sell. And then we divide up the profits to the investors, and we we go to the next one. We issue distributions quarterly. Okay. And then on some of the properties, some of the investments, we have a preferred rate of return.

Okay. Others, we have just a straight rate of return. Right? So based on whatever the property is generated. Right. And so, you know, it's all in the business plan. Right. It's all disclosed. It's all it's all formal.

Mhmm. And then based on our experience, based on the market, based on how we think we can generate the most value in that property, then we decide, are we gonna distribute quarterly? Are we gonna distribute monthly? Right. You know, for how long? Those sorts of things. Right. Right.

And and how involved does an LP need to be?

LP real well, let let's go back. First of all, an LP has ownership. Okay. Right? LP has ownership. You're in the LLC that owns that particular asset. Correct. It's just that you don't have the day to day responsibilities that the general partnership has. And having said that, LPs have all the disclosure rights, have all the availability, and all the accessible rights that a general partner would have.

It's just that they don't do get involved in the, in the day to day operations. Right?

They they

are truly the the LPs will have the true passive

They're passive. Part.

Like, how they can use the business as a vehicle.

Well, for sure. I think, you know, I usually go back to equating it to their household Mhmm. Because, you know, in corporate America, and I'm I'm sure you guys have dealt with big corporations too, most of them, you know, have what's called a parent company.

Mhmm.

And you will see that all the time. I mean, like, I use Berkshire Hathaway, Warren Buffett's company. That's, like, the parent company, and then he owns, you know, hundreds of different companies. But it all is for the benefit of that parent company. And, when I look at a household, you know, the family unit, you know, that that is what owns the assets, whether it's your real estate, whether it's your four zero one k, whether it's your bank account or your practice. I mean, you own those things. Your household owns those. Mhmm.

And everything that you do is I mean, at the end of the day, isn't it for the the betterment of your household to live a better life, to have money and freedom and things that you wanna do. So we have to look at each of these these investments that you have and make sure that they are contributing somehow for the benefit of the parent company.

Mhmm.

So that's typically and where I see practice owners fail in that is that most of them don't pay themselves near what they should for owning the practice and doing all the roles that they play. Mhmm. So I can dig a little deeper in that if you'd like me to, but that's that's the basic concept that we operate with. Mhmm.

Yeah. That's a that's a thing that we have seen as well, that they aren't taking enough in wages. And we are looking at it from a different reason, but we see it all the time that they're underpaying themselves and undervaluing the service that they provide. And they think they're saving in taxes, but it's really not a significant amount for the the upside that can be had when you're taking a higher wage. So I I would say that is a good place to dig into. What would you speak to that?

Yeah. Sure. I mean and, look, it's it's hard to make in, financial decisions, like, in a silo. I mean, you can make a one decision, but it's gonna have an effect on, you know, other areas of your life. So, you know, one of the things that we usually start with is, you know, how do you compensate yourself and how much should you? Early on, I started having every practice owner incorporate that. You know, 10% of the practice revenue comes right off the top, and that goes to you as your owner compensation. And that money isn't designed for you to buy bigger houses and cars and consumption items. It's designed for you to invest that money so that you can create other income sources so you're not dependent upon the practice for the rest of your life.

Mhmm.

So that's that's just kinda one of the things that we'll, that we'll try to help practice owners with so they they can, you know, figure that out. I think most of them and and you have to do it very carefully. Like, I I the last thing I'd want is for anyone that's not doing that right now. Like, oh, yeah. I heard this guy on this podcast. I'm gonna start opening up a, you know, a a in a separate account. I'm gonna start paying myself 10%. I I would highly suggest that you don't start at that level because, you know, one thing that I've learned about business and income business expenses is really two kind of fundamental rules, and you guys can tell me if if if these resonate with you.

But, you know, number one, any business, it's gonna try to spend every dollar that it makes and then some. And, you know, it just seems to be there's always a demand of money, in a practice, but it also will make what it thinks it needs to make to survive. And, you know, there's something called necessity. And, you know, when when we look at practices, you know, most of them are are operating on a certain make break number that they think that this is how much I need to bring in to kinda cover my my basic expenses. But they're missing some of these other key, you know, profit buckets, if you wanna call them, to make sure that the practice is solvent, that they have money to pay their taxes, and that that they can pay themselves that 10%. So a lot of what we do is just going in and just refiguring like, hey, guys. You know, you're you're operating on a hundred thousand dollars of make break, but you're actually need to be operating at, like, a hundred and 20,000. And and here's why.

Mhmm. And that really changes the way that they look and they start, oh, ma'am. You're right. Mhmm. No wonder we're struggling all the time. No wonder I don't have money to be on exam. No wonder I don't have. I'm like, yes.

You see, this is you're underestimating how much your business actually needs to bring in for you to feel good about your financial situation.

You're saying that set aside a certain amount of money and try to find other forms of revenue, whether it's directly through the business or when you pay it to yourself, you invest it. It's not for consumption, but it's for investment purposes. So essentially what you're doing is you're creating additional revenue streams for your parent company, which in this case would be the household. Correct. And as long as you know, your tax, whatever you're going to incur on those additional revenue streams is, less than whatever you're going to make, then it makes sense.

Yeah. And I think that, you know, is there does it increase the tax burden? Probably. Does it create a bigger benefit, though, down the road? I mean, that's kind of what you have to weigh. Right. And and see if if it's gonna, you know, allow them you know, one thing I know about money is that if if you leave it set Right. In one place too long, it's gonna get spent, unfortunately. Yeah. And, you know, the only way that I've ever seen people accumulate reserves in retirement is that you have to, like, physically remove money out of one place and move it to another.

That's why there's $6,000,000,000,000 in four zero one k plans right now. Mhmm. Because people never took receipt of that money. It it got ripped out of their paychecks. Right? So that's we're we're trying to just accelerate the process for them to be able to, you know, retire and not just depend upon their, quote, unquote, four zero one k plans Mhmm. For their for the majority of their retirement income.

So what would be these other additional revenue streams our listeners could look into?

Yeah. So and I'm not advocating one or the other. Mhmm. There's generally three three to four that we'll we'll look at, and these are categories. And Okay. And all alls we're trying to do is is make sure that you're allocating money into places that, number one, can can pay you back at some point in time

Mhmm.

That will that will create cash flow. Maybe there's some tax benefits for doing for in investing in these types of investments. And there is some level of protection from the money. So there's three buckets that that we'll typically look at. One would be just like traditional stocks and bonds, so maybe like dividend or municipal bond portfolio of some kind. So I have the money, a 10% taken out. I have that set up in a in a separate account. We call it a wealth storage account, which is kind of a fancy name.

Right. Yeah.

And the money will sit there, and then we get it in motion. Okay? We put a percentage in, you know, maybe a stock or a bond portfolio. Another, bucket may go into a real estate bucket. And, you know, we can go into all kinds of different, you know, areas of that. But you you real estate that you either buy by yourself or maybe you buy with a partner or maybe you a syndication or a private placement, but it's primarily gonna be in some kind of a real estate bucket.

Okay.

And then, we'll look at insurance based products. This could be, like, cash value life insurance, annuities, if they're if they're appropriate for that person, because I get protection and and guaranteed income from there. Mhmm. I'm just not one of these advisers that that okay. It's just stocks and that's it. Or, hey. It's just real estate and that's it. Or it's a I I really as a fiduciary, I kinda think I have to look at all these.

And

do they have merit? Can they provide cash flow? Are they predictable? And, will they get their money

back?

And

that's what I'm looking at when we're trying to, look at a portfolio for them.

I see. Okay. That's interesting. Yeah. There's this a wise person I know by the name of Michael Cordello, and he always says that, you know, to make money, you have to make sure that the money's constantly in motion. Yes. If it's not in motion, then it's not going to make any more money. And the other thing he would always say is that, you know, as as an entrepreneur, we're constantly trying to look for deductions so we can reduce our taxes.

But a good financial savvy person, someone who knows or wants to know more about his own money, will look at it from a top end that you speak of right now.

Ash, I know you said this, episode was about note funding, but Nathan, tell us specifically what kind of notes and a little bit about it.

You bet. So again, thanks for having me on, guys. This is, this is great. So my expertise is that, I have been in residential mortgage notes for, goodness, since 02/2008. So coming up on fifteen years now. So it's been, it's been a long time, and I've really, really enjoyed it. And, essentially, what that means is I am buying an existing mortgage, or in Texas, it's a deed of trust, but I'm buying that loan. Whatever's attached to a residential property, I, I essentially am becoming the bank to whoever's living in property.

So the, the bank is selling off a loan for all kinds of different reasons. We can maybe get into that if you'd like, but, but anyway, they sell off all kinds of loans for all kinds of different reasons. I tend to buy actually from hedge funds. So the hedge funds will buy from the bank. I buy from the hedge funds. And essentially, like I say, I become the bank. And that puts me in a a really cool position where I can control a property without actually earning it. And it's it's fantastic.

It's such a fun business. I buy first lien mortgages. So there are two real main things that I'm looking at. Of course, you know, whatever the interest rate is, when is the last time they made a payment? All those things are important as well. But in order to protect my investment, the things that I'm really looking at is property value. I wanna make sure that if something goes wrong, if I do need to take back this property Mhmm. That the property value is there. And then the other thing that I'm looking at is title.

And I wanna make sure that there's a queen bill title. No other liens that made ahead of the first little mortgage and that, property taxes or city liens. And I can find all that out before I purchase any loan. And I do, just to make sure that I'm well protected.

Okay. Now you said it was a flat 8%. So is it 8%, or is it up to 8%?

No. It's 8%. Okay. Yeah. And I that's a good question because I've had that before where there's a so you mean maybe six or seven? No. No. No. 8%.

It will be 8%. Not up to

And how is that paid out? Is that paid out monthly, quarterly, annually? What? That's a quarterly distribution. And then as an investor, what kind of reporting is there? What what would I expect to get and how often? So each quarter with that statement, I

would send out a statement with that, had some reporting and just some updates on what's happening and what maybe to come to expect in the next few months. But every quarter, you'll get a report that goes along with that payment.

Thanks for listening today. Be sure to subscribe to Beyond by Wings on your favorite podcast platform. For more information, you can follow us on Facebook, Twitter, and LinkedIn. Or reach out to us on our website. You can also shoot us an email at info@eandassociates.com.