Table of Contents
- Two years ago, Jabbar Adesada got serious about using real estate as a tool to build wealth.
- Today, the 20-year-old uses house-hacking and upscale vacation rentals to earn $3,000 a month.
- He financed the $60,000 down payment on his second property through a private investor he met.
At 18 years old, Jabbar Adesada was fresh out of the Marine Corps boot camp when he set his next goal in life: to achieve financial freedom.
At the time, Adesada, who’d joined the military to help fund medical school to become an orthopedic surgeon, was going through combat training in California and temporarily staying with a local host family. As someone who had faced childhood hardships and grew up without much money, Adesada’s curiosity was particularly piqued by the host family’s affluence — enough for him to seek investing advice from the family’s father, Phil, who worked as a financial advisor, he said.
“Phil had an amazing life. Ever since I met him, that was the goal — because I saw how he was living, and financial independence and being wealthy was personified in Phil,” Adesada told Insider from a military base in the Savannah, Georgia, area just a week after returning from a four-month deployment in Norway.
The two finance books Phil gave Adesada, along with his advice, led Adesada to reevaluate his existing relationship with money. Although Adesada had read “Rich Dad Poor Dad” by Robert T. Kiyosaki in high school and had always hoped to one day become successful, up until that point in life he’d never been particularly frugal with his money. But after meeting Phil, Adesada became obsessed with saving and investing his money for retirement.
Embracing frugality and investing
When he met Phil, Adesada had about $2,500 to his name. He began saving as much as he could of his take-home pay from the military, which totaled $1,800 a month, and he invested that money into stocks.
“When I was doing the analysis on when I’d be financially free, when I’d be a millionaire — it seemed like it was going to take way too long through stock-market investing,” Adesada said, debating the merits of traditional securities investing versus real-estate investing.
He decided to pivot to real estate after realizing how lucrative the field could be, giving himself a six-month runway to close on his first property. But after experiencing a loss of $2,000 through a cryptocurrency scam, he was determined to never make that same mistake again.
In what he viewed as his due diligence and a crash course into real-estate investing, Adesada listened to all (at the time) 400 episodes of the BiggerPockets podcast. He also read books, joined mastermind groups, attended in-person events to network, and built relationships with and absorbed knowledge from other real-estate investors.
During this time, Adesada tried to pick up any side hustles he could, such as food delivery through DoorDash. He also took on other Marines’ assignments and 24-hour weekend posts for money.
“The rest was just purely living like a broke person,” Adesada said.
Buying his first property and his introduction to house hacking
Five months after pivoting to real estate, and equipped with about $20,000 in cash, some of which he’d taken out of the stock market, Adesada decided to buy his first house. But with no prolonged job experience or credit history, as well as a lopsided debt-to-income ratio, he hit a dead end with numerous loan officers, Adesada said.
In a two-month period, Adesada said, he consulted with 13 lenders on terms and preapproval for a conventional mortgage. Eventually, the 14th lender he went to was willing to take a chance on him and was more resourceful in finding a solution, he said. Adesada was told that he could qualify for a $230,000 Veterans Affairs loan because of his military service, but he’d have to come up with at least a 5%
. He was also told to shop around for various home-insurance quotes to get the lowest rate to make the numbers work for the loan approval.
“With the VA loan, typically lenders like to see a debt-to-income ratio of 43%, and if it’s above 43%, it’s an automatic denial,” he said. “This lender that I finally got in touch with had a more lenient overlay that was closer to the actual VA guideline.”
VA loans, administered through the Department of Veterans Affairs, are a special type of loan product available exclusively to veterans, active-duty service members, and members of the National Guard and Army Reserve. VA loans include multiple benefits, such as a 0% down payment and a 25% default payback guarantee on loans over $144,000. But eligible VA loan borrowers still have to be approved by private lenders based on their income,
, and credit history. While Adesada was able to secure financing, having multiple hard-pulls by
and loan officers can have a negative effect on one’s
Adesada scoured the multiple listing service and found a four-bedroom, four-bathroom single-family home in Savannah, Georgia, which he calculated would have a monthly cash flow of about $1,000. Adesada bought the house in February 2021 for $246,000, personally putting down 5% of the 30-year mortgage, about $12,300 cash. After
and furniture, Adesada spent about $22,000 out of pocket on the deal in total.
For this deal, the sale price Adesada paid was lower than the asking price, presumably because potential buyers were thrown off by the fact that the dining room had a bathroom in it. But Adesada saw an opportunity to convert the dining room into an additional bedroom by adding a door and wardrobe and replacing the chandelier.
Within a week of buying the property, Adesada was given notice of deployment to a training course in Arizona. Before leaving, he created a checklist of systems and processes, and he paid a friend about $300 a month to manage the property and find tenants. Whenever Adesada could find a stable internet connection, he’d call his friend from the desert to debrief and coach him on the next steps.
Now, between deployments, Adesada alternates between staying in his military barracks and sleeping on the house’s futon, in a common strategy known as “house hacking,” where rental income helps offset a property’s mortgage. Adesada said that since buying the house, which he rents out by the bedroom, he receives $3,900 a month in total rents, earning about $750 to $850 per bedroom, documents viewed by Insider showed.
After paying the $1,100 mortgage and accounting for expenses and potential maintenance, Adesada’s monthly profits now land between $1,700 and $2,000 of mostly passive income. Because of his rigid checklists, which detail exact instructions for scenarios such as tenant move-in and which handyman to call for a specific problem, Adesada estimated that he spent between one and three hours a month managing the property.
Adesada was able to raise rent prices on his property by focusing on strategy value-add efforts. He said he takes care of things that roommates normally “argue about,” specifically providing items such as dish soap,
, trash bags, and paper towels to his renters. He equipped the house with two refrigerators so there would be enough room for everyone’s food, and he even pays for a professional house cleaner to clean the common areas twice a month.
“I really make it an ecosystem for someone who just wants a room to sleep and lay their heads in and not worry about anything else,” he said.
Adesada tries to market his property toward other service members, listing primarily on Facebook and Roomies.com. The latter is a website specifically used to rent by the bedroom, and it provides better-quality leads, Adesada said. Because of an adverse experience with a previous applicant who broke his move-in agreement, Adesada has a rigid screening process that gives applicants 24 hours from the time they’re approved to submit a security deposit to hold their spot.
“The deposit has to come immediately because I need some sort of recourse,” he said. “If they don’t honor their commitment and move in, it becomes the fee, and I get to keep it.”
Zillow’s home-price estimate, which the site said it calculated through an advanced algorithm, indicated that the house could fetch upwards of $325,000 if listed for sale in the current market. After his value-adds, Adesada’s cash-on-cash return for the house was 81%, he said. Cash-on-cash is a metric that measures an investor’s cash income relative to the total cash invested, and Adesada’s value of 81% is vastly higher than most investment properties and his initial baseline of 33%.
Maximizing income on a luxury Airbnb short-term rental
After researching the asset class’ potential net passive income, Adesada decided that his second real-estate investment would be used as a short-term rental.
Through a friend, he learned that short-term vacation rentals in the Great Smoky Mountains were particularly lucrative, and he decided to zero-in on that market. But Adesada faced one problem: His savings had been completely depleted by the purchase of his first property.
Not to be deterred, Adesada began reaching out to everyone in his network, pitching to potential investors his idea of buying a cabin. After a series of harsh rejections, he finally received an investment from a senior master sergeant who was about to retire and had heard through the grapevine about Adesada’s real-estate projects.
“It’s like me talking to upper, upper, upper, upper management. I have to ask for permission to talk to this person with my hands behind my back,” Adesada said, laughing at his astonishment on being called to the master sergeant’s office. “It is that big of a disparity between where I am and where he was.”
Adesada borrowed $60,000 in total from the master sergeant, paying $417 a month on a five-year balloon loan with 10% interest. Through his network, he found his partner, another young investor, and the two engaged a well-known Realtor to find a property. After putting in multiple offers, in October 2021 the pair finally purchased an upscale cabin in the Tennessee mountains for $600,000 using a conventional vacation loan.
Adesada paid the 10% down payment of $60,000 from his private money loan. Closing costs and furniture were another $20,000, which was split between the partners. But even though Adesada covered the entire down payment, the house’s equity is split evenly between the pair.
“It’s 50/50 because he’s the one who took the risk on a 19-year-old who had one property, and he’s carrying the mortgage in his name,” Adesada said. “The reality is, the first 10 deals you do in real estate are not as important as the experience you gain from it.”
The house is classified as a one-bedroom, even on the MLS, because of Tennessee laws around septic systems, Adesada said, but it includes two “bonus” rooms. This is a feature that potential investors might have missed if they were only screening listings for three bedrooms or more, Adesada said. His Realtor estimated the property at $750,000 based on comparisons in the direct area and these additional rooms.
But Airbnb property incomes can fluctuate drastically based on seasonality. For instance, the cabin can rent for as much as $850 a night during holidays, such as Christmas, Adesada said, but $200 per night in off-season months, such as February. But when looking at the adjusted average, it comes to about $7,500 a month, documents viewed by Insider showed. After various expenses and the $2,975 mortgage, each partner takes home a profit of $1,500 a month, Adesada estimated.
Adesada poured time into understanding Airbnb’s review system and algorithm for search-engine optimization. He paid for professional photographs and Hospitable, a messaging software that directly interacts and checks in with his guests. Adesada also uses dynamic pricing and travel-analytics websites, such as AirDNA and Vrbo, where he’s able to compare his rental to others in the area while adjusting for extra amenities, such as pools.
“Another thing with Airbnb, if you’re booked out 100%, your prices are too low,” said Adesada, who added that the ideal range was a 65% to 75% occupancy rate. Even if an Airbnb owner could make the same profit with a 100% occupancy at lower prices, they’d give themselves more work, and the property would also experience more wear and tear, he said.
Adesada estimated that he spent between two and three hours a week managing the Airbnb, with his partner taking over during his deployments. Recently, Adesada hired a virtual assistant to maintain the system and advertise the listing on social media.
Adesada is constantly hunting for new deals, with his goal this year to expand his monthly passive income from $3,000 to $10,000. He no longer plans to attend medical school, but he hopes to scale his real-estate portfolio to one day reach financial freedom and engage in philanthropic endeavors. Even as Adesada juggles his service with the Marine Corps and his real-estate investments, he still makes time to mentor other young investors and fellow Marines interested in real-estate investing.
“When they got their first deals, I was so happy for them. It was so exciting,” Adesada said. “The utility of money will wear off, but the utility of helping other people is forever fulfilling.”