Physical reasoning, which involves the interpretation, understanding, and prediction of object behavior in dynamic environments, remains a significant challenge for current Vision-Language Models (VLMs). In this work, we propose two methods to enhance VLMs' physical reasoning capabilities using simulated data. First, we fine-tune a pre-trained VLM using question-answer (QA) pairs generated from simulations relevant to physical reasoning tasks. Second, we introduce Physics Context Builders (PCBs), specialized VLMs fine-tuned to create scene descriptions enriched with physical properties and processes. During physical reasoning tasks, these PCBs can be leveraged as context to assist a Large Language Model (LLM) to improve its performance. We evaluate both of our approaches using multiple benchmarks, including a new stability detection QA dataset called Falling Tower, which includes both simulated and real-world scenes, and CLEVRER. We demonstrate that a small QA fine-tuned VLM can significantly outperform larger state-of-the-art foundational models. We also show that integrating PCBs boosts the performance of foundational LLMs on physical reasoning tasks. Using the real-world scenes from the Falling Tower dataset, we also validate the robustness of both approaches in Sim2Real transfer. Our results highlight the utility that simulated data can have in the creation of learning systems capable of advanced physical reasoning.