Latest / Wealthy Woman Lawyer Podcast, Helping you create a profitable, sustainable law firm you love / Episode 246 Attorneys Investing in Real Estate on the Side with Tessa Muir

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Episode 246 Attorneys Investing in Real Estate on the Side with Tessa Muir · Wealthy Woman Lawyer Podcast, Helping you create a profitable, sustainable law firm you love

• 0:00
  Tessa: I've been reading a lot about how current generation can't buy a house. There's not enough inventory available. They're priced out of the market plus these high interest rates. Do you think your timing played into that, or have you tend continue to sort of steadily invest despite the interest rates, despite the houses that used to be 125, now it's $2.50 purchase price, or now it's $4.50 purchase price. Have you continued despite that?
• 0:28
  And what is your kind of thinking on that?
• 0:30
  Davina: Yeah. So my thinking on that is that historically, if you look at real estate, the median home price in The United States, you can just Google that, and it shows it's very similar to the stock market where it show it goes, you know, from left to right, up and down, up and down, up and down, but steadily over time, it goes up. So real estate, just like the S and P 500 appreciates over time. And so every single house I bought, I thought, oh my gosh. I can't believe I'm paying this much for a house.
• 0:57
  And then two years later, I think, I'm so glad I bought it when I did.
• 1:02
  Intro: Welcome to the Wealthy Woman Lawyer Podcast. What if you could hang out with successful women lawyers? Ask them about growing their firms, managing resources like time, team, and systems, mastering money issues, and more? Then take an insight or two to help you build a wealth generating law firm. Each week, your host, Devina Frederick, takes an in-depth look at how to think like a CEO, attract clients who you love to serve and will pay you on time, and create a profitable, sustainable firm you love.
• 1:32
  Devina is founder and CEO of Wealthy Woman Lawyer, and her goal is to give you the information you need to scale your law firm business from 6 to 7 figures in gross annual revenue so you can fully fund and still have time to enjoy the lifestyle of your dreams. Now here's Devina.
• 1:52
  Tessa: Everyone, and welcome back to the Wealthy Woman Lawyer Podcast. I'm your host, Devina Frederick, and my guest today is Tessa Muir. Tessa is a law lawyer, a law partner, a mom, a stepmom, a wife, and a real estate investor while balancing a hectic law career as a federal prosecutor, then as an in house lawyer for a large tech company, and now as a law partner for a criminal defense firm, she built a successful real estate portfolio on the side. It all started as she was getting further along in her career, and she realized that the harder she worked, she was not really getting ahead financially in the way that she wanted to. She started researching real estate to build lasting, snowballing, generational wealth.
• 2:35
  While still managing a full time career as a lawyer, Tessa launched Invest On The Side LLC in 2024 to help other high achieving professional women learn how to unlock the power of real estate investing without stepping back from their careers, building themselves a second job, or swinging a hammer or fixing broken toilets. I'm super excited to have Tessa here today to discuss investing on the side in real estate so we can continue to build generational wealth. So welcome, Tessa.
• 3:07
  Davina: Thanks, Davina. Thank you for having me.
• 3:09
  Tessa: I'm so glad to have you here, because I love to talk about what we do after we've created a wealth generating law firm with the money that we've got and where do we put it, and how do we invest it? Because the goal with Wealthy Woman Lawyer is to help women lawyers become wealthy. And the first step with that, in my mind, is generating enough income that you have some money that you can invest. And so I'm glad to have you here today because we're gonna talk about all things real estate investment with you. But before we get into that, if you could tell us a little bit about your journey to becoming a lawyer and kind of what your career path has been as a lawyer.
• 3:48
  Davina: Sure. Well, I started by doing army ROTC in undergrad for primarily for the scholarship opportunity, but then I ended up really enjoying it, all the physical fitness and the team building stuff and the adventure seeking. And as I was getting to the end of my undergrad career, I started thinking, oh my goodness. What am I actually gonna do in the army? What's my job gonna be?
• 4:10
  And I realized I probably wasn't gonna stay in the army for a full career. So I looked around me and most of my professors in my major seem to have law degrees. So I thought, oh, I'll be an army lawyer. So I ended up going to law school and then becoming an army lawyer in the army jag corps, which was a phenomenal experience.
• 4:28
  Tessa: Oh, wow. Imagine that's gotta be really difficult because not only are you going to law school, but you're also rising through the ranks in the army to be able to do that. So it's quite a challenge.
• 4:42
  Davina: It was challenging. Yeah. It was, a super interesting career. And all the things that I liked about ROTC, I liked about the JAGCORE. You know, was still very fitness and adventure oriented.
• 4:53
  And one thing that was unique about the JAGCORE as opposed to more traditional career starts in in law was that you get so much leadership experience right off the bat, some of which is trained and controlled and some of which is just sort of like, hey. Go do this. And I found myself leading people, even people who are older than I am who had been in the army for a long time were under my command, so to speak, and direction and and leadership, which was just a really a really cool experience.
• 5:24
  Tessa: So where did you how long were you in the JAG Corps, and then where did you go from there?
• 5:28
  Davina: I was in the JAG Corps for four years. And so I was in Korea and Kansas and Georgia and Virginia at various times. And then I got to be a prosecutor and whatnot within the JAG Corps. I had a few different roles, all of which were really different and cool. And then after the JAG Corps, after I did four years in on active duty, I ended up becoming a federal prosecutor in the Western District Of Michigan, which I ended up at because I really liked being prosecutor in the army.
• 6:02
  And I just applied to literally all of the openings for assistant US attorneys at the time that were in locations I thought that I might like. I had only been to Michigan once. I had no idea that Grand Rapids, Michigan was a thing. I I'd never heard of it before. I'd never been here.
• 6:18
  And now twelve years later, I'm still here, I love it and put roots here.
• 6:23
  Tessa: Oh, that's wonderful.
• 6:24
  Davina: Not a prosecutor anymore. It was a phenomenal career, but I've done a few other things since then.
• 6:29
  Tessa: So what have you done since then? Like, with your because after you left being a federal prosecutor, then what legal job did you have? Because you had a couple after that.
• 6:40
  Davina: I did. Yeah. The next one was I was in house counsel for a large international tech company among other people on on the legal team there. And that was really neat just to get a totally different perspective on being a lawyer within a company where law is not the product. It was very different for me and interesting.
• 7:00
  Right. And then I did that for a little while, and I actually really missed being in the courtroom. So I ended up going into criminal defense where I am now. Okay.
• 7:13
  Tessa: So you're and you're a partner in a criminal defense firm now. Right?
• 7:16
  Davina: I am. Yes. How long have done that? I've been at this firm for four years, and I joined as a senior council. And then I became a partner a couple of years ago, which was an interesting process.
• 7:30
  Tessa: Yeah. Yeah. Oh, good. Well, wanna hear about that interesting process. A lot of people have questions about moving into partnership partnership and and kind of what's involved.
• 7:39
  I'd be curious to hear about your experience. You don't have to go into great detail, but give us an idea of did you were you requested to sort of buy in to the partnership?
• 7:49
  Davina: Yeah. So I came in as senior counsel because I knew some of the people who worked there who were my former colleagues at the US Attorneys Office. And to be honest, I wasn't really sure that I wanted to be a criminal defense attorney. So I nor did they offer me a partnership at first. It was just sort of like, do I like this?
• 8:05
  Do you like me working here Yeah. Trial period. With not a clear path of where it was going. It's a small or it's a smaller firm. It's getting bigger, but we have 16 people altogether who work there.
• 8:18
  And the the process for becoming a partner was because it was a small firm, there wasn't really a a career path per se for nonpartners to become partners. And so there was a lot of just discussion on both sides of do do the existing partners want another partner? What is that gonna look like for them? How does that affect them financially? Is it gonna be helpful to them?
• 8:45
  And then on my side, do I want to buy in? It was a buy in. Do I want to buy in quite a significant amount of money for a seat at the table? And we restructured the operating agreement to make sure that it ticked everyone's boxes in terms of the potential hangups that everybody might have. And I think I'm pretty happy with how the operating agreement came out.
• 9:10
  It gave me a lot of comfort. It seemed to give everybody a lot of comfort that this was structured in a way that people could get out of if they wanted to. They wanted to leave, not like a forever situation necessarily. And in the operating agreement, for me, the most helpful part was that we defined how decisions are made just as you add more partners. I I really don't like conflict, which is funny since I'm a criminal attorney and I have do litigation.
• 9:37
  Tessa: Well, you've been a federal prosecutor. You've been Yeah. Yeah. Yeah. I was like, it's interesting.
• 9:44
  Davina: So that for me was the big thing was I I wanted to know how people make decisions so that we're not just, like, yelling at each other across the conference table. And that was very clearly defined in the new agreement as was what happens if somebody leaves, whether it's one of the other partners or if I wanna leave. How do we get out
• 9:59
  Tessa: of this? Right. Right. And I'm curious. You don't need to give us numbers or anything, but I think people have a question a lot of times because I talk with a lot of attorneys who are thinking of how do I create career paths for people working for me?
• 10:14
  And they're confused on the buy in process. Oftentimes, I know it could be like a year in bonus or something like that that somebody uses to buy in, or maybe there's some sort of payment arrangement or something like that. Was was that something for you, or were they sort of expecting this lump sum investment?
• 10:34
  Davina: So I ended up doing a lump sum investment, by refinancing some of my real estate properties just because they didn't want to get into, like, a long term payment situation. And also, think what was appealing for them was the immediate upfront payment. From what I've learned and the research that I've done in my area, it was quite a high buy in, but we all thought it was fair because it came with some additional real estate properties. So the amount was like it was similar to buying a house, like a modest modest house, I would say. Yeah.
• 11:07
  Good.
• 11:08
  Tessa: Good. That gives so I think that gives people something to think about when they're thinking about how they might structure partnership in their in their firm. So I appreciate you sharing that. But what we really wanna get into is the juicy stuff, and that's the real estate because I know that's your passion. At some point in all of this sort of journey, your career as a lawyer, it wasn't enough, and you needed to add something else to your plate.
• 11:34
  I know. Right? And you became a real estate investor in multiple different types of real estate. So I wanna talk about that journey. At what point in your life, where
• 11:45
  Davina: were
• 11:45
  Tessa: you career wise when that began?
• 11:48
  Davina: So I started researching that when I was at the US attorney's office, when I was in my early thirties, just because I came across a podcast that I really enjoyed about real estate, and it sort of opened my eyes and ears to thinking about, gosh, there are people in the world who are doing more than just relying on a salary or relying on income from a job. And I honestly had never heard of that before. I didn't know anybody who had money from anything other than a job. I had never understood, you know, how these wealthy people go off on vacation and, like, how are they still making money? It was just all very new to me and and interesting.
• 12:25
  So I started researching it in my early thirties. And then after I had my daughter, I took the plunge into actually investing. I think just something about having a kid, I realized, you know, the financial destiny and the financial pathway that I'm on is is up to me. And if I want to have more time at some point in my life, whether it's retirement or now, to spend with her and I want to have more financial security than just relying on income from a job, then I've gotta actually diversify. Right?
• 12:58
  So tell us about your first deal. So the first deal, I was at home. I was with my baby, and I literally was looking out the window, and I saw a for sale sign go up on a small house across the street. And I thought, oh my goodness. Maybe I could buy that house.
• 13:15
  And it was just kinda like a a crazy wave came over me where I thought, if I'm gonna do this, I mean, that is the perfect opportunity. So I marched over there the next day with my realtor, made an offer, and lo and behold, got this got this house. And then kinda, like, panic stricken. Oh my god. What I do now?
• 13:34
  What do I what do I do? But I just kinda dug into the resources that I had found over the years through the podcasts and books that I'd that I'd learned from and just started to fix the house up and rented it out. And it did so well, and it was such a little moneymaker that I was able to roll that into two more houses in a couple of years. And then I refinanced those and bought into the law firm and bought some more properties, from there. And now I
• 14:05
  Tessa: have 10 altogether. Wow. 10. But are they all residential, long term rentals?
• 14:11
  Davina: Yeah. There are, six that are long term rentals. So somebody lives there, They pay every month, and they can live there as long as they want. One is a short term vacation rental on a lake about an hour away. And then three are office spaces that belong to my law firm, which is what I bought into with the buyout.
• 14:30
  Okay.
• 14:30
  Tessa: Okay. Good. Good. So you have some commercial, some long term residential, and some short term residential. So let's talk about each of those kind of models so people sort of understand what they are.
• 14:42
  So why and why did you decide to I mean, you kind of, like, fortuitously found this house. You could have gone one of two ways. You could have done long term rental or you could have done short term rental. Because I'm sure when you bought it, Airbnbs were like the hot thing. Right.
• 14:57
  VRBOs, you know, but you decided to go long term rental. Tell us why.
• 15:01
  Davina: Yeah. So long term rental, I had identified as the best strategy for me as a busy working person because they we're gonna take the least amount of time. So there's all sorts of different ways to get into real estate, all of which are fantastic, and they work for different kinds of people. But for me, I didn't have a lot of time, but I so I needed something that was more of a long term investment and less of a flipping or kind of a get rich quick thing where it had to be really on each individual transaction. I wanted something where I could spend the time to do the investment, get it right, and then just kind of leave it for years cause I still had my income from my job.
• 15:44
  Tessa: Yeah. So how long did it take you to sort of fix that house up and get it rental ready?
• 15:50
  Davina: It was pretty quick. That one was definitely the most hands on that I have ever been and will ever be. I, you know, I was, like, removing wallpaper and painting and meeting with all the contractors myself to get get the flooring, know, re sanded and stuff like that. But it was definitely just a refresh. I don't do remodeling.
• 16:12
  I just do kind of refreshing of I generally go to a big box store to get flooring and light and paint and appliances. Those are the big ones that I do and some landscaping. It all in all, it took about thirty to sixty days to do the refresh and place tenants. And I did do background check through there's a bunch of different companies that you can do background checks through. I I think I use TransUnion for that one.
• 16:42
  But there's different companies that will check people's credit and eviction history and just kinda give you any red flags that you might wanna know about before approving a tenant. So about take you to rent it out? It was quick. I think I put it on either Facebook Marketplace or Zillow, and I think the next day it was rented out. Oh, wow.
• 17:04
  Oh, wow.
• 17:05
  Tessa: So have you had any issues with the tenants that in I mean, you've got six long term rentals, I'm sure there's you've bound to have had some issues with tenants. Can you tell us about that?
• 17:19
  Davina: Yeah. So I would say I've had a 95% success rate, give or take, on tenants because I'll start with that, and then I'll give the problems. But the tenants have been great because I've I've invested in properties that are in locations that I think I would feel comfortable living, that are safe, that are well lit, that are neighborhood y feeling. They're nothing extravagant. They're two and three bedroom houses in modest areas, but they feel good.
• 17:48
  They feel good to me. They feel like a nice place where somebody would wanna stay. So those are that's the feeling that the tenants are getting too. So I'm attracting tenants that are looking for a place to live, like to plant a garden and have friends over and, work from home. You know, just they want a place that feels good, that feels safe, and they've tended to stay a long time and pay on time and really very, very few problems at all with the tenant.
• 18:18
  The only tenant I had that was not great was one particular guy who I just I fell into all his traps. He he seemed great. He was super friendly, but he refused to give me his driver's license because it was in his wallet that was in a different car. And then that car got stolen, and then it then there was a then his mother was ill, and then there was fire at his storage unit. There was like all these things that I realized all these red flags.
• 18:46
  Red flags. Yeah. Like, never actually happened. And he didn't he didn't give me his driver's license because he wasn't who he said he was. And he ended up living there, paying occasionally, and I had to give him several notices that I was about to evict him.
• 19:01
  And then he would then he would pay up. And then we eventually parted ways sort of pretty amicably. And I didn't need to evict him. He just realized he couldn't really afford to live there. And I think I forgave some of his rent or or I I wasn't out a huge amount of money.
• 19:19
  I was just glad to be rid of him. The big issue was that he had a cat that he didn't tell me about that did quite a lot of damage to the house. That's so interesting.
• 19:28
  Tessa: That's so interesting. Yes. I have so my husband and I just moved to Colorado, and we decided we would rent. We sold our place. We moved here, and we're renting.
• 19:39
  And it's a gorgeous, gorgeous home that has been completely remodeled, interior designer and everything. But we understand that the people who lived here before, the people who own the home before the investors bought it, and remodeled it, they had cats, and they did so much damage Mhmm. And created such and I love cats, by the way. I used to have a cat, but they did so much damage that when we signed here, we had to swear, you know, that there were no cats, that we had no cat at all because they had done so much damage. So the real estate investors were like, yeah.
• 20:15
  We don't want any cats again.
• 20:16
  Davina: Yeah. It was shocking. I mean, I I also like cats, and I've never encountered a cat situation like this. But it was, not very litter box trained cat, and it was, just kinda got real stinky in there, and it was hard to get out. So
• 20:31
  Tessa: Yeah. It's always the owner. It's always the owner. When they're pets to me, when there are issues with pets, it's always because the owner is irresponsible or doesn't do what they need to do by the pet. But so that so that's wonderful for you that you've only had that kind of thing.
• 20:44
  Tell us about the short term rentals. What was the what made you decide to finally do, like, short term rental?
• 20:50
  Davina: So I invested in a short term rental with a partner who's also a partner at my law firm, and we've got a few properties together that are separate from the law firm. And we invested in a short term rental because he had a short term rental that was a ski condo that did really well that he eventually sold. And I had some interest in potentially getting a family lake cottage nearby because Michigan's right laky. Everybody goes to lake in the summer. Right.
• 21:18
  So I had kind of been keeping my eye out for a potential lake property for our family, but I wasn't really sure how much we would use it or if it'd be worth it. So we found this adorable lake property in a really cute summer town by the beaches of Lake Michigan, but it's on a smaller lake. And we got it. We did a we did a whole renovation to that one. That was months of working with a designer and a contractor to bring it up to a very cute Airbnb standard.
• 21:45
  And that one rented I think we we finished it in about February, March. It it was sold out for the summer, which is early June through the August for the school holidays. So that first year did did really well. It's seasonal, though, so it was baking a lot in the off season. So we're gonna give it a couple years to see how it does if it evens out, because it does so well in the summers.
• 22:15
  So that one's TBD on how long we'll keep that one.
• 22:18
  Tessa: Yeah. Yeah. I you you live and learn. Your what do you think sort of of the pros and cons of the long term versus short term versus commercial have kind of been for you so far?
• 22:35
  Davina: That's a great question. So the short term rental, I'll start with, makes far more money per day that someone's in it. So in terms of when someone is in it makes the most money. If it the hard thing about short term rentals, though, is it requires a lot more work, more than I had anticipated because you have guests moving in and out all the time, and it has to be pristine for each of them, which means, you know, the cleaner has to be on time. The sheets have to be inspected.
• 23:09
  Are they ripped? Is anything stained? Do we need to replace anything? Having a vacation rental comes with a lot of we have to put the dock in and out and, you know, do more landscaping than we would do for a long term tenant. So the the short term rental, I think it's cool, but it's not doesn't make my heart sing.
• 23:28
  I don't think that I would want to have an empire of short term rentals personally while I'm trying to manage a full time career. We have a team in place that manages it now, which has been amazing. And so it's way more hands off than it would be if I was doing it myself. But still, it's quite a lot of communicating with the Yeah. Biggest team members.
• 23:47
  The long term rentals are my preference. The long term single I rent I invest in single family rentals just because that's what's available mostly in my area. I really like those because I intend to keep them for ten, fifteen, maybe thirty years. And so every month that there's a tenant in there, even though they're not paying that much more than my expenses on the property, which are mortgage, insurance, taxes, upkeep, they're paying every single month. And that my mortgage is going down every single month with their money.
• 24:25
  So even if the house never appreciates, which is unlikely given the historical trend of real estate as an asset class in The United States, the property would be fully paid off using the tenant's money, and then I would have the value of the house, whatever it is at the time. So it just makes a lot of sense to be that investment model as a long term investing on the side type of strategy.
• 24:51
  Tessa: Right.
• 24:52
  Davina: The commercial one is similar. We have our law firm has three office spaces that we occupy. And so the law firm is the tenant, and then we have a separate LLC that has the same partners that owns the real estate. And so we have great tenants. We have tenant the law firm the tenant.
• 25:11
  No. Right. You're right. So the tenant. And that is just truly that is truly hands off.
• 25:17
  I mean, that is, like, the very occasional handyman has to come in. But if we could if I could find more commercial property where the tenant was definitely not gonna move out, I would be interested in that. But it's it's hit or miss right now with everybody working remotely, and I certainly wouldn't invest in traditional office space necessarily. It would have to be something like a doctor's office or a physical therapy place. Whether you know they're gonna
• 25:47
  Tessa: be there for a long Read a long time. Yeah. Yeah. And avoid that turnover. Do you you obviously have been really good at picking the properties because one of the downsides a lot of people say with a real estate investment, long term rentals, is they get the property and then there's more work, more money that has to go into it to sort of get it up to rental status.
• 26:13
  And they have renters that leave and they cause a lot of damage. And so a lot of their profits are going back into sort of caring for these properties and, you know, repairing damage that tenants have left or, getting them up to a standard where somebody can live in it, maybe finding things that they didn't expect when they bought it that they were gonna have to replace. You you haven't had any situations like that yet, have you?
• 26:40
  Davina: I've had a few surprises. Like, a whole AC system went out at one house. Another house didn't have it where I thought they had it. Another house said they had a dishwasher and the dishwasher was physically present when I bought the house. But when I actually got possession, I realized it was an old dishwasher with no dishwasher hookup whatsoever.
• 27:00
  It was just sitting there under the counter. Really weird. So there's stuff like that. It's kinda like, I didn't realize I was gonna have to spend money on that. Or I did have a major foundational issue that was discovered in inspections one time where we were able to negotiate with the seller that they fixed it before we before I closed on it.
• 27:20
  But my strategy I have a mindset strategy and a practical strategy for that. The practical strategy is that I always get a home warranty on the new properties as soon as I purchase them. So I have the homeowner's insurance that covers, you know, disasters, broken pipes, or trees falling on the roof or whatever. But then the home warranty covers things that are more maintenance stuff, like plumbing issues, the AC unit, ductwork, appliances breaking, stuff like that. And I like to have those home warranties.
• 28:00
  They're usually, like, 500 or 8 to $800 a year, so they're not that expensive. And when I was self managing my properties I now use a property manager. It's been life changing. But when I was self managing, since I'm not a plumber and I'm not an electrician and I don't know how to fix those things, the tenants would contact me and say, you know, the bathtub's draining really slowly or the dryer is not drying or whatever. I would just log on to the home warranty company and put in the issue, and then they would send the right technician out to fix the problem.
• 28:30
  So, like, what give me an idea of kind of the how you find the warranty company. I just googled, like, home warranty companies. I ended up using one called American Home Shield that I'm not affiliated with. I just ended up finding them. And they were great.
• 28:46
  They had a lot of coverage on the types of things that I wanted. And so when I would contact them, they would they have a network of providers in the local area that they come out and fix the problem. And the nice thing is that then the visit, let's say the plumber comes out, it would cost me a $100 per visit no matter what the problem was. Okay.
• 29:09
  Tessa: Let oh, and you said you had a mindset strategy.
• 29:11
  Davina: Oh, yeah.
• 29:12
  Tessa: Before we move on, I wanna hear your mindset strategy because that's what I Yeah. Said for
• 29:15
  Davina: So the mindset part is, you know, owning property is just like owning any other business, and you have to keep the business up. So I personally know that when I buy a property, all the things that make the property that put the property in a good condition are gonna need to be replaced at some point. So roofs have a lifespan. Gutters, paint, siding, landscape, foundations, driveways, sidewalks, railings, flooring, they all have a lifespan. And so they all have different lifespans.
• 29:49
  So, hopefully, they don't all need to be replaced at once. But over the course of owning a property for thirty years or even ten years, some or all of those are gonna need to be replaced. So I just have the mindset that I am gonna have to put some money into these things and that it's not free to own good properties. But I see it as every dollar I put into the property, I'm ensuring the highest rental rate that I can for that property. So it's a great investment for me to put in new flooring or put in new paint.
• 30:19
  And then ultimately, I want good tenants who see it as a place that's not just dilapidated and falling down. I want them to see it as a place that's well cared for, which helps my bottom line. And then eventually, when I go to sell it or refinance it, I want the appraiser or the or the buyer to see that it's somewhere that's been well cared for. And I also think that if you keep up your property, like, it it helps the neighborhood and the neighborhood will follow suit. And obviously, they hope that I follow suit because they're nervous about having, you know, rental properties in their neighborhood that aren't gonna
• 30:53
  Tessa: be kept up. Right. Right. So tell us one of the things I think that people worry about in terms of investing in real estate is coming up with that first chunk of money to because there's all kinds of refinance strategies and stuff like that that you can do to get the second property or third property. But getting that first property, did you you obviously were listing the things and sort of preparing for that and sort of setting money aside.
• 31:21
  Was that your was that what you did?
• 31:23
  Davina: Yeah. It was. So I had originally about four years before I invested in my first property, I had set aside I had saved I had $7,000 saved set aside. And I was like, great. I can invest this somewhere.
• 31:37
  I didn't know where or how. And I called the bank. I was like, can I buy a house? And they were like, well, you can buy a house up to, I think it was, like, $80,000 or something that they said to to look in that range. And so I started looking at houses in that range, and I was like, this is not gonna be a great investment experience.
• 31:55
  I like, the properties, they needed so much work or they were so old or they just were not gonna attract tenants that were gonna be able to pay top dollar. So I said I'm just gonna hold off. I'm just gonna keep saving. I saved more money. And then I decided to go very traditional route because it's what I was familiar with.
• 32:14
  So I saved money for the down payment, got a traditional mortgage just like 20%. 20% down. Yep. Traditional mortgage just like you would do if you're buying your own house. And then then then a couple years later, got the next one same way.
• 32:32
  Couple years later, I got the next one. And then I said to my lender, I was like, how many mortgages am I gonna qualify for? Like, I'm not making oodles of money. What are you gonna stop me at some point? And he said that the first one is the hardest because you have to show that you qualify.
• 32:51
  But then after that, once you show successful rental history that the debt and the income on those properties sort of cancels it out cancels each other out. So you just have to keep proving that you can qualify for one investment property, basically, one more. Does that make sense? Right. Right.
• 33:09
  Did you when you
• 33:10
  Tessa: got your second and your third, did you refinance the first one to get so a lot of people do that and they pull money out. They use that for the next one. Did you do did follow that strategy?
• 33:21
  Davina: Yes. I did. So I can't remember the exact sequence, but I did ultimately refinance. I have ultimately refinanced the first three properties that I got. I've refinanced them to pull money out, which helped me finance additional properties and the law firm buy in.
• 33:40
  And so that was an interesting experience just to go through, you know, what is refinancing. What does it mean to pull money out? And my first time doing it, but essentially, it's just going back to I went back to the same lender and said, my property's worth more now. Can I get more money? And so they send out an appraiser, and they say, yeah.
• 33:59
  This house that you bought for the first one I bought for $1.25 125,000 is now worth 225,000. So they were able to lend up to 80% of the new value. And so all of that equity, I was able to roll into the next investments.
• 34:15
  Tessa: Yeah. Yeah. Do you use the you you talk about using the same lender. When you first found your lender, did you was it a Google experience? Let me go find a lender, or was it like a local somebody?
• 34:27
  Or do you have a strategy there?
• 34:29
  Davina: Yes. I've used it I've used different strategies. At first, I used my big bank because it's where my checking account was and my savings. And it was a great company but a nightmare process. There's just so many departments, and they're such sticklers.
• 34:46
  Nobody has authority to do anything. Everybody needs someone else's authority. It like, one signature will expire, and then you need another one. It just was a nightmare. So I ended up finding a local lender at a lending company that is local to where I live.
• 35:02
  And, oh, it's a it's a world of difference. Just I have one person now that I talk to who manages the whole process. He knows me personally. You know, if we saw each other on the street, we'd stop and chat. That's Leah
• 35:14
  Tessa: for banking and lending.
• 35:16
  Davina: Yeah. He calls me sometimes just to check on how the properties are going, and we've done we've collaborated together on on things. And it's just so much better. And so I don't even you know, this this is this is something I've told him. I don't even shop around for rates because the benefit of getting maybe a little bit off the rate is just not worth it to me.
• 35:42
  Plus, I know I'm gonna refinance these properties anyway. So I just wanna get them.
• 35:47
  Tessa: Yeah. And so is it so you said a lending company. It's not a traditional bank. It's a it's a company that what they do is is lending.
• 35:54
  Davina: Yeah. It's a neighborhood it's like called a neighborhood lending company. And it's similar to what a credit union I Mhmm. I understand credit unions have people like that too that, are local to the area and, have more flexibility and more authority in in what they can Yeah.
• 36:09
  Tessa: Offer you. Absolutely. So I can imagine the busy women law firm owners who are already trying to run their law firm business and probably have kids thinking, oh my god. How do I do that and this? And I'm sure so you started out doing doing yourself with your first one.
• 36:33
  How soon did it take you to sort of realize I need to have a property manager or somebody to help me with these?
• 36:39
  Davina: Yeah. Once I got the third one, then I actually enlisted my dad as a contractor for me who's he's just very handy. He's not a contractor, but he moved to the to the local area. And I then had him handle all of the tenant communications and all of the turnovers when tenants moved out, which was the most difficult thing for me to orchestrate because it involves a lot of different types of people coming in to do the paint, do the floor, do the cleaning, do the lawn, whatever. And so that was after this the third property, and he was just on an ad hoc you know, hourly basis.
• 37:18
  I could have used any local person that I trusted to do that. And then once I got the fourth property, I enlisted the help of a professional property management company, which has been phenomenal because and I I could have done it with the first one. There's no reason that you need to have multiple. And if I were to do it again, I probably would do it with the first one. But they handle all the tenant communications.
• 37:43
  The tenants don't even know my name. They don't have my phone number. They have no way of contacting me. All the communication goes through the property manager, and he takes care of everything. So
• 37:53
  Tessa: And was this, again, kind of a local property management company? Somebody that you met, knew, or found?
• 38:00
  Davina: This one, yeah, I just found through Google, this one. The lender, forgot to answer your question, I found through a realtor. But the, yeah, the property manager I found through Google, and I, spoke with on the phone, and he got good reviews. And, he's been very loyal and
• 38:13
  Tessa: professional and reliable. Oh, good. Professional and reliable is good. Do you have to be handy? I think a lot of people watch HDTV, and they think if I buy a rental property, I'm gonna have to I you know, they think to themselves, I can, oh, I can do that.
• 38:30
  And then they get it, and they're like, I have no idea how to plumb. I have no idea how to do like, I have no idea. And they find themselves sort of in a bind. Did you face
• 38:41
  Davina: something that I was a little bit worried about myself because my really, my only handy skill is I can paint just like a normal person level of painting. I feel like I'm skilled at it. And everybody said to me, my gosh, you're gonna be fixing toilets in the middle of the night. And I was like, well, I don't know how to fix toilets, so I'm definitely not gonna be fixing them in the middle of the night. So I have built systems and processes in place to ensure that no tenant ever has to rely on me fixing anything because I can't.
• 39:12
  And I don't have time and I don't know how I How to do it.
• 39:15
  Tessa: Right? Yeah. Exactly. Don't wanna learn. You don't really wanna learn how to fix a toilet.
• 39:19
  I don't wanna learn. In the middle of the day or the night. Yeah.
• 39:21
  Davina: Exactly. At no point even if my own toilet and my own house broke, I would not be the one to fix it. So it's just figuring out it's like with law, it's very similar to issue spotting when I'm dealing with tenant issues. They tell me there's a problem. And I think, is it a plumbing issue?
• 39:36
  Is it an electrical issue? Is it an emergency that I need to call an emergency person? One time a cable, like a power line fell in the backyard, and I was like, that sounds like a power company question. You know, just issue spotting. Right.
• 39:54
  And then just calling that provider that provides that service and getting it taken care of. So I have not used I've gotten more handy in my knowledge in terms of what to look for. Like, I could tell you the difference between different kinds flooring and what types of outlets need to go in a bathroom and stuff like that. But I am not doing any of that work myself.
• 40:13
  Tessa: Yeah. I think it's kind of, interesting because one of the challenges that women have when they start their own law firm business is going for the high achieving women are doers. We do, do, do, which is how we get to where we are in our education and our career. And then when you own a business, you really if you wanna scale the business, you really have to stop being the doer and start being the the leader and the one who sort of has a strategy and organizes and keeps everything on point with the vision that you have and stuff. And so it really sounds like it's very much the same thing.
• 40:48
  And I think where people may get bogged down in real estate investment like they do with starting a law firm is they get bogged down in thinking, I've got to be the doer as opposed to who could we find who can do this thing, who already has the knowledge.
• 41:01
  Davina: That's exactly right. Yeah. That's such a good way to put it. And it's like, you know, the CEO mindset that I know you talk about on your podcast, the CEO mindset of, how do you elevate from being an individual contributor to to being someone who is getting exponentially more done than your individual time will allow. And so, yeah, that's exactly what I've thought of as I've built this real estate portfolio that I'm not rowing the boat.
• 41:26
  I'm finding people to go in the right seats on the boat and then they're rowing boat. Right. Right. And I'm occasionally shouting out, stroke, stroke, but they're actually rowing. Well, you know what
• 41:37
  Tessa: I think is kind of interesting too is that you have you also keep your eyes open for opportunities, right, that other people might not view that way. So when you're looking at the partnership invitation in this business, you're looking at how decisions are made and things like that. But, also, there was the opportunity to invest in the commercial real estate aspect of that. And that's something you were able to look at and say, here's an opportunity. You you didn't go out seeking commercial real estate to invest in, but you were able to well, there's an opportunity there for me with that.
• 42:17
  And that, no matter what happens with the firm, that property is still a tangible thing, right, that is there that has value in and of itself. And so I think one of the things once you start going down the path, it's like you're partnering the law firm. Well, now we see an opportunity to maybe do this joint venture of the the rental property, the short term rental property. So that's an opportunity that you might not have been aware of or thinking of had you not been a real estate investor and having conversations with other people in real estate. Right?
• 42:50
  So your your opportunity spotting, I think, gets sharpened.
• 42:55
  Davina: Yeah. Yeah. Exactly. And I've been able to develop the mindset just sort of subconsciously, I think, now that you bring that up of any prob I personally don't think that there's a problem I couldn't find my way out of. And I think maybe that's why it was so important to me in creating the partnership law firm operating agreement of how do we out.
• 43:17
  Because with real estate, you know, having multiple exit strategies, it is what gives me a lot of comfort that I could either flip it and sell it or I could hold it or I could rent it or I could short term rent it or I can you know, there's a lot of different ways you can get out if you're like, oh, this strategy isn't really working. So I just have a lot of confidence that I can always just figure my way out. And also just I saw it as you're making a decision either way. You know? I thought, am I gonna diversify my income or am I not gonna diversify my income?
• 43:55
  It wasn't to me like this huge risk of like, oh my gosh. I'm putting everything on the line and I can never get it back. It's like, no. Am I gonna stay in a a career where I have one source of income? That to me is risk.
• 44:07
  Or am I gonna diversify and have multiple streams of income so that if I lose my job or I get sick or I wanna or I have to take care of a parent or something like that, I wanna step away or I need to step away that my source of income isn't just cut off. So to me, was more like diversifying risk rather than taking risk. Right. Right.
• 44:28
  Tessa: Have you, first of all, that first 20%, did you just you just saved that from your regular job? You made a point to save that. Did you have a strategy for saving that? Because I know a lot of people think to themselves, oh, I could save that amount of money.
• 44:42
  Davina: So that one actually came because I moved from one house to another and it was a downsize. And it wasn't so that I could invest in real estate. It just happened to be a down a a less expensive house and so it freed up some money. So I got a little bit lucky in that regard, but it wasn't a huge amount of money that I needed. I mean, I think on mid level or early to mid level career path for most lawyers, I think, you know, saving 30,000 or $40,000 over the course of a few years is not completely unfeasible.
• 45:18
  And they're the the investing with a partner strategy that I used with my law firm partner is definitely something that would be repeatable in terms of using somebody outside of your immediate family. So not your spouse or something, but partner where you're both contributing an equal amount of money to the down payment and then you own the house equally where and one person gets the mortgage, but you put it in both of your you put the house in both of your names. That's something that's easily replicatable with where it would cut the down payment in half. Yeah. Yeah.
• 45:54
  Do you
• 45:54
  Tessa: think the I have so many questions. Do you think the I've been reading a lot. I've been reading a lot about how current generation can't buy a house. Can't buy a house. There's not enough inventory available.
• 46:13
  They're priced out of the market plus these high interest rates. Do you think your timing played into that, or have you tend continued to sort of steadily invest despite the interest rates, despite the houses what used to be a 125, now it's $2.50 purchase price or now it's $4.50 purchase price. Have you continued despite that? And what is your kind of thinking on that?
• 46:36
  Davina: Yeah. So my thinking on that is that, historically, if you look at real estate, the median home price in The United States, you can just Google that, and it shows it's very similar to the stock market where it show it goes, you know, from left to right, up and down, up and down, up and down, but steadily over time, it goes up. So real estate, just like the S and P 500 appreciates over time. And so every single house I bought, I thought, oh my gosh. I can't believe I'm paying this much for a house.
• 47:04
  And then two years later, I think, I'm so glad I bought it when I did. You know, the first house was 125,000. The next ones were in the 200,000. And I was like, I cannot believe I'm investing in a $200,000 house. The vacation rental was in the 400,000.
• 47:21
  And I was like, oh my gosh. I can't believe I'm investing in $400,000 All of them have built equity, and all of them have had the debt paid down by the tenant or the renters. So I personally haven't tried to time the market. I've steadily bought over time because I I find that the house is going to be more expensive on average five years from now than it is now. There might be ups and downs, but it's gonna be more expensive in five years, which means I should get it now, and it will appreciate.
• 47:53
  And if it doesn't appreciate, hold hold on to it for another five or ten years, and it almost certainly will appreciate at least from where I bought it.
• 48:01
  Tessa: Mhmm. Mhmm. And you're charging rent. So you're charging rent accordingly. So if you're paying you know, like, they're really showing on the on the Good Morning America and Today show, they'll show a mortgage payment.
• 48:12
  And what you paid during the pandemic per mortgage was, you know, $600 less or whatever. And now it's, you know, gone up And but you're also pricing it out that way with a rental.
• 48:26
  Davina: Right? Exactly. Yeah. So the renter my my formula is that I I research what the rental market is going for on that type of property, but it works for me if the going rental rate is higher than the mortgage plus the insurance plus the tax. I I do put my own money in now and then to cover shortages like vacancies and repairs.
• 48:50
  I'm investing my own money to keep these rentals afloat, but knowing that the properties are still a business asset. So even though I'm investing my own money, I'm still getting exponential return on that. It what becomes tricky, I've learned, I'm learning as I'm refinancing these things, is that when you refinance at the higher value of the home, your mortgage goes way up. So at that point, you have to raise your rent or hope that those people move out, and then you can raise the rent, you know, significantly for the next people. We do do rent increases just to make sure that the tenants are used to that.
• 49:29
  Every year, they go up a little bit. But I wouldn't be able to jump the rent up, like, double or something like that.
• 49:36
  Tessa: Right. Right. So you have a, course where you help people. Speaking of speaking about trying to figure everything out yourself and hiring somebody who already knows something, you have a course where you actually help people, executive level professionals like women law firm owners who might want to get into the real estate investment. Tell us a little bit about that program.
• 50:03
  Davina: Yeah. So I started a program called investontheside.com is my website because it's all about the strategy of being a high achieving executive level woman, specifically, investing on the side. So it's investontheside.com, and the course that I created is a twelve week mastermind called the mogul masterclass. And in that program, it is an I wanted to give people a really no fluff direct step by step do this, do this, do this in bite sized chunks over the course of twelve week. So we just launched this year.
• 50:42
  We have our first cohort going through, including a woman law firm owner who owns her own firm, and it's just going great. It's amazing to see people tackle their fears over security and risks while trying to mount balance their dream of having more freedom, more free time, more autonomy over their finances. So it's a it's an online course, and then we have a coaching component to it as well. So it's been it's been really awesome. It's been a lot of fun.
• 51:15
  Good. Good. The
• 51:18
  Tessa: and it's interesting because I went through a couple years ago, I went through kind of a real estate coaching program. And I got to a point I I had a great conversation where I had really understanding. But one of the things it revealed to me was what I wanted next was not that. And I think there's sometimes those things are illuminating in helping you get clarity in your life and your direction. So the timing because the next piece was, you know, look at properties and stuff.
• 51:51
  And and then I started thinking about, you know, what we wanted, and it it's sort of facilitated our move to Colorado. Because it was like, do we buy in Florida? Do we buy in Colorado? Do we what do we you know? And we knew we were gonna be moving.
• 52:05
  So then you you start, like, getting really clear on, well, what you're this is the next thing for my life. So sometimes even going through something like that, there's an education component. But sometimes it can also show you that you help you get clarity on where you are in your life and what you want in your life, and it may not be the thing. Right? Or or you might have somebody says, I'm I'm really doing short term rentals because I've just seen so much about Airbnb's.
• 52:29
  And they might get in and they go, oh, here are the pros and cons, and here's why I'm gonna do this instead or do that or whatever. So I think it's great. And I think the idea too that stumps a lot of people is sort of the down payment aspect and how do you get there and how do you prioritize? How much do you need and all that kind of stuff? Because traditional lending with 20%, I would wonder if you could get a house in a neighborhood right now that would be the kind of neighborhood you describe for a $125,000.
• 52:57
  You could. So you're gonna need more than $3,040,000 dollars. And how do you do it? And I'm sure you you delve into sort of strategies to help people figure that out.
• 53:05
  Davina: Yeah. That's one of the the big components of it, and everybody has that question of, do I have enough money? And we go through you know, there's some some interesting, not that creative, definitely not off the wall strategies where we help people identify resources that they actually do have access to without pulling out from their four zero one k's or anything like that. There's some different products out there that help people who have reliable income, to get started with investments. So we go through a lot of that.
• 53:35
  And Well, let me
• 53:36
  Tessa: ask you this. How do you deal with business owners who are trying to show on their tax returns less income for tax purposes? That's their tax strategy. And then they go to get a loan, and they're faced with you don't make enough money. Yeah.
• 53:58
  Do you have a a strategy for that? Do you help people with that?
• 54:01
  Davina: You know what? That question came up before recently in a forum that I was looking at, and it's a very interesting question. I haven't had that yet with my participants, but it's a very interesting question. I know there's a lot of depreciation and other tax asset advantages rather that come with real estate. But if you are running your own business where you need to show that you're not making as much as you would need to qualify for a loan, then, yeah, that would be an obstacle you'd probably need to talk to through a coaching program or a mentor or a community that that could help you Yeah.
• 54:37
  Hive mind that. Because I do
• 54:39
  Tessa: think that is something I think it's something you'll encounter. If you have women law firm owners who are other types of business owners that start coming to you and going through your program, it's a very common thing as somebody who's owned their own business for years, who's married to somebody who's owned their own business for years. The that that you would think that bankers, lenders would know that this is a tax strategy. And but it really makes a a w two will get you if you have a w two, it will get you a loan faster than if you own your own company.
• 55:13
  Davina: Right. So I think that having that neighborhood lender or credit union lender is one of the ways that you could probably figure that out. I know when I was moving from my last army station to Michigan, I was leaving a job to to join a new job, and the big bank I was trying to get a mortgage through was like, you can't get a mortgage because you haven't started your new job yet. I was like, but I'm moving to start the new job. Like, that's what I'm moving for.
• 55:41
  They just were so close minded about it. Whereas I think if I had a personal relationship with somebody who knew my situation, it would be a lot smoother sailing. Yeah. When we
• 55:51
  Tessa: were thinking about buying here, we we didn't because we did we wanted to make sure we knew where we wanted to be before we made that kind of investment. But the I found a lender and what they that works with business owners, and what they do is they they take the risk. So they add a little, you know, half a point or a point or something on it. Right? So for what however many points.
• 56:14
  I don't remember exactly now, to sort of justify taking risks. So there are lenders out there who do it, but you may have to for people who are in their business, be aware you may have to make some changes in how you do your taxes or in preparation for that and or find a lender that sort of works with business owners and understands that because that makes a huge difference. Absolutely. If we want to get in touch with you, find out more about your program, find out more about you, just call you and say hi? How do we find how do we connect with you?
• 56:44
  Davina: Yes. Please do. The two best ways to find me are on Instagram at Invest On The Side or through my website, there's a page that is a great place to start and that has some downloadable resources for free called investontheside.com/howtostart. And you can connect with me there. We'll include those
• 57:08
  Tessa: links in the show notes then. I appreciate it, Tessa. It's been so fun to talk with you about this. It's a it's a favorite topic of mine, so I'm glad you were here.
• 57:16
  Davina: You too, Davina. Thank you so much for having us. It's such a great conversation. It's such a pleasure to see you
• 57:21
  Tessa: face to face. Good. Likewise.
• 57:25
  Intro: If you're ready to create more of what you truly desire in your business and your life, then you'll want to visit us at wealthywomanlawyer.com to learn more about how we help our clients create wealth generating law firms with ease.