Millionaire Ohio dentist expects to lose $200,000 to ‘doctors, by doctors’

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Millionaire Ohio dentist expects to lose 0,000 to ‘doctors, by doctors’

Dentistry has long been considered a clear path to lasting wealth, but it is not always easy. Many high-paying dental professionals are carrying huge student loans, trying to get multi-million dollar business loans – or chasing investment opportunities that can pay off.

Just ask Dr. Sunny Pahouja.

This 42-year-old Ohio dentist earns a salary every six months, owns rental properties and has built a multimillion-dollar investment portfolio with his wife, according to a recent report by The Wall Street Journal (1).

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Yet despite his financial success, Pahouja expects to lose about 80% of the $250,000 he invested in multi-family land deals developed by a company marketing “real estate for doctors, by doctors.”

“It was a big lesson learned on my end,” Pahouja told the Wall Street Journal. “A lot of things we didn’t see would happen.”

His experience is a reminder that even high earners can have financial challenges – and be burned by attractive promises.

Million dollar revenue, million dollar liabilities

Dentists may appear rich on paper, but many actually start growing underwater.

Pahuja graduated from dental school in 2011 and was carrying about $250,000 in student debt.

According to the American Dental Association, more than two-thirds of new dentists in 2022 began their careers owing approximately $290,000 in student loans for their dental education. (2)

Then comes the next expensive step: buying or building a habit.

After working as a laborer for three years, Pahouja bought the dental practice and the building it was in, taking out another loan of $1.5 million. Dentists launching practices from scratch now typically borrow between $3 million and $3.5 million, according to Live Oak Bank healthcare finance chief Lindsay Harkey, who works for many dental practices.

When buying or building a practice, there are rising operating costs that you have to deal with. Construction costs, hygienist salaries and expensive dental technology all eat into the margins. According to the American Dental Association Health Policy Institute, the inflation-adjusted median income for general dentists decreased by 13.2% between the 2015-2019 period and the 2020-2024 period. (3)

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Moving forward is fraught with risk

Dental Economics (4) states that many dentists build wealth through a combination of practice ownership, real estate, retirement accounts and investing in the stock market, although others pursue risky bets such as crypto and private real estate, according to the Wall Street Journal.

Pahouja is part of the self-directed crowd. Aside from contacts with firms including Morgan Stanley and Merrill, he says he ignores most calls from advisers, telling the Wall Street Journal, “If it’s really important they’ll leave a message,” (1)

He also runs a Facebook group with more than 26,000 dentists who discuss strategies ranging from improving practice profitability to using backdoor Roth IRAs.

Between 2020 and 2022, Pahouja invested in five multi-real estate deals through Ascent Equity Group, a Colorado-based real estate company founded by a physician and marketed exclusively to other medical professionals.

Then interest rates went up.

As the Federal Reserve aggressively raises rates starting in 2022, projects are under pressure, eroding investors’ profits. Pahouja now expects that most of his investment will disappear.

The failed investments highlight growing financial pressure among America’s so-called “middle millionaires,” which are households with assets between $1 million and $30 million. According to consulting firm Capgemini, wealth in that group increased by 52% between 2018 and 2024, reaching $20.2 trillion. (1)

What the highest earning professionals can notice

Pahouja’s story is one example of a wealthy professional who may have high income, but also limited income and a small margin of error when it comes to big investment mistakes.

Chris Sands, a partner at dental firm Pro-Fi 20/20 Dental CPAs, said many dentists underestimate how much retirement planning they still need to do despite their income. (1)

Instead of building diversified long-term portfolios, some are chasing real estate sales or investing in dubious private businesses, Sands said.

“Many dentists want to throw a dart and hope to hit it rich,” he warned. (1)

That desire for big profits has made dentists attractive targets for aggressive investment advertisers and, in some cases, outright scams.

Here are some red flags investors can watch out for, from the US Securities and Exchange Commission: (5)

Marketed investments in certain professions (“doctors,” “dentists” or “specialty physician opportunities”)
Passive income promises with limited risk
Relying heavily on debt financing in a high interest rate environment
Limited amount or limitations on withdrawals
There is no independent third-party monitoring

Elie Engler of Ashford Advisors told the Journal that he generally recommends that small dental practice owners focus first on traditional stock-and-bond investments until they have built up significant liquidity.

Some dentists eventually venture into other investments successfully, but only after their means and retirement savings have been established.

Detroit area periodontists Dr. Monish Bhola and Shilpa Kolhatkar, for example, didn’t start investing in low-cost funds, private debt and private equity until they had already built substantial wealth and worked with advisors for years.

“We started with index funds,” Bhola told the Wall Street Journal. “Right now, if the business is growing, our risk tolerance is very high.”

For Pahouja, the painful real estate loss didn’t affect his long-term finances — but it did change the way he evaluates investment properties.