He Started with $5,000. Now He Owns 14 Rental Properties (And Quit His Job!)

0:00This investor went from a$5 ,000 down payment to financial freedom in just six years. In 2015, Niyi Adewole asked the finance guys at his office to explain how a 401k works, and he left that conversation even more confused. But Niyi soon found an investment that made way more sense. It was a triplex that he could live in in Louisville, Kentucky. That property cost about$190 ,000, but Niyi only needed about five grand to buy it. And that was convenient because, well, it was almost every dollar he had. He moved into one unit, rented the other two units, and went from paying$12 ,000 a month in rent to living for free.

0:41From buying that first property, it only took Niyi six years to replace his W-2 paycheck and move into real estate full-time. He didn't start with any family money or any other advantages. In fact, Niyi watched his mom lose their family home in the 2008 crash. But that's why he was so determined to build wealth that he could control. Today, Nii is sharing the entire journey, how he scaled from one house hack into a portfolio of small multifamily properties, how he kept investing through several cross-country moves, and how he built the multiple income streams in real estate that helped him buy back his time.

1:18By the end of this episode, you'll see, there's no magic to investing in real estate. It's just a formula that started with one$5 ,000 investment.

1:31What's going on, everybody? I'm Henry Washington, co-host of the BiggerPockets podcast. And today I've got an investor story with Mr. Niyi Adewole out of Atlanta. So let's bring him in. Niyi Adewole, welcome to the BiggerPockets podcast, my friend. Come on now. Thank you for having me here. This has been integral in my investing career. And so it's an honor to be here. Well, we are glad you're here. And let's start off by just having you give us a little bit of background about how you got into this whole real estate space. So we're going to take it back a little over a decade to 2015. I was just getting into my first career outside of college, which was medical device sales.

2:10And I wanted to be smart with the money I was starting to make. I wanted to know like, hey, where can I put this where it can grow and start to earn some income. And so I went to my finance guys that I sat next to and played fantasy football with and asked them like, hey, how does this whole stock market thing work? I've never had a 401k before. I've never done any of this before. Can you just coach me through it? And they tried to simplify it. But at the end of the day, I left slightly more confused than I came in. I was like, okay, let me just put this into like a target fund or whatever. But when I started doing my own research, I came across certain books like Rich Dad, Poor Dad and things of that nature.

2:48And it got me excited about real estate. And then I found the Bigger Pockets podcast. And in 2015, I listened to, I don't know how many episodes, but there was one in particular that caught my mind. And I remember this specifically, I remember the exact episode. It was episode 60 with Serge Shukrat, where he was talking about buying small multifamily homes. I listened to that once and just could not get it out of my mind, listened to it two or three times over that weekend and set in my mind that I was going to get started in real estate investing. So you listened to some podcasts, you got excited about real estate, but what actually turned it into action?

3:24Man, so started to hear about that house hack strategy, and then I got promoted in my job. So when I first started working in 2015 as an intern, I was making like 55K annually and living in Chicago, which is semi-expensive. And so that money was getting spent. Yeah, absolutely. And so what I did is I got promoted and actually moved to Louisville, Kentucky. And at the time, I could not pick Louisville out on a map. I actually thought it was where Louisiana is. I'm like, I'm looking around for it. Like, where the heck is Louisville? And when I saw Kentucky, I was a little bit disappointed, but it turned out to be a blessing in disguise because Louisville is a lot less expensive.

4:00There's a bit less to do or less distractions out there. And so I was able to actually go get my first house hack when I moved there in 2016, where I bought a triplex for 190K, lived in one unit, rented the other two out, and essentially lived for free. So that was your very first real estate deal, was a house hack, Louisville, Kentucky. Triplex, did you just find it sitting on the market? Yeah, it was on the market. I was looking to find a quote unquote, investor-friendly realtor. I messed that up initially, but I still was able to buy a deal. And at that time, I thought I was overpaying. But looking back, I mean, I wish I could buy 10 of those.

4:34I assume since this was on the MLS, it was pretty much turnkey. You just had to move in. Correct. With some caveats. The thing about Louisville, Kentucky, anybody that's been there or seen the Derby, most of these homes were built in the early 1900s. And so, Henry, I don't know if you're still working with 1900 homes, but I try not to. Yeah, I try not to now from experience. The fact that I didn't know and I bought a bunch of these, but that one had so many weird quirks, right? There was like one of the units where they couldn't put HVAC into it. So I had to figure out like a mini duct system and every winter the pipes would freeze.

5:06So I had to get like a space heater for this one area. It was a lot going on, but I went from paying 1200 a month, right. To now saving that 1200 and living for free. And when I moved out, was able to actually make income on that. And that opened my eyes to a new world that I didn't, I didn't know what's possible. This house hack, did you use an FHA or a conventional loan? I went FHA with it. So three and a half percent down. So what did you end up putting down? And then what were your rents in the units? Yeah. So my total amount was about five grand, which was everything I had saved up. So it was a lot of money to me.

5:40I was like, dude, this is everything I got. Let's hope this works. And when I moved in, the mortgage was 1350 and that's including everything, right? The insurance, all that stuff. And the two rents of the other units was 1400 total. And so I was in the positive, call it$50 if you had no expenses. And that was a win. So people talk about house hacking all the time because of the power of the strategy, but just the fact that you get your mortgage covered is only 50 % of the benefit of house hacking. The true benefit of house hacking comes from you continuing to pay rent. You just pay it to yourself, that allows you to save up what you need in order to continue to invest.

6:23So was that what you were doing with that now windfall of cash that you didn't have to pay rent with? Yes. And what you said is 100 % the key. It's are you willing to have delayed gratification and sacrifice now for the future? And I think that my background and what happened to me financially in the past is what allowed me to not even have a question on that. When I came up. I had a single mother that raised three boys by herself. I was the last one. And in the 07, 08 timeframe, right before that, my mom bought a family house. We're all going to live there. It was amazing. It's like, mom, how'd you even afford this?

6:58And it was answered in 08 when we had to short sell that thing and declare bankruptcy. And so I've seen financial struggle and I've seen what it's done to our family. And so when I was getting into medical device and all this other stuff, I'm like, dude, I want to be financially free because it just means so much to me and to be able to help our family kind of see that there is another way. And so, yeah, I was saving that money and I was still doing a good job at work to where I got promoted in less than a year after I purchased that home. And I actually got moved up to Boston with the same company to move into a higher risk, but higher reward medical device opportunity and started closing some deals up there and doing a similar thing with a house hack up there as well.

7:38So if I'm hearing you, you moved to a whole new market after you did your very first deal, which in a lot of people's perspective would probably be a little frustrating because now you've you've just you found this market where you could buy good deals. You got a great deal. And if you want to start growing and scaling now, you don't live there anymore. So how did you go from like one house hack in Louisville to a much more expensive market and being able to invest? Did you still invest in Louisville or did you pivot and invest in Boston? When I moved to Boston, you're spot on. That cost is way in above.

8:13I didn't even realize Boston was that expensive. It's like top five in the country. It's crazy expensive. Yeah. Because I'd never been there before. So when I'm like looking at it, I was getting a promotion to where, hey, you're getting, you know, a 20 % raise in your income. But when I looked at the cost of living, it was actually a 40 % decrease. I can't even afford to go get my own apartment. And so I delayed gratification. Right. And I said, hey, I only want to have 25 % of what I'm making on base, not commission, go toward living expenses. Right. And so I ended up doing a house hack, but not in the traditional sense.

8:47I didn't buy anything. I just had two roommates in an apartment. And we all rented it together. Right. And I was able to save significantly on that front. You did a rental house hack. I did that, too. I was coming. Did you? Yeah. Not because I was in the real estate. I was just broke. It works in the way. Up there, I was just like, hey, man, I got to save somehow because it's expensive. Yeah. And then to your point, I had just bought down here and I knew that neighborhood. I used to run around the streets and kind of understood that block. And so I continued to invest down there. And the next deal that I bought, it took about 18 months to close some deals and get enough money.

9:23But I ended up buying 12 units at one time, three quadplexes from one owner that was literally three doors down on the side street adjoining. Because I knew that neighborhood and that's what I did. And I did it through a partnership as well with family to get the rest of the funds. Okay, so you moved out of your house hack. I assume you kept it and you rented the unit out that you were living in. So now that thing is cash flowing because you are already making money to live there. So now you've got one cash flowing asset. Then you rent hacked in Boston. So you decreased what it would cost you to live there.

9:57And your very next deal wasn't in Boston. It was actually a set of multifamilies from a Louisville, Kentucky owner. Now, was this somebody you knew already or was this a deal you went hunting for? It was one where I connected with an investor friendly realtor and she has now been my partner for many, many years. And we partnered other stuff together, but it was through her network. It did hit the market, but it was 500K to buy 12 units. And I was like, hey, these numbers make a lot of sense. There was a lot of work that needed to happen in the house, structurally roof siding. There was a lot going on, but that was the next deal that kind of got us going.

10:37Okay. That's a lot of units to buy when you're not there. So how did you get your eyeballs on all of these units to determine what you were buying and if it made sense? Man. So it was leaning on her, right, to go in and do videos of every unit, which she did. And then once we were able to get under contract during that due diligence period, I did fly down to go and see these units. I realized there was a lot of work, but looking at what I was pulling in on the house right right next door that was semi-updated with our management. I'm like, man, we can do this. Now, I quickly realized that when you're dealing with, because some of the tenants were section eight, some of the tenants were like a whole bunch of other different housing pieces.

11:16It was a different class than what I was used to, which was mostly students renting the other place out. And so that was a learning curve, but I just kept trying to automate as much as I can within my systems. And then I used and leaned on that realtor to help me lease up different units, but it still was a struggle. Looking back, if I did that again, I probably would not have bought that deal. It was a hell of a lot going on, right? That was why they were selling it for so little, but it taught me a lot and it helped me get to where I am today. Now, how did you finance this deal? Was it like a construction loan where you were given some of that renovation money or were you funding the renovation out of your pocket?

11:51Henry, you're now getting into the mistakes and you have an eye for it. So keep in mind, the first day I bought FHA, right? 30 year financing. And I'm like, okay, this is smooth. When I was running these numbers upfront, and this is really green of me, right? Having listened to all these podcasts, I was running it on a 30 year note. I'm like, these are three quadplexes. It's going to be 30 year. This is great. And then I get hit with the realization as we're getting past due diligence, this is a commercial loan. I've never done a commercial loan. 20 year AM. It's 20 year AM. That changes the numbers significantly.

12:23I'm like, hold up, this is completely different. Right. And it's like a five year balloon to where, hey, you've got to either refinance or you got to sell this thing, you know, five years from now. So that completely changed up the numbers. And I warned a lot of people of that now. Like, hey, commercial is different. That five year you're looking at versus the fourplex are not the same thing. These are two different things. Right. So we financed it with a commercial loan. And then I just paid for the repairs out of pocket because I was starting to do well in the job. And this is what I'd say to anybody that's thinking about, hey, I want to move into full time real estate investing.

12:53you absolutely should use the job that you have as a business partner to help you ease into it. I would not just jump ship. You should use it to help you ease into it because it was only the grace of God and having that job that helped me be able to keep these properties long enough to where it actually made sense and finish all these renovations. What I just want to reiterate for people is me used a commercial loan and typically commercial loans are amortized over a shorter period of time. So when you're underwriting deals it helps to know what kind of financing you're going to get. I like to use a lot of local community banks and construction loans.

13:30And so I underwrite my deals with a 20 year am. And also you're right. You have to understand what that balloon term is. So typically it's going to have what they call them adjustable rate mortgages. That means your rate will adjust after the adjustment period. And you can negotiate that period. Sometimes they want to do it in three years. Sometimes they'll lock you into five years. It depends on the deal. It depends on your credit. Depends on the institution. So when you're underwriting a deal with a commercial loan, you want to make sure that you at least are paying attention to what interest rates are doing.

14:04Because if rates go up and you get stuck in a place where you now either have to refinance, you could be forced to sell because you can't refinance and the numbers make sense. Can you tell us a little bit about what each of those units were renting for versus what you were servicing the debt for? Yes. So each of the units, when I first purchased it, we're renting between $450 and$650. And it was under market rent at that time. I'd already boosted the rents for my units, which were the same size, to$850 a unit,$900 a unit. So that's where they were rented for. So I was like, hey, man, there's a lot of spread here.

14:41But there was a lot of work to get it there. And then the debt, it was around$6 ,000 a month. That's pretty solid numbers. $850 times 12 units, that's about 10 grand a month. And if your debt service is six grand, that's a pretty solid cash flowing deal that you bought from somebody who was your boots on the ground. And it's interesting that you've mentioned her a few times as a partner. So I'd love to dive into like, what these next deals look like and like how you structured this relationship or partnership with your investor friendly agent. But I want to do that right after the break. Investing in real estate has always been smart, but it hasn't always been simple.

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18:57All right, we are back on the BiggerPockets podcast with my man Nigi Ewaale, who is telling us all about how he got started in real estate, started off with a house hack. I think that's a phenomenal way to get started. Gave you the proof of concept. Job threw you a curveball, good curveball, promoted you, moved you right out of the place where you bought your first duplex, but that didn't stop you from continuing to buy there. Ended up buying 12 more units there, and then found yourself in a position to sell some of those properties to move into a, let's call it a larger opportunity. So why don't you tell us about this townhouse development deal and kind of how you structured that?

19:37Absolutely. And so you're spot on. We bought that 12 unit. And then over the next couple of years, all the way up until call it beginning of 2021, I bought more triplexes, duplexes, and just got better at identifying deals. We got to like 30 units. I just kept, anytime I saw, and it was all within a mile of each other, most of them on the same street. So I kept seeing the opportunities and now I know the numbers. I was like, Hey, I'm buying that, buying that, buying that. And more came. And so this opportunity, my realtor who I've been working with this whole time, my investor friendly realtor, she's owns more real estate than I do.

20:08Right. And so she's been living in this town, in this neighborhood for over a decade. And she kept driving by this land that this owner is trying to sell themselves. It was 11 acres of land in Taylorsville, Kentucky, which for anybody that's listening is about 30 minutes south of Louisville, Kentucky. And it's one of the best school districts in the metro. So her kids go to school there. She's very familiar with the area. And so that was kind of our in with the knowledge. And the cool thing about this land is most land is zoned agricultural out there. But this one, the owner went through the two-year process of getting it switched to B2 commercial, meaning you could build literally just about anything over there.

20:43And so we had a game plan to build townhomes as well as storage with storage being the first piece. And she brought me in to have the conversations with the owner, which took about six months to negotiate actually buying that land. But once we bought it, we kicked off ground quickly on the storage, which cost about 2.2 million to build. And we just are 50-50 partners is how we split that piece up. I made her the managing member because she lives there has all the contacts and things of that nature. And then we just, we work from there. Wow. So that's a, that's a heck of a leap. I understand you, you, you, you got up to 30 units in Louisville, but 30 units of kind of, uh, you know, buying existing and renovating is a whole different ball game than, than ground up development.

21:28So you mentioned townhomes and storage. So did this property, did you build both or did you buy it with the intention of doing one and did another? One than the other. We haven't done the townhomes yet because that's not something we can do out of pocket, right? This is more of a syndication that we got to work on. So we bought the land officially in like middle of 2022 and we broke ground for the storage in 2023, finished it in 2024. We're now at like 75 % occupied. I love storage now. It's amazing. Literally, we're running it with one VA and one handyman in like a text group chat, which is awesome.

22:02Okay. So you build for 2.2. So what's that put you in terms of like, what's your debt service on that versus what are you bringing in from a money perspective? Because you said you're what, 75, 85 % occupied? So we're 75 % occupied. Last month, we brought in a little bit over 15K. All right. And the note on this is around 12K. Okay. Yeah. You're doing all right. Yeah. You're doing all right. Because people don't realize the maintenance is not the same as like a single family. There's not as many things to break. Like there's expenses and maintenance, but not like there's no toilets. Right. It's a different it's a different ballgame.

22:36So that's that's pretty solid. Yeah. And the key to storage. And this is what we learned early on, because the first couple of months of leasing up were rough because we were at market value. The key to storage is just look at the big guys. You got to really slash early. So there's a lot of discounts that you give early and you make the price a lot less than all the others. But the cool thing about it is we built into our system that every six months that somebody is with us, it's a five percent increase. So you go from 100 to 105, six months later, 105 to whatever, 5 % of that is. And long story short, like it ramps up quickly.

23:08And we have most of our people that have been with us for over two years, because once you get a storage unit, you tend not to leave. I know. I tend to get more. It's funny because you can't see my office, but there's a wall right here. On the other side of this wall is a fence. And on the other side of that fence is my storage unit that I have at the storage facility. And I said my storage unit, it's now units. I've got three of them now because it just, yeah, they got me. They got me. They got me. Well, that's really cool, man. Thanks for taking that tangent with me and telling me all about this storage deal because I'd like to live vicariously through other people and their deals.