MtoM #36 - Psychiatrist Real Estate Investor Multimillionaire

This is the White Coat Investor podcast, Milestones to Millionaire, celebrating stories of success along the journey to financial freedom. Here is your host, Dr. Jim Dali.

This is Milestones to Millionaire podcast number 36, the Millionaire Psychiatrist. As a white coat, you have valuable knowledge. Various companies want that knowledge and they're willing to pay you for it. That's why we put together a list of recommendations for companies that pay you to take surveys. If you're looking for a profitable side gig for not too much effort, getting paid for surveys could be the perfect solution for you. You can make extra money, start a Solo 401 and use your medical knowledge to impact new products. One of the WCI columnists makes an extra $30,000 a year just doing these surveys. Sign up today and use a fraction of your downtime to make extra cash. Go to whitecoatinvestor.com mdsurveys you can do this and the White Coat Investor can help. If you would like to be on the Milestones to Millionaire podcast, you can apply@whitecoatinvestor.com Milestones we want to feature you and your story. Whatever inspiring financial milestone you've hit, I don't care if you've just hit back to broke, right, or whether you paid off your student loans or your mortgage or whatever. We're trying to get a wide variety of financial milestones on the podcast. We from a wide variety of people, just to show others that it can be done and to inspire them to do what you've done. So if you'd like to apply whitecoatinvestor.com Milestones we have a great guest today, a psychiatrist who is a millionaire. Let's get her on the show. Our guest today is Dr. Stageberg. Welcome to the Milestones to Millionaire podcast.

Thank you. I'm excited to be here.

Tell us about your specialty and how far you are out of training.

I am an adult psychiatrist and I am one year out of my training.

And what is your approximate net worth?

Just recently I closed on a large real estate transaction and that bumped my net worth up to $7.5 million.

$7.5 million, which is pretty remarkable. One year out of training. So I think we're going to hear an interesting story about this. But before we get into the story, tell us what your net worth is divided into. I'm. I mean, how much is your home equity, how much is investments, how much is whatever?

Yeah, so 100% of my net worth is in real estate and cash, and that fluctuates wildly depending on, you know, kind of what I've recently acquired versus what I've, you know, refinanced, but essentially real estate.

And did you have a prior career before going to med school, residency, et cetera?

I did for a short while. So I finished undergrad and then I got a two year master's of Health administration and policy, which is like an MBA but with a healthcare focus, focus. And then I worked for two years doing quality improvement with pediatricians in the state of Oklahoma and really liked working with physicians and so then decided to go to medical school. So there was about a four year gap between undergrad and medical school.

All right, let's hear the story. There's a story here that we need to hear about how you acquired so much wealth that clearly did not just come from saving your physician income. You've done something else. Tell us what it is.

Yeah, so I would say if I had to pick kind of one thing that led to the wealth creation that I have, particularly at such a young age, besides the advice to invest in real estate, it's that I valued financial education at a very young age. So I was legally emancipated at 16. I had watched my parents struggle with extreme poverty. And then even the money that we did have was all debt, credit cards. A lot of days like don't answer the phone, it's debt collectors. And I knew I wanted something very different. So I started educating myself about credit cards and loans and homeownership at a very young age, like 16, 17, 18 years old. And I've always been very debt averse in my personal life. So I've always driven a very modest car, very modest home, those sorts of things. And then started investing in real estate very young. I was 24 when my husband and I, I had a home, he had a home. We kept my home, moved into his home. That was our first investment when I was 24. We had just gotten married and we decided at that point we had both come from very challenging childhoods. We both were kind of self made young people. We had had mentors in our life who had invested in real estate. And we said, we want to be like them. We were just fortunate that we had both had those individuals in our separate lives before we met and made that one of our big missions over the last decade. And so we've built our real estate portfolio over about 10 years now. And as I mentioned, 100% of our portfolio is in either real estate or cash. So all of our net worth has come from real estate investments.

Okay, so what was he doing while you were studying medicine.

So he is a career technologist. He was number 13 of a startup in Oklahoma City, a technology startup, and you know, kind of a story outside of, of the time that we have here together. But he actually never got a big payout when that company sold, largely because we moved to Rochester for my training, for my psychiatry training. And the company seized his stock options when that happened. But we thought that we would have a big payday. So that was another part of our kind of mindset is we thought that at a very young age we would get, you know, maybe a low seven figure payday. And we wanted to be good stewards of that wealth. So we started investing in real estate as a way to practice that so that when we got this big mythical bucket of money, we would know how to spend it wisely. We didn't want to be those people that, you know, win the lottery and have a terrible life and are broke a year later. That pot of money never came. But the experience that we got from investing in real estate allowed us to take the return on the investment that we were creating. And all along the first nine years of our investing, we funneled all of our profits from our real estate investing back into investing. It's only been over the last year that we've lived off of, you know, really any of the cash flow from our investments. But that, that's what he did. And then he left his career to run our real estate company about two years ago. And then I've been running our real estate company since I finished residency.

So how many doors under management do you have now?

Under management, we have about 275 and we personally own about 180 of those.

And so what's your process? How much do you tend to put down when you buy a property?

So our process has been investing in single family homes. I love single family homes. You know, I don't know if that's because that's where I started or kind of why I came to love single family homes. But over the past 10 years, we basically started with a small bucket of money. That first real estate investment was the home that I lived in before we got married. Our first purposeful investment was a $35,000 foreclosure in Oklahoma City. That's where I did medical school. We spent about 15,000 on renovations. That was the extent of our life savings. Some of that was on credit cards that we had to, you know, immediately pay off. We then refinanced that house at appraised for about 100,000 so, so we got 80,000 back on the refi, which replenished our 35,000, paid off the 15,000 for the credit cards and the contractors, those sorts of things. We did a lot of that rehab ourselves as well. And then we had a bigger bucket of money and we basically kept doing that over and over and over. That's harder to do today because the market is just at a much higher place. It's harder to find properties with a lot of equity available. But it was some combination of recognizing that business plan, being very committed to it, very willing to work really hard. We often were, you know, both working until midnight doing medical school. We had three children along the way. My husband was working, you know, starting this small real estate investment company. And then some of it is grace that we started investing at a time that the real estate market has steadily increased. Now I do, I still continue to do single family. I also do large multi family now, just trying to leverage my expertise. You know, it's easier to leverage expertise on larger buildings than it is single family homes. But I love single family homes because of the ability to recycle capital very quickly. So you don't have to start with a huge bucket of money. I started with essentially 50,000 and have spooled it up over the last 10 years.

Have you stuck with sub $100,000 purchases?

No. Our first purchase there in Oklahoma City was very inexpensive. And then when we moved to Rochester, Minnesota for my training, the real estate here is much more expensive. And I had all sorts of fears that we would not be able to continue investing and we just needed to get a sense of the market and sort of learn how things work here. So real estate is more expensive here, but rents are more expensive as well. And so the ratio was roughly the same. If anything, the ratio was a little bit better here. I would say that just coincidentally, I ended up in a better real estate market than I started in. And then, you know, of course the value of homes has climbed over the years. So for several years we tried to stay under 200,000 and 250,000 and now really under like 300,000 is our target price.

So. Do you practice medicine?

I do not. I finished my training late because I had two children during residency. I had a part time contract at a local hospital here. My specialty is psychiatry and I kind of always thought I would have my own practice. Just kind of that entrepreneurial spirit. And then that contract was set to start during COVID Our daycare kept closing, so I delayed it for a year. And then just Our business has grown and I spend so much time in our business. So I work with a lot of physicians and help them with their real estate goals and investments. I do a lot of charitable giving. So I, I work in a clinic here locally as a, as a psychiatrist. I work with a women's clinic here as a psychiatrist. And it's not the path that I thought I would end up with when I started medical school. But I love that I'm able to give such a high value skill and that's kind of how life has played out for me. And so at this point, I don't practice clinical medicine for money, but it's still a big part of who I am. Absolutely.

You've used debt significantly to help you acquire this net worth. I mean constantly borrowing the money back out of the properties after you increase their value. What would you say your loan to value is now of your real estate portfolio? What's the ratio there, you think?

Yeah, excellent question. So I want to speak there very carefully for the listener about personal debt versus business debt. So I've always been fairly anti personal debt. So very modest car payments, didn't have car payments for a many, many number of years. Very modest home, no credit card debt, you know, those sorts of things. But you're absolutely right, I use a great deal of debt in our business. We try to keep that very close to 80%. So we, you know, we're levering our properties but of course the bank won't allow us to go past 80%. And then when a property gets down to say, you know, 60% or so, then we will re lever it through another cash out refi. But globally, across our whole business, we never want to go beyond 80 because we don't want to be so leveraged that if there was a dip in the market which, which will come, I mean that always happens after, after prices go up, prices come down a little bit. We want to make sure we have protection there.

Although many would say 80% is, is pretty aggressive amount of leverage as well. I see a lot of people limit themselves to 65, 70%.

Yeah. So I, I think when I, you know, when I look at the housing crisis and how, you know, we're in a 10 year housing crisis, there's you know, way more people than there are homes. I don't see, see a price dip coming and so I feel comfortable with that. You know, at any given time. If I, if I looked at our sheet today, you know, it might be 73 or 75. It just, it kind of depends. On, you know, what properties we've, we've just re levered versus the price growth in those properties. We never go beyond 80%. When we get to close to like say 60% in any given property, that's when we'll start to see, you know, do we want to do another cash out refinance on this property to unlock that equity and keep going. And then that also doesn't take into consideration the value of our businesses. So like the value of our property management company, the value of our construction company, I don't count those at all. Like in our loan to value ratio, I count those in our net worth, but we don't have any debt against those.

So what advice do you have for somebody that's a few years behind you? Let's say they're five years behind you, they're in med school or residency, they maybe want to practice part time or they don't want to practice at all and they're interested in doing real estate. How would you tell them to get started?

Yeah, I thought about that question a little bit this morning when you sent over the list of questions. And I would say the biggest thing was so coming from nothing certainly gave both my husband and I a hunger for something different. We didn't want our children to struggle with poverty and the things that we did. But what it also gave me, I mean both of us, but, but me specifically, is a sense of like naivete or ignorance that I just didn't know any better. I didn't, you know, I didn't have a set of beliefs or parents or other people saying, you know, well, why are you buying your first house as a single woman at 22 years old? Or you can't buy real estate while you're in medical school and have children. I just kind of chugged along doing whatever I wanted to do and not having any sense of limit. So you know, sometimes I'll hear people say, you know, I want to reach a million in net worth in 10 years. And that's great. Absolutely. Set goals. Goals are the most important thing and really anything that we do because it gives us a vision for the future. But could it be a year, could it be five years? You know, try to divorce oneself of like normal parameters and say, what, what do I want for myself? And then go out and get it. And I think kind of that mix of I had some general sense of what I wanted, but I also just didn't take into consideration like constraints or what other people were doing. I just did it. And that's that's how I operate my business today. And, you know, even my. My personal life, like, I want a lot of children. My husband, I want five or six children. And people will say, well, how can you do that? I don't know. There's other people out in the world that have six children, so why not me?

Hopefully they don't need too much explaining as to how to do that.

Right.

Having the children's usually pretty straightforward. It's the part after that that I find challenging.

It's tough. I have three under five, and it's a constant sense of chaos, but just a sense of, like, of course I could do that. There's other women in the world that have way more than six children. Like, what's stopping me? So just that, and trying to do so with. With grace and humor and just knowing that Universe or God or whoever that is will provide what they want to provide. And my role is to show up and be the best version of myself and to be open to those possibilities. And kind of that mix of that energy there, I think, has been the source of really all of the accomplishments in my life. And if I could give one piece of advice to anyone along the spectrum, it would be that.

Awesome. Well, thank you so much for being on the podcast. We appreciate your time, and we're super inspired by your story. It's a unique one. I don't think we've had a story quite like that on this podcast before, but I know there's a lot of people out there that will be excited to have heard it.

Yeah. Well, thank you so much for the opportunity. This was a pleasure.

Awesome. Well, that is not our normal episode. Lots of leverage involved there. Certainly not the traditional medical pathway. I'm pretty amazed. She's kind of a superwoman, raising kids, doing med school and residency, and running a real estate company. I mean, it's really pretty amazing, the capacity that some people have. Nonetheless, it does show you what's possible. I mean, with leverage, with some smart decisions, with a lot of hard work and a little bit of luck, amazing things can happen. And so I love her bit about setting goals and not necessarily feeling like you're pigeonholed into somebody else's pathway or somebody else's plan. It's your plan, it's your financial plan, and what you want is what you ought to go after. As a white coat, you have valuable knowledge. Various companies want that knowledge, and they're willing to pay you for it. That's why we put together a list of recommendations for companies that pay you to take surveys. If you're looking for a profitable side gig for not too much effort, getting paid for surveys could be the perfect solution for you. You can make extra money, start a Solo 401 and use your medical knowledge to impact new products. One of the WCI columnists makes an extra $30,000 a year just doing these surveys. Sign up today and use a fraction of your downtime to make extra cash. Go to whitecoatinvestor.com mdsurveys you can do this and the White Coat Investor can help. If you'd like to be on the Milestones to Millionaire podcast, you can apply@WhiteCodeInvestor.com Milestones. Until then, we'll see you next time on the podcast. Keep your head up, shoulders back. You've got this and we can help my dad.

Your host, Dr. Dahl, is a practicing emergency physician, blogger, author and podcaster. He is not a licensed accountant, attorney or financial advisor. So this podcast is for your entertainment and information only and should not be considered official personalized financial advice.