Up until 2018, Mike Newton never had more than $1,000 to his name.
He grew up “unbelievably poor,” he told Insider. His mom raised him and his six siblings on her own in Grand Forks, North Dakota. They relied on food stamps and subsidized housing to get by.
Newton started working immediately after graduating high school in 2009. He landed a job at a construction company in the Seattle, Washington area and did home remodeling projects for about six years before transitioning to a career in law enforcement. He’s been a Washington State Trooper since 2016 and a member of the SWAT team since 2019.
In 2018, after watching a handful of real estate- and personal finance-related YouTube videos, he decided he wanted to build wealth via real estate investing. That’s when he started seriously saving for the first time in his life.
Over the past four years, he’s acquired 10 units across eight properties in three different states: Washington, where he resides, as well as Indiana and Illinois. Insider verified these details by looking at closing documents.
Newton, now 31, profits about $2,000 a month from his rental units, he said, and plans to retire from law enforcement before he’s 35. At that point, he expects to be able to live completely off of his rental income.
Here are the first four steps he took after deciding he wanted to buy his first property.
Years before Newton even started looking at properties, he was watching real estate-related YouTube videos.
Back when he was working in construction, he’d spend hours in the granite shop cutting countertops. “Rather than just listening to the constant buzz of the saws, I listened to YouTube videos with headphones on,” recalled Newton, who stumbled across real estate investor Grant Cardone’s channel, as well as Robert Kiyosaki’s “The Rich Dad Channel.”
Thanks to YouTube, he learned about the concept of “house hacking,” which is the strategy he ended up using to be able to afford his first property. House hacking is when you rent out a portion of your home to offset your mortgage. It can effectively lower your monthly housing payment and help first-time investors save up to buy more properties.
If you want to get in the game of real estate, learn everything you possibly can about what it takes to succeed and the nuts and bolts of how to actually buy a property. Check out books that have inspired other successful investors, listen to podcasts, or watch YouTube videos like Newton did.
“You can pretty much learn to do anything — how to fix your car or remodel something in your home — all from YouTube University,” said Newton, who has a channel himself and uses it to discuss his real estate journey.
Take your education a step further and reach out to successful investors and ask them how they got to where they are today, he added: “You can find a small-time YouTuber with only a few thousand subscribers like me and you can direct message me and I’ll actually see it and I’ll actually respond too, because I don’t have a million followers.”
Getting educated is a great first step, but if you don’t take action, you won’t get anywhere.
“It’s great to be motivated and to be watching every video that comes out on YouTube about real estate investing, but you actually have to take specific steps if you want to be successful,” said Newton. “That means getting educated about real estate investing while at the same time cutting back on expenses and volunteering for more overtime shifts at work so you can save money.”
Investing in real estate requires upfront cash for a down payment and closing costs. Newton didn’t have anything in savings, so his next immediate step was to save aggressively.
For about six months, he picked up every overtime shift that he could, he said: “I was working 90 hours a week and saving every penny until I had the money I needed.”
Saving came relatively easy to him because of his background, he noted: “Growing up as poor as I did, I already lived a very frugal life. So when I made this conscious decision to start actively saving to invest in real estate, I couldn’t really tighten the belt anymore. I shop at Walmart. I don’t own lavish things. I drive a 32-year-old car that I bought 12 years ago. So there wasn’t much of a lifestyle to cut back.”
The things he enjoys doing — playing soccer, going to the gym, and spending time with his five-year-old son — don’t cost a lot of money, he said.
The combination of increasing his income and living frugally allowed him to save $30,000 in about six months.
“Examine your spending closely,” he advised. “Maybe you eat out too much or your car payment is too expensive. Most likely, there are places you can cut back.” If not, focus on increasing your income by picking up extra hours or starting a side hustle. After all, the more money you bring in, the more you’ll have to save.
Another important step Newton took was talking to lenders and getting pre-qualified for a mortgage, which helped him understand what he could afford.
You’ll want to talk to multiple lenders, he advised: “The most astonishing thing that I discovered through this process was how different the terms with different lenders can be. Big banks like Chase approved me for a tiny amount with a very high interest rate. Other places, like Caliber Home Loans, approved me for double with a lower interest rate. I was so surprised with the discrepancy.”
Note that when you’re shopping around for the best mortgage rate and submitting applications to several lenders, you may incur multiple hard inquiries, which can hurt your credit score. To minimize damage to your score, do all of your rate shopping within 30 days. All of the hard inquiries that you rack up during this “mortgage credit pull window” will only count as one inquiry on your credit score.
Newton ended up going with Caliber, which qualified him for a $450,000 mortgage. That became his budget.
When it came time to look at specific properties, as a first-time buyer, Newton needed a real estate agent to help him find exactly what he was looking for.
Start by doing some basic research on realtors in your area, he advised. If you have a particular person in mind who was referred to you, see if they have a website with reviews and testimonials. Take it a step further and reach out to other people who have worked with him or her. Ask what their experience was like.
After narrowing his search down to five or six realtors, Newton interviewed them all. “I was looking for somebody who did a large volume of transactions and seemed to be a hard worker and honest,” he said. He came prepared to the interview with specific questions, including:
He settled on a realtor and told her his budget. He also told her that he was specifically looking for a multi-unit property so that he could house-hack.
Plus, he’d done some research into his market, the suburbs of Seattle, and knew that he wanted to buy in an area with a good school district to attract good tenants. If you’re clear on exactly what you want, it’ll be easier to find the right property for you.
After two months of looking at properties, Newton put in an offer on a duplex four hours after it was listed.
“It almost was that Cinderella deal where it just happened,” he said. It was all of the legwork, though, that allowed the pieces to fall into place.
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