Why Doctors Struggle to Build Wealth Despite High Incomes: A Physician's Guide to Real Estate Investing

Most physicians finish training with a six-figure income and almost no financial education to go with it. Debt is framed as something to eliminate as fast as possible. Diversification means index funds and nothing else. And the plan for building wealth, if there is one, usually amounts to saving whatever is left over after the mortgage, the loans, and the lifestyle that finally feels earned after a decade of delayed gratification.

Dr. Letizia Alto has spent the last decade making the case that this default plan leaves a lot on the table. A family medicine physician and hospitalist, Letizia and her husband, Dr. Kenji Asakura, started investing in cash-flowing rental properties in 2015. Their goal wasn't to leave medicine. It was to build a second income stream substantial enough that they could keep practicing on their own terms. Three years later, they had reached financial freedom, defined as enough monthly cash flow to cover their expenses without a clinical paycheck, and Letizia kept working half time anyway, because she still loved the work.

Today she and Kenji, through their company Semi-Retired MD, own more than 185 rental units across multiple states and have taught thousands of physicians how to build similar portfolios. Their approach is laid out in full in their 2023 book, Life on Your Terms: Why Doctors Use Real Estate Investments to Set Themselves Free and How You Can Too, and in the free educational library at semiretiredmd.com. Below, in her own words, is her case for why physicians are uniquely bad at building wealth despite excellent incomes, and what she thinks doctors get wrong about debt, diversification, and financial freedom itself.

Why do physicians struggle to build wealth despite high incomes?

Physicians spend years in training deferring the spending most of their peers are already doing. Alto argues that delay creates its own trap: once the paycheck finally arrives, the instinct is to spend rather than to keep saving. "People feel like, okay, I finally can spend money because I finally have money," she says. The habit of continued saving, the thing that actually builds wealth, often loses out to the years of deferred gratification finally catching up.

Is a primary home a liability, and what actually counts as an asset?

Alto draws a hard line here that runs against how most physicians are taught to think about their houses. "An asset is a thing like a real estate property that cash flows because it pays you every single month," she says. "A primary home, I see it as a liability, because it takes money every single month from you to be able to support that primary home." Her framework for debt follows from that same distinction: debt used to acquire an asset that generates monthly income is good debt. Debt tied to a liability is not. She now carries millions of dollars in debt across her portfolio, offset by the cash flow and net worth that debt has helped her build using leverage.

What's the biggest financial mistake physicians make early in their careers?

Keeping up with peers who are spending above their means, Alto says. Physicians are surrounded by colleagues who look financially comfortable and easy to match, which pulls attention away from investing. Her counter is a specific discipline: setting aside a fixed percentage of income every month for investments, particularly ones that generate cash flow, so that money starts working instead of just sitting in a paycheck cycle.

Are index funds actually diversification?

Alto's answer is no, at least not on their own. "When you have 95% of your wealth tied up in the stock market like most high income earners do, and most physicians are taught that's the only option, that's diversification, what you miss is there's a whole group of alternative assets out there," she says, pointing to real estate, private equity, private credit, and other alternative assets that ultra-high-net-worth investors regularly hold. Her point isn't that index funds are wrong. It's that treating them as the entirety of a diversification strategy leaves out an asset class most physicians are never taught to consider.

What made Alto decide clinical income alone wasn't enough?

Watching colleagues ahead of her on the timeline. "I was looking out at other hospitalists who I was working with, and they had been at it for, you know, 20-plus years, and I could see what was happening to them," she says. "I could see that they were completely burned out, and they kept going." She realized that path would mean trading time with her kids and her spouse for decades of clinical income, and that realization is what pushed her toward a different plan.

Why is real estate specifically well suited to physicians?

Because it doesn't require starting from zero, Alto argues. Unlike launching a business from scratch, buying a rental property means buying infrastructure that already exists: property managers, contractors, tenants, a functioning system. That lowers the lift enough to do on the side of a full clinical schedule, which is why she's seen physicians build six-figure cash flow portfolios and six-figure annual tax savings while still working full time.

How much money do you actually need to start investing in real estate?

There's no single number, Alto says, because it depends on the property, the market, the financing, and the investor's goals. Financing options for real estate range from creative structures with 0% down to a traditional investment loan requiring 25% down, and the right down payment depends entirely on the size and type of property being targeted.

How does owning cash-flowing assets change contract negotiations?

Alto calls this one of the most underappreciated benefits of building outside income. "The person who always has the strongest leverage in any negotiation is the person who can walk away and who doesn't actually need it," she says. A physician with another income stream can raise concerns, ask for changes, and negotiate salary or working conditions from a position that doesn't depend on that one paycheck, which changes both the substance and the tone of the conversation.

What does financial freedom actually mean, practically, for a physician?

It's personal, Alto says, and worth defining before chasing a number. For her, it means living outside a fixed schedule: she and her family live in Puerto Rico, travel roughly 183 days a year, and homeschool their kids with help from a nanny who travels with them. She recommends physicians start by asking what they actually want their daily life and schedule to look like, and only then work backward to the income required to support it.

Physicians who want to go deeper than a single conversation can allow will find the fuller framework in Life on Your Terms, the book Alto co-wrote with Kenji Asakura, or in the free courses, guides, and podcast available at semiretiredmd.com.

Letizia Alto, MD, is a family medicine physician, hospitalist, and co-founder and CEO of Semi-Retired MD. Learn more at semiretiredmd.com.

Resources

• Book: Life on Your Terms: Why Doctors Use Real Estate Investments to Set Themselves Free and How You Can Too by Letizia Alto, MD, and Kenji Asakura, MD (2023)
• Website: semiretiredmd.com
• Podcast: Doctors Building Wealth, hosted by Letizia Alto and Kenji Asakura
• LinkedIn: linkedin.com/in/letizia-alto-semi-retired-md
• Instagram: @letiziaalto