• Mike Newton has had less than $1,000 in savings for most of his adult life.
• In 2018, he doubled down and picked up extra hours with the goal of saving to buy real estate.
• He bought his first property at age 28 and now has 10 units that earn him $2,000 a month in profit.

Mike Newton isn't one to shy away from a challenge.

"I hate not being good at things," the 31-year-old Washington-based state trooper and real estate investor told Insider. 

This ethos is what prompted him to start educating himself on sales back in 2011. At the time, he was working in construction, laying granite and doing other various home remodeling projects. But his company recognized that he'd excel in more of a sales role, which changed the course of his life.

"They noticed that every time they sent me out to somebody's house to remodel a kitchen, I'd come back with a new work order for their bathroom or something. So they said, 'We want you to be a salesperson,'" recalled Newton. "I had no idea what it really took to be good at sales, so I started watching YouTube videos."

He searched "how to be a salesperson" and came across Grant Cardone, a popular sales trainer who also invests in real estate. Cardone's content led him to other real estate and personal finance-related channels, including Robert Kiyosaki's "The Rich Dad Channel." 

He spent hours listening to videos while working in the granite shop cutting countertops, he said: "I'd be in the shop all day by myself with power tools. Rather than just listening to the constant buzz of the saws, I listened to YouTube videos with headphones on."

The idea of investing in real estate was now top of mind for Newton; however, he didn't have any capital to get started off with. 

Newton grew up "extremely poor," he said. "We were that family you did not want to have renting from you."

His mom raised him and his six siblings on her own in Grand Forks, North Dakota. They relied on food stamps and government assisted housing to get by. 

After graduating high school in 2009, Newton forewent college and immediately started working. He was a truck driver at a sugar beet farm for fives months before landing a job in construction. In 2014, after one of his co-workers and close friends was tragically murdered, he decided to pursue a career in law enforcement. 

"My goal was to become a detective or a member of the SWAT team so that I could hopefully prevent things like that from happening again, and step one is becoming a police officer," he said. "It took about a year because the hiring process is very long and arduous, but I was able to get hired as a police officer and I am happily fulfilling my goals."

Newton has been a state trooper for the past six years and on the SWAT team for the past three. His job responsibilities range from responding to 911 calls and conducting traffic stops to executing search warrants and making arrests.

Up until he decided he wanted to build wealth via real estate investing, he had practically nothing in savings, he said: "I had about $1,000 in my bank account." 

Over the past four years, he's acquired 10 units across eight properties in Seattle, Washington, where he resides, as well as in Gary, Indiana and Chicago, Illinois. Insider verified these details by looking at closing documents. 

Here's how he built his portfolio from scratch.

Working overtime and 'house hacking' to afford his first property

After deciding he wanted to buy a home, Newton took two immediate steps: He shopped around for a mortgage lender and he started saving for a down payment. 

"The first thing you're going to have to do is go to a lender and see what you qualify for," he said.

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. 

He needed about $30,000 in cash to cover a 5% down payment on a $450,000 mortgage ($22,500), plus closing costs. It took him just six months to save that money. 

"I picked up every overtime shift that I could," said Newton, whose base salary was $60,000 at the time. "They can never get enough people to cover all the overtime shifts, so I made about $30,000 in overtime in less than a six-month period." He estimates that he was working 90-hour weeks during that time period in 2018.

Saving came relatively easy to him because of his background, he added: "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 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.

When it came time to look at specific properties, Newton interviewed five to six real estate agents. "I was looking for somebody who did a large volume of transactions and seemed to be a hard worker and honest," he said. He settled on a realtor and told her that he was looking for a multi-unit property.

After listening to hours of real estate-related content, he was convinced that buying a multi-family property like a duplex or triplex and "house hacking" — meaning, he'd live in one unit of the home and rent out the other to offset his mortgage payment — would be the safest way to get his foot in the door. 

He closed on a $450,000 duplex outside of Seattle in November 2018 and moved into one of the units. The other unit was already filled with a tenant, meaning he immediately started earning $1,600 a month in rental income, he said. Plus, a childhood friend moved into one of the three bedrooms in Newton's half of the duplex and paid $500 a month in rent. 

His two tenants covered the majority of his $2,750 monthly mortgage payment, "but even if they both lost their jobs and couldn't pay me, I could still make the payment on my own with my 9-to-5 job," he said. "I wanted to create multiple layers of protection."  

Becoming a homeowner in his 20s was a bit surreal for Newton. 

"As somebody who grew up unbelievably poor, to have bought a nearly half-million dollar asset at 28-years-old was a very good feeling," he recalled. "That being said, I never relish in victory. I'm not going to sit back and think that I've done something spectacular or impressive or amazing. I haven't. I'm not going to think, 'I've done it. I've made it. I've arrived.' There's always another hill to climb, so I thought, 'Okay. It's time to double down.'"

Acquiring property in Indiana and expanding his portfolio to 10 units in four years

Immediately after buying his first property, Newton was thinking about the next. But he'd used up most of his cash. Plus, his next purchase would be an investment property, which would require a bigger down payment. (Lenders see investment property loans as riskier than primary home loans and typically require you to put 20% down.)

"I realized that if I wanted to buy anything else, I'd have to save up 20% — and a 20% down payment on $500,000 properties is nothing to sneeze at," said Newton. "That's a lot of overtime work and a lot of time spent saving."

His monthly housing cost dropped even more, to about $300, when the tenant in the other half of his duplex left and he increased rent from $1,600 to $1,950. That helped him save the majority of his salary, but it would still take years of saving before he'd be able to afford to invest in the Seattle area again.

That's where Gary, Indiana comes into play.

In 2019, Newton met a retired cop, Mark, who lived on the east coast and invested in real estate in Gary, an industrial city located about 25 miles east of downtown Chicago. They connected on YouTube in the comments section of a video.

Prior to meeting Mark, Newton had never considered investing out-of-state. "I had always read that you don't want to invest in other markets because you could probably screw it up, and it's better to stay somewhat close to home to keep an eye on your property," he said. But Mark, who lives in Virginia, appeared to be successfully investing in Gary. "He had four or five rentals when we first met and, within a year and a half, made it up to 15 units." 

After researching the market and picking Mark's brain, Newton decided to follow his lead and buy in Gary. 

Mark referred him to a turnkey provider in the area. This is someone who fixes and flips homes, Newton explained, "but instead of flipping it to a homeowner, they flip it to an investor. They find a distressed property, remodel it, and rather than sell it, they put a tenant in it at fair market value and then sell it to an investor."

In 2020, Newton bought his first turnkey property in Gary for $60,000. It came with a tenant who was paying $800 in rent, he said, meaning he's been earning rental income since day one. Today, the property cash flows about $260 a month, he added.

The obvious benefit of investing in Gary was the affordability.

"It's a cheaper market that I actually could afford to invest in," said Newton, who's lived outside of Seattle for the past 14 years. "But with that comes different issues and unique problems. Gary, for example, has been dubbed America's most miserable city. Its poverty and crime rate is triple the national average. One-third of all houses in Gary are abandoned." 

Like many major industrial cities throughout the Midwest, Gary fell victim to deindustrialization and not having a diversified economy. Newton is betting on the flight-to-quality phenomenon in real estate and believes that by providing nice housing in an area where there is a need for investment, he'll attract and retain tenants. 

"If you remodel everything and you make it look beautiful and keep it in good condition, people will like that since it's a rare thing for that market," Newton said. As for Gary specifically, "it's within driving distance of Chicago, which has two million people who are tired of paying extremely high Chicago rents and are willing to move 30 to 45 minutes away and commute into the city. There's a big market for people who want nice, affordable housing, and if you provide that and keep it up-to-date, you're going to find good tenants."

Newton now owns six properties in Gary: five single-family homes and one duplex. He also owns a single-family home in Chicago that he bought in 2022 for $62,500. Plus, he still has his duplex near Seattle, where he resides.

That's a total of 10 units across eight properties in three different states. He financed four of them with traditional, 30-year mortgages and two with seller financing. His two most recent purchases, including the one in Chicago, he paid for in cash using a HELOC (home equity line of credit).

I'm not going to sit back and think that I've done something spectacular or impressive or amazing. I haven't. I'm not going to think, 'I've done it. I've made it. I've arrived.' There's always another hill to climb. Mike Newton

If you're considering investing out-of-state, "the most important thing to do is build a team and a network," he said. Start by connecting with other investors in the area you're looking in, like he did with Mark, and ask them about the area and their experience investing there. When the time comes to find a property manager, contractor, handyman, and other key players, lean on the established investors you've already connected with. 

"The next most important person on your team is going to be your property manager," said Newton. "They're going to make or break your out-of-state investing experience. Ultimately, they're going to help you mitigate the amount of headaches that you have." 

Profiting $2,000 a month from his rental portfolio and planning for an early retirement 

When Newton is looking into potential investment properties, his goal with each new place is to profit $250 a month. And that's "pretty much exactly what every property that I've gotten has paid me starting day one," he said.

Currently, between his eight properties, he's netting about $2,000 a month, he said. It took him nearly five years to get to that point.  

"In this business, it's slow to get started," said Newton. "You might feel like what you're doing is a waste of time. You spend all this time, effort, and energy — you save all this money up — and you finally buy a house and you're just making 250 bucks a month." 

Plus, the work doesn't stop once you find and buy a property.

"Real estate investing is the least passive form of passive income that I can think of," said Newton. "If you invest in the stock market and get high dividend paying stocks that are going to just push money out to you regardless of what you do, that's true passive income. Managing properties is work. I don't work nearly as hard as I do as a cop patrolling the streets, but it is definitely work. I take phone calls. I have to network with people. I've got to schedule meetings."

If you stick with it though, your rental income has the opportunity to snowball, he said. That's what Newton is starting to experience: "I am definitely feeling the positive effects of the income snowball, even though I only make around $2,000 a month in straight profit. When I put that into perspective, though, considering how poor I was my entire life, $2,000 is a lot. To the average American, it's a lot of money." 

Newton plans to continue buying property in Indiana. He wants to grow his portfolio to the point where he's financially independent from his rental income. 

"I plan to retire from law enforcement within the next three years, before I turn 35," said Newton, who wants to move to Florida with his son. He doesn't want to stop working completely, though. "I'd like to get my real estate license and buy and sell real estate in Florida." 

His timeline is compressed, he noted, partly due to the hours he's put in the last four years. Anyone can use real estate to build wealth over time and retire comfortably, he emphasized: "Just get to four rental properties. If you buy one every couple of years while you're working, then 30 years from now, all four will be paid off, they'll be cash flowing 100%, and you'll have four assets that have appreciated over 30 years that you can sell or live off the rental income and you'll be fine.

"If you can just get to four, you will be set. If you want to get bigger and better than that you can, but there's no need."