Jabbar Adesada on The Military Millionaire Podcast

Episode 159 | Jabbar Adesada | Military Millionaire

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Jabbar Adesada on The Military Millionaire Podcast

00:00 - 05:00

David:

What's up military millionaires! I'm your host David Pere. And we've got the wonderful Alex Felice on the show and Mr. Jabbar as you know I'm gonna butcher this. I asked you how to pronounce your first name, Adesada?

Jabbar:

Wow, that is so impressive!

David:

Fuck yeah!

See how organized I am.

Intro:

Welcome to the Military Millionaire podcast where we teach service members, veterans and their families how to build wealth through personal finance, entrepreneurship and real estate investing. I'm your host, David Pere, and together with my co host, Alex Felice. We're here to be your no BS guides along the most important mission, you'll ever embark on your finances.

Sponsor:

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David:

So alright, so nonetheless, Jabbar was recently on the BiggerPockets money podcast. And Mindy Jensen was impressed enough that she actually sent a personal email to me and was like, Yo, you gotta have this guy on the podcast. And then he and I jumped on a phone call. And I was like, Yo, you gotta be on the podcast. And so Jabbar is an active duty Marine, a corporal?

Jabbar:

Yep!

David:

Corporal in the Marine Corps in Beaufort, South Carolina. So a young service member whose fucking already crushing it in real estate. And I was like, yep, this is fucking sweet. Let's jump on a podcast, we're gonna talk and what we're gonna do is we're gonna share his story. And then we're going to talk about things that you should do as young service members to invest in real estate or finances or whatever. And it's gonna be just an open free flowing conversation true to what we are trying to change the podcast over to.

So Jabbar let's hear the background. Let's hear your story.

Jabbar:

All right, cool.

So my name is Jabbar Adesada, I'm a 20 year old United States Marine active duty station in Beaufort, South Carolina, like he just said. So I basically got started, I want to say investing back in January of 2020. I was fresh out of combat training. I was hosted by a family because during combat training, I was there during the holiday. So Thanksgiving holidays. And so they have like this host a service member where the locals host like people who are I guess Marines who are unable to go home. I got hosted by a family, they were extremely happy and also happened to be extremely wealthy. It's funny how that correlates.

So, I mean, I looked at that dude, I looked at Phil, I love Phil, I give him a shot all the time. And Phil, I was just like, looking at these people's lives. And I was like, man, like, I want to be like that. And to give you guys some perspective, Phil, he will just come home one day and take his daughter to like Paris, like just randomly like off rips or or they'll go skydiving in the morning or like scuba diving in the afternoon. So this is like a fun spontaneous family. I'm like, wow, I want my life to look like that. What do you do? So I had read Rich Dad Poor Dad a couple years prior, but Phil gave me the book Automatic Millionaire by David Bach. And I Will Teach You To Be Rich by remote Sethi. And those are like, you know, finance books like going over the whole 401 K's investing save more than you spend less than you make, like you know, the whole shebang there.

So I'm on this frugality journey from January of 2020. I'm investing every dollar I have almost into the stock market. And from then the market crashed in March 2020. I tell people you could have put a blindfold on someone tied a monkey to their boots, and it had the monkey stick his tongue out and pick the stocks and you've been up over 100%.

So that's what happened to me. So like and I literally was putting all of my money into stocks and buying like so. So zoom passed. So July of 2020. The military paid me like $13,000. And my net worth has shot up to like $25,000. So then I was like, hooked. I was like, oh my god, I have all this money. I'm an E3, 18 year old kid in the Marine Corps. How can I like, you know, scale this up? Like, how can I become wealthier and you know, grow from here. So, August of 2020, I found bigger pockets.

05:00 - 10:00

Jabbar:

Alex, I know you listened to every single episode, like two times, because I listened to your podcast there. I've listened to every single podcast once because they have like the money show, the rookie show and the OG show. So I've listened to every single one of those. And yeah, from there, I went, I was doing the whole education journey listening to every single podcast reading books. And then I bought my first property with my VA loan, a house hack in February of 2021. And then recently, I just closed on a second property, which is a $600,000 mountain cabin in the Great Smoky Mountains that I'm in love with.

So that's like a quick summary of my story investing journey.

Alex:

Hey, what's it like going to work every day with a bunch of other 20 year olds that aren't doing any of this?

Jabbar:

It is actually pretty interesting.

You guys know how it is. They just don't listen, you talk to them. You tell them you share the journey. They make fun of you. And then when you try to address their financial situations, it's like talking to a brick wall. And yeah, it's like, it's like mental gymnastics. And sometimes when I'm bored, I like to troll. So it can. It can be a little bit entertaining some days.

David:

There's the inner 20 year old, and sometimes I just like to fuck with them.

Alex:

Does it frustrate you that you go to work every day with people who are not, you spend a lot of time with people who are not like minded?

Jabbar:

Oh, yeah, definitely.

I'm in a mastermind called Cheeks Freaks. And that's like a bunch of young people who are into personal finance. Like we have 19 year olds buying properties. We have people who are already financially free. I'm like, normal there. So I just, you know, after work, I get to talk to all my digital friends online on Zoom and shit.

David:

Is that Dan who runs that?

Jabbar:

Yep. Dan Shakes.

David:

He just wrote First to a million or whatever.

I met him on Fincon.

Jabbar:

Yeah, I love Dan.

Alex:

So yeah, that Great Smoky Mountain. Short term rentals. That's, that's popular. That's very popular right now.

Jabbar:

Yeah, I can nerd out and give you all the good reasons on why people should invest there. It's a really great market and it makes sense from like, economic point of view and a business strategy, because if you think about it, like 60% of North America's within a day's drive of the market, it's like the number one, you know, visited national park.
Supply was cut by like 2500 cabins back in 2016 and then 2021. It's just now catching up so there's a lot of good reasons why I believe the markets are good for things like Airbnb ease and short term rentals. And yeah, I love it. I mean, I just got paid $4,300 5 nights for New Year's for New Year's Eve.

David:

And that thing is what? 35?

Jabbar:

No, 3,000.

Yeah, we gross like almost $10,000 this month, and that's bad. Like we miss Christmas. We booked Christmas pretty low. But I'm happy with it.

Alex:

Damn, good for you. That's incredible.

David:

That's incredible. Especially at 20 years old.

Okay. Here's the question though. How did you buy a $600,000 cabin in the Smokies with an E3, E4 salary? Because I know you said $25,000 saved in stocks. That is not a 20% down payment. So did you partner like how do you pull this off?

Jabbar:

Yeah.

I like to persevere a lot, right? So my friend, Eli, oh crap I shouldn’t name drop them. One of my friends. He has six of them there. And he was telling me how he's like clearing $300,000 a year in cash flow off of like three cabins and that's like net. So I was like, wow, that helps me get to my goals a lot faster. So I did all this different research. Like, you know, obviously you go through that path. It's another asset class.

10:00 - 15:00

Jabbar:

So I studied up real hard and I was asking every single person in my family, I'm like, Hey, let's, I don't have money, but let's partner on this deal and we'll split 50-50 Blah, blah, blah. I was taught, and I was like detailed reports. I had all this crap, right? And so everybody told me No, I never got one Yes. And to answer your question, yes, I did partner. So I, this new member of our mastermind in Cheeks Freaks. He joined and he said he had Airbnb, I DM them because I was like, super stoked about Airbnb. He's like, he's getting like a 10% return on his Airbnb. I'm like, dude, like, like, what? On the airbnb? Because he's house hacking it. So I'll give him some slack there. And it's in Austin. So then I'm just venting to him. I'm like, literally venting to this guy about like, I have like this crazy, amazing strategy and plan to buy cabins in the Smoky Mountains, not even trying to pitch him or nothing, no slides, or no long pitch, anything. And then like, after I finished venting, because I'm like, frustrated. He's like, Yeah, man, like, I'll partner with you there on this thing. And I was like, what's his really he's like, Yeah, I just got to talk to my wife. So he talked to his wife. That's when I showed them that I'm not like a dumb, like, 20 year old kid with a pipe dream. And should I actually know what I'm talking about. And I have resources I'm going to rely on and yada, yada, yada. And then we bought a property for most later. And it's a JV. And it's not like an ambiguous partnership, where we're like, we're gonna buy the entire mountains. It's not like that. It's like, you know, one off, we have the LLC and the operating agreement. And we're pretty clear on terms there. And we have an exit plan, dissolution and all that stuff. But that's how I bought it. And I'm probably going to buy a couple more like that.

David:

So I can tell that you've been listening to some podcasts, because you knew that the first thing one of us was going to ask you about is what you're going to, what's going to happen if that doesn't work out as a partnership. And you're like, Oh, I already know, one deal, we're not buying everything together. We have a dissolution plan, we have an exit strategy we have like, but that's, that's awesome. Because Okay, first off, most 20 year olds are not buying a $600,000 investment property, right, especially not on the salary of an active duty enlisted service member. And they damn sure aren't thinking through the what if goes wrong, when they do it, right. So I think that's really cool. Like, I think that's a good spot. Because if you guys crush it, you can love working together, then you bought more. And if you don't, then like, you got one property together, it makes you money.

Jabbar:

I think that with the way I'm doing it, he's really, really passive. Like I'm doing everything and I'm okay with that. I bought it with those intentions. And it's actually helping me because now I have like it on my track record. And so now I'm talking with other people. And so to them when they don't have any Airbnb, I'm almost like this Airbnb, like, sort of expert when I'm talking to these people. So it makes it easier with partnering and, you know, fighting for equity on future JV’s and strategies and things like that. And then obviously, I can't qualify for multiple 500 $600 million cabins, because I would be drowning if anything went wrong. So it kind of works for that aspect, like risk protection, and things of that nature.

Alex:

I love the abundance mindset. I talked to a young girl today who wants to buy her first house. She's my age. And she's got a VA loan. And you know, she's like, well, I just don't have any money and I don't have any savings and I'm afraid to buy too much house and I don't have a way that would partner with me and just all of these reasons why it's not gonna work. And I'm like, I was trying to explain to her I was like the vast majority, the overwhelming majority of people who buy real estate are not doing it with their own capital. But they're using lots of banks, using lots of lenders and then there's lots of private money and there's no shortage especially right now you know, the market liquidity is just super abundant.

So there's lots of money out there to get and you went off and you went and got some fan I love that because that is, that's just such a valuable skill and a value of mindset to have going into this and learning how to you know, do any kind of business where it's like I don't need the money, I know how to find the money.

David:

Yep.

Jabbar:

Yeah, exactly.

And like if you were to talk to me like before, like when I was buying my first deal I was like yeah, I'll probably help do like one house hack a year right because like my personal finances only enabled me to buy one house hack a year so I mean, E3, single, you know, not receiving BAH it's not really you know, maybe I'll buy more than one once they start to stack but like for the most part, so then when I started saying like, How can I buy more than one property a year? How can I buy that mountain cabin in the Smokies with that scary big old price tag, how can I make that work for me? That's when you know the gears start spinning and you start thinking through these things, you start educating yourself on the information that you're lacking.

15:00 - 20:00

Jabbar:

So a lot of people reach out to me. And they're just asking these questions like, they come, but the first thing they do is like, I don't have this, I don't have that. I don't have this. And it's like, wait, stop, ask yourself what you do have, and maybe, then you can start to focus on figuring out what you can then go get, you know, to, you know, to, like, put the pieces in the puzzles to you know, accomplish your goals. And I love it. I mean, where else can you do something like this? It's incredible. I love real estate a lot.

David:

I'm a tee up, we missed a huge, huge component of this earlier.

In my head, I just automatically assumed that you were married and had BAH, you just told me the opposite. And I want to stop there because you are now the second person that I've ever known who's done this. The first was named Ron Blank. Alex, we interviewed him a couple times.

Jabbar:

I listen to that podcast. Yeah.

David:

You are not one of two people I know who've done this. And I key in on that. Because I hear this all the time from people online to the point that we were just talking about what I can't do x, where it's like, well, I don't have and don't get me wrong. Like if you're in San Diego, you're probably not going to be able to get approved for a mortgage without housing allowance. But walk me through how that works. Like, how were you able to house hack and use the VA loan without Bah? Like, kind of kind of walk us through that first house hack?

Jabbar:

So the first deal, I mean, oh my gosh, it makes you so confident. And I love telling this story. So I was talking to Dan right, my first interaction with Dan, he mentioned Craig Curelop, who was doing house hacking, and was a millionaire in his mid 20s yada yada yada, he had like he's on his like, fifth Hot House hack. And so once I connected the dots.

To me, it didn't make sense to house hack unless I was gonna make money while house hacking. But when I learned that Craig is like making $1,000 per door in Colorado, I was like, somewhere around Beaufort, South Carolina, this is going to work.

So the first thing is obviously getting a lending. And then at this point, I only had that 25, maybe 30 grand. And then I didn't even have credit. I didn't have two years of W-2. So I just started calling banks. So I called 13 different banks. And all 13 of those banks said no, they denied me. I mean, I had one lender, it was like I've been doing this for 20 years. And like I'm telling you right now, there is no one who will get you like there is no one who will get you financing with your VA loan without BAH.

So the 13th bank told me maybe. The 13th bank told me maybe, and so but the lender before obviously, screw that guy. But anyway, I'm calling these different banks. And as I'm calling them, I'm starting, I'm doing my own research on the actual guidelines, because you'll be surprised how many loan officers don't know the guidelines, they only know the overlays for their banks. And for those who don't know, an overlay bank has additional restrictions like their lending practices that are not that are separate. They like they're don't apply to every bank. So that's why you kind of have to call around. So on that 14th Bank, I'm starting to know the right questions to ask. I'm knowing how to position myself to where now I know what I need to do to house hack if I if that's what I want to do.

So I realized, all right, I'm gonna need to get a non owner occupied co borrower to co borrower with me on the property. So I went through the whole process of asking my family this was the first time I did that. And they all told me no, everyone told me no. So I just started calling strangers and it's crazy because strangers will make you rich is when I'm starting to figure out my family won’t help me but strangers are just out here.

Alex:

Your family seeing you make too many dumb mistakes as a kid that they don't want to trust you. You know what I mean? My family probably invested in me either. So don't blame them too much.

Jabbar:

Yeah, I love my family. I'm just talking trash. But yeah, you're so right, Alex.

So I’m calling my family because I needed a co-borrower. All of them said no. Then I started calling up some close friends who I enlisted with. So not my close friends who went to college and don't have W-2, my close friends who like went to the military that I've known for a long period of time. And so I worked out like a way to like, buy a house hack with them. Because, you know, I really wanted to desperately get into the game of real estate and wanted to buy my first property. And so at this time, like a bunch of good things just happened all at once. So I told you before I didn't have credit. Well like literally that same week, my credit like my six months of credit history finally, like happy like I finally had that like seventh payment. And so all of a sudden I have like a 750 credit score. So checking off that box. And then I found out from one lender that I actually don't need, when you're in the service. According to this one lender, you actually only need six months of like service to finally use your VA loan. So you don't need two years of it. You only need six months, well, which is what the lender told me. So that's how I kind of got the workaround, they only use one of my tax returns. So I didn't have to use two of them because I only had one.

20:00 - 25:00

Jabbar:

And then he told me if I put 5% down because obviously E-3 Corporal Adesada couldn't qualify for a $246,000 house. He said, If I put 5% down though, I can buy it by myself and I don't need anybody. So I was like, wow, well, the numbers still work out, great with me doing this. So I ended up being able to close on this property and put 5% down, and didn't have to put any partners on there. And I mean, like when I tell you and I like to talk like numbers because I've had this one since. I mean, it's been rented, I haven't had an actual vacancy, I mean, and my mortgage. So to give you perspective, my gross rents are $3,795 a month and my mortgage is like 1234.

So like, obviously I have utilities, but it works out to me like probably my net, my net like or my phantom cash flow, like without capex and maintenance or whatever is like around $2,000 ish, a little bit less a month. And so after I store up for, like capex and maintenance and vacancy, it works out to me cash flowing, like between $1300-1500 A month while living in this property. So it's one of those crazy homerun deals that I'm one that I can't find another one like that, but that's how I did that's how I did it. I just was persistent as hell.

David:

That's exactly what you are and you're educated as hell. I'm, like, super impressed by the fact that you're smart enough to call a phantom cash flow. So you understand that there's other things that are going to come up in there. And the fact that you understand the difference between like the VA guidelines and overlays by lenders itself. Like that's, that's not like base education, like you've done your homework. I'm impressed, man. That's fucking cool.

Was it still VA? Or did you end up?

The reason why is because, maybe I don't know, maybe I didn't, I don't know. But I didn't want to pay PMI. And so and then the VA. Oh, sorry. So one thing I left out another thing for your listeners here is that the VA loans are actually a lenient lending process.

So my DTI is like at that point was like stupid was like almost 50% it was like 49% to them. A lot of lenders like, I think they cap you off at like 43% or your debt to income ratio.

But with the VA loan, what they do for you is so they break it down by different regional areas like, this is how much after paying off your housing. So this is going to be your mortgage payment, like property taxes, insurance, PITI, whatever, plus, like, a certain percentage for utilities based on the home square footage. And so it depends on the area, I think in my regional area, it was like 500 something dollars left over, after all of that. So my mortgage payment PITI plus an additional account, like an additional, like, let's say 20% for utilities, then like after all that my income had to have. Like, I think it was like $500 leftover.

So there's not a lot of people who know that. I'm finding, but it makes it easier to qualify for mortgages because it's not just cut and dry like, Oh, you're at 43% sorry, buddy, we can't help you. You know, it's a lot more lenient so that's another reason why I use my VA loan and not like a FHA or conventional on the single family home.

Alex:

Yeah, I love that you didn't listen to the first lenders. What happens to a lot of people I think is they will call the bank, the bank said this and then so banks do that banks won't do it. And they don't realize as you alluded to about overlays where banks, they're all lending different stuff, right? They have different concentrations. They have different things they like, they have different experience levels within that bank, and so banks are far more different than people realize, from the outside, they all do the same thing they all lend, but what they like to lend, why they like to lend it, what kind of experience they have in lending, where their money is placed, and and what experience they have in that market. There's like so many variables.

25:00 - 30:00

Alex:

So a lot of times I tell people to do exactly what you did, where it's like, hey, the bank said, No, it's like, did you call 20? Because you're gonna get 20 different people who have 20 different experiences and perfect, like, you know, specific what they're good at. And every bank has a different balance sheet, every bank has a different cost of capital, every bank has a different risk tolerance. And, you know, I generally tell people, like every loan, if it's a reasonable loan, you know, if you're like, hey, I want to get 100%. Like, that's gonna be hard. But if you have a reasonable loan, the hard part is finding the lender for it, not whether or not somebody will do it. It's finding the one person.

Jabbar:

Yeah, that's 100% correct.

David:

The way to say this without sounding self promotional, but that's why we have the network of recommended agents and lenders, because there's so many different things. And unfortunately, there's a lot of really bad or knowledgeable lenders, when it comes to the VA loan. And so it's important to have somebody who, and I'm going to throw this out there publicly, and I'm gonna, somebody's gonna hate this, and I'm gonna whatever. Just because you're a veteran, doesn't mean you know, shoot out the VA loan. Sorry. But like, there's really garbage lenders. I mean, my first purchase was an FHA, because I literally, I heard an ad on a radio for this bank, and I'm going to call their bank, a little rock mortgage, and I was in a hurry, but I heard, Oh, were the VA Loan Experts. That was the radio ads, I go to the guy's friggin 'office, and he tells me don't use a VA loan on that duplex. You can only use it once. And you don't want to waste it on your first purchase.

Alex:

The other side of lending is it's, it's kind of like splitting the two parties, right? You have underwriters, well, three parties, you have credit credit approval boards who decide on the loans, but not for small loans like this, but you have underwriters, who are approving loans, even though Fannie Mae is basically, you know. But you have the people who actually approve loans, and then you have the salespeople. And so a lot of times what happens with borrowers is they'll get stuck in this quagmire. They're like, I need this loan, and you'll get a salesperson like, yeah, I can do it. And then they get you to tie your time up, they get you to pull the credit they get your financials in and then the hand of the underwriter then there's like, yeah, we can't do this. And the salespersons, like, alright, can't do it. See ya. And it's becoming very discouraging for borrowers, because they're like, you get banks are jerking me around. And I'm like, No, it's not all banks, that guy jerked around. And that happens, because he's trying to get a commission. So it's very important to understand just a lot of what we're talking about, like how banks actually work. Because if you understand a lot of things that Jabbar says, like if you understand how they work, and what they're looking for, and what they need, and then you can walk in with a package and say, look, I got what you need, it's already done. You don't have to do anything. And let the salespeople hand that package over to underwriting and be like, look, it's already done. Life is easy. It's when, you know, either complicated deals or ugly deals or deals that are on the margin, and then you got a lousy salesperson or a cranky underwriter, or both. And things fall apart. Yeah, a lot of it's just tenacity. I love that.

Jabbar:

Yeah, that's, that's exactly it.

And so one thing that I'll just just say is just like, for people who are young, who are like, you know, starting out in their careers, and they're like, Oh, well, I want to figure out how I can buy a property as like an E-1, E-2, E-3, or, I mean, at least wait to get to that. I will revoke that comment. But, you know, for young people, it's just like, one, make sure that you actually have a strong financial position. Because like, people told me how like stupid or crazy I was, with the financial decision that I was making, but they didn't own any real estate, or they weren't buying a home to live in. But like, I had capital, right? Like, I spent $22,000 on that house, I had, like, more than six months worth of expenses saved up to mitigate my risk. So just like the biggest thing I'd say, is because obviously I'm taking risks, right? It's just having capital, having reserves, having things in place, having different exit strategies, so that if your idea or if your plan of execution doesn't work, you have some other way to get out of it. Because the worst thing you can do, especially as a young service member, especially if you have a security clearances, you know, not be able to pay your bills and you lose your security clearance and then you're blaming me you're emailing or you're emailing Dave and Alex that like we screwed you over but just make you have a strong financial position? Because I see a lot of people who want to get into real estate and get into taking off all this debt? And it's like, well, how can you make sure? How do you want to make a business cash flow when you yourself, don't cash flow.

30:00 - 35:00

So just keep that in mind, just make sure you yourself have a strong financial position, because I save money, like now, I probably spend more money on education and relationships and things like that. But like, when I was saving for this property, I had like an 80% savings rate, one of the months where the stock market crashed, I spent $50, like the entire month, so and I was doing DoorDash, I was taking people's duties for money, like I was writing people's essays form. So like, I don't want people to think that what I did is definitely repeatable. But you shouldn't just like to do it off a whim, it needs to be something where you're, you know, you're thinking about the risk, you have like your risk mitigation plan, and then you have your multiple exit strategies and so forth.

Alex:

Yeah, people forget, you know, debt is the risk. It's not just some risk.

Check this out. I don't know if you know this. Every major religion since the dawn of the last since the dawn of modern civilization, every major religion bans debt, because it sinks, civilizations, right? It is the risk, it's hard to go broke with no debt, right? The fix is what you said, which is it, which is cash reserves, I'm not saying don't use debt, I'm saying, it's really important to respect the risk of debt. And then we also are in this really weird narrative now where people say, Oh, well, we have inflation, you better get out of cash. And I'm like, if you got debt, and you get out of cash, you're setting yourself up for failure. Because you know, you don't know what's going to happen. And the market, you know, you keep talking about the last 2020 crash, but that was a blip. Compared to history, you know, what happened to history.

So having cash reserves, big cash reserves, I'm trying to, you know, my girlfriend's trying to buy her first place, and we keep going back and forth on the mortgage, she's like, I just wanna pay for in cash, I don't want a mortgage, and I'm like, that's fine. But you can make, you know, she sees the risk side and I see the opportunity of debt. But I said, the secret is, you know, keep 30 grand in cash, even if it's too much to keep a 30 grand $100,000 house, it's like, what are you gonna do, it's gonna take you a long time to go broke on with $30,000 in reserves on a small house.

So cash reserves, even during inflation, you know, really, really, really good position to have. And I also like what you said, this is why I tell people like my financial life is a disaster. I want to get into real estate. I'm like, That's a mistake. You fix your personal balance sheet first, then you go get additional assets.

If you are bad with money, adding debt in real estate is going to make you bad at money in two different entities. Your personal and your business are both going to go bad because you don't have the tools you know, to operate them efficiently and responsibly. Once you have the tools then you can add to it and then you have to implement the system like you said, save money, spend less than you earn, reinvest, keep reserves right just be safe, but be safe but optimistic or how I should say it.

Jabbar:

Pessimists, skeptical.

Alex:

Yeah, the word I like is paranoid. Be paranoid, but still move forward.

So, but what you do is the people who are like, okay, my life's a disaster, my financial life is a disaster. I'm gonna go get a 300,000 house and I'm like, I know how this is gonna go. Takes a little while, but I know how it's gonna go.

Jabbar:

eah, exactly.

David:

I'm not getting more risk averse. I don't think that's the case. I think I'm just getting to the point where I'm understanding like, alright, whether I'm risk averse or not. I need to take these precautions because my portfolio is getting big enough that I have to have more in there.

So like, LLC with partners, we all have, you know, 25 grand or whatever in the LLC for which just saved my butt, although insurance actually going to work out but it just saved me massive loss for those of you who didn't listen to the podcast where I mentioned he tenant, I had rip all the electrical wires.

Jabbar:

Yeah, I saw that.

David:

Luckily, between insurance and cash reserves, no big deal. But what I do for like, my own portfolio for the longest time, and I'm finally fixing this is I've been kind of the inflation, appreciation, cash flow, don't like to keep cash guy. And so I basically have six figures in my tsp and I'm like, hey, if the world ends, I pay a 10% fee and I pull that out. And then I have a $72,000 line of credit like a HELOC. And I leave it empty. And I'm like, hey, if the world ends, I can use my HELOC and that's obviously not the way to do it. But it has allowed me to keep it to a minimum. I still have cash reserves, but smaller cash reserves. With the knowledge that if I have to cut a check, I can, what I'm trying now is building the cash reserves because I finally got to a point where I'm like, alright, I'm you know, so I know it’s a long answer time to get out of my own way.

35:00 - 40:00

Alex:

Let me tell our listeners why that's a terrible thing to do.

If you look at lending during a downturn every single time, the first thing they're going to do is they're going to clip available credit. In fact, they did in 2020, people started reporting, myself included, where they would reduce credit card limits, they would reduce HELOC limits. Because the banks are going to go like, okay, if things just went south and you have a $20,000 HELOC, you might go grab all that now we have to put $20,000 in cash in an environment where the risk just went up.

So the first thing that the banks are gonna do is they're gonna take, they're gonna take credit limits that are available, and they're going to yank them back. And every single HELOC for every single bank has a clause that says we can access anytime we want. So HELOC are great, but they only work in a stable environment as soon as risk hits the fan. I mean, you're laughing.

David:

I'm laughing, because in March of 2020, I cut myself a check for $30,000 from the HELOC. And in my bank account and said, I'll pay that back with that money. But at least if they cut my line, I've got half a year in the bank account.

Jabbar:

Yeah, yeah, yeah.

Alex:

I did the exact same thing. But it is important. But you know, now you're on a timing thing. Right now you're now you're against the clock, you know, making sure you're rushing to it faster, the bank is rushing to it.

David:

I preface that it wasn't the right move.

Alex:

Look, man, look, hey, if I can't hear and give you a hard time, then I don't know what the heck we're doing on the show. That's the whole point, the whole point of our friendship, but it is important to say, I'm glad you said it. Because there are people out there, right? The markets have been good for 12 years. And it's easy to think it's gonna keep being good. And you don't need that many reserves. But especially as you get bigger, you need more reserves, because now you have more to lose.

Jabbar:

Yeah.

Alex:

And it's good to step back, you know, the TSP is good, but it is good to have high reserves, even the inflation right now I think having reserves is healthy.

Jabbar:

Definitely.

And I actually made a reel, almost like a Tiktok about that. But basically, my strategy since I don't have six figures in my tsp and I'm probably going to use my HELOC to buy real estate. What I do is I follow the profit first model. And so I saved like a big chunk, either I put that like money in an account. And so I said, basically, I'm saving up a big amount of reserves that are like, Hey, this is the amount that I'm comfortable with.

So for example, for my first property, it's $10,000. And so after, like the account gets to $10,000 to my cash flow, that phantom cash flow is treated as net profit that I'm able to use for additional real estate or whatever. Because I mean, most of my maintenance or capex is easier to cash, like just kind of checking my profits but anyways. But once that account gets tapped for some odd reason, like let's say my furnace goes out and I have to spend five grand, that's more than the cash flow, well, that capex account is used for whatever, you know, capex or maintenance comes up, that's more than like my monthly cash flow or my net cash flow for the month.

And then by doing that, because I couldn't get behind like saving five to 15% in perpetuity. Because to me, it doesn't allow it to work for my risk tolerance. So in this way, I still feel comfortable with the reserves I have seen in the bank for that one property. And I do it because I'm doing it for every single property that I buy, but, it's just another, I guess, way of, you know, protecting yourself from from risks market downturn, tenants screws your property over, like, you know, they ban Airbnb in the Smoky Mountains or something. So, yeah, that's my strategy.

Alex:

As long as you have it in mind, you know, it's not the risk that you know, you take that gets you, it's the risk that you take that you have no idea about that sinks you. And so it's the things that people are not paying attention to or not thinking about that come out of nowhere.

So yeah, I love it as long as you kind of got a strategy then you know, if you're thinking about it, then you're probably okay. If you're not thinking about it, then that's when you get set up.

Jabbar:

Yeah.

40:00 - 45:00

David:

Alright, so we've got a few minutes left and so you've covered a couple key things. I'm just gonna like to highlight them in sequential order real quick and you let me know what I missed.

First off, your personal finances right? You're working on getting a credit score. You were working on having money on reserve, you were investing, you were saving money, you had a really high savings rate, you were doing all the things right to save money, get a credit score, have good finances, have a good track record and learn about what you were doing. And then you house hacked, which, in your case, not only are you living for free, but it's profitable while you're living there, which is awesome, which is while of house hacking, but even if it just allows you to live for free, then you can save your BAH if you're getting it or in your case, you'd still be a net zero with learning about landlord anyways. So you do that, then you take it to the next step, you go to a strict investment, you partner, but because you had all the finances setup, you were able to take that leap.

I don't know if I got that all in summary, but I want to throw that out there to everybody. Like, look, there's a process to this, there's steps to this, it's not just buying a $600,000 house with somebody else. As a partner. It's learning, setting yourself up with a credit score, setting yourself up with a good financial background. And you know, having some runway there, but what else?

Alex:

I want to stop real quick and just kind of for all the people that are listening to Jabbar and being like, Okay, I'm 38, he's 20. And they're going to feel bad about themselves for not having done their first deal or not being where you're at. I want to say that like, you know, F this kid can go your own path. Don't listen to him. It's okay. It's a long game. No, it's really impressive what you've done at 20. It's really impressive what you've done at 20. But it is interesting, just coming from my perspective at 38. I'm like, Dude, I only figured out about real estate when I was, you know, 10 years older than you are now. So it's just I don't know, I don't really have any specific point. But it's an interesting way. Like everybody kind of gets their journey when they figure it out. And it's, it's really good that you got started early, I'm really excited to see what happens over the next 10 years because life's got a funny way of pulling you in weird directions, you might become a real estate mogul, might find something else you like, it's really interesting.

Jabbar:

Yeah, I have one point to that, because I see it a lot. Because from the young side, right when I'm the young kid with no real estate, and no BAH and no money, I'm looking at all these people who are making millions of dollars in real estate. And I'm like, looking at all these different things. And I'm comparing myself to people. And so I listened to a BiggerPockets Podcast, and I'll never forget it. I don't remember which one it is. But the dude just says, instead of trying to compare yourself to people, just like, take what other people have done and like to draw inspiration from it. Because when you look at it from that lens, you don't look at it like, oh, I don't have this. So that doesn't work for me. You look at like how Oh, wow, he did this? I didn't even know that was possible. Like, how can I apply that with what I got going on over here?

So I'll just say try not to compare yourself to people, like just draw inspiration because like I draw inspiration from you guys, like all the hundreds of people I've listened to on the podcast, like I draw inspiration from them, because like, you know, it's possible, like when I see someone go out there and crush it. Like I don't say oh my gosh, like, I wish I had a million dollars to put down on this deal. I say like, wow, I can't believe that's possible. That means I can do it. But that's kind of like it's a lot bigger. Like what you think about things is like what will propel you forward. It's just like, think about what you can take out of this. Or take out of what you're listening to, and figure out how you can apply this in your own life with the resources that you have.

Alex:

Yeah, that's kind of what he's getting at. It's like, Dude, it's not about FOMO, FOMO is deadly, nothing good is gonna come out.

Listen to Jabbar and be like, Oh, he did so good. I can't do that. It's like no, no, you can, look if a 20 year old can do it. You can do it.

Jabbar:

Exactly.

Alex:

To be honest, as knowledgeable as you are. And you know, definitely certainly like second or third tier knowledge. It's not anything, none of it's rocket science, like real estate it's not mentally. You know, it's not that hard. It's a very simple business model, right? It's fixed expenses, it's income minus expenses, they almost never change. And, and then net.

So a lot of what's happening is persistence, a lot of persistence and a little bit of abundance mindset. And one thing that we really didn't touch on that I don't think we have time for but you got around people that helped you grow. And that's so important.

When I was in the army, I hung out with idiots and I was like, you know, I'll be an idiot too. And then when I started hanging out with people that are doing well. I was like, Oh, now I started doing well. When I hung out with alcoholics. I was an alcoholic when I hung out with meatheads, he deadlift 600 pounds, I was deadlift at 600 pounds. And so really you just got to find out what you bargain for and like I said we didn't really talk about it. He brainwashed himself by hanging out with people that were doing bigger things than him and the family stayed with your mastermind now military to millionaire. That's like the one of the biggest things you can do to positively benefit your life is just like spending time around people who are doing things you want to do or people you want to become. And then you become them if you hang out with him enough, it's really that simple.

David:

100%. That's huge.

All right, Jabbar what? What resources do you recommend, course, website, book, whatever anyone who's looking to get started in real estate, especially young service remember?

45:00 - 50:29

Jabbar:

So geared towards young people? I'll give them the packet. The packet is the three books I definitely recommend is Set for Life by Scott trench. That's a bigger pocket book.

The House Hacking Strategy by Craig Curelop, because I truly believe that house hacking is great for everybody when you're trying to achieve early financial independence, and then the book on Managing Rental Properties by Brandon Turner. So that's like the three like the basic borderline trifecta, it'll give you all the how to and a little bit of mindset, then I'd read First to a Million. Honestly, I've read the book, I'm in it. So I don't want to. I'm self promoting here. I'm also in that book, but I'd really recommend checking out First to a Million by Dan Sheeks. I've read the book and it gives you a lot of, like, tactical information on how you can, you know, achieve that early financial independence and then Dave's book The no BS Guides. Yeah, yeah, right there.

David:

All of those authors other than Dan have been on the podcast, although BiggerPockets actually reached out about having Dan on the show, so we may be doing that as well.

Jabbar:

Whoa! Yeah.

Alex:

Also that no BS sign standing behind David, that great sign. Whose idea was that?

David:

Whose was it?

Jabbar, what else?

Alex, it was Alex's. So I wanted the neon sign at one point, but I had no idea what to put on it. And then I also didn't even think about it when I was designing my office. And Alex was one it was like, you need something that pops like a neon sign. I was like, great, but like, do I put on it? And then Tada.

Alex:

And now it flows. It flows.

Jabbar:

It looks really good.

David:

I like it. Yeah, it turned out alright. If I finally got my money's worth putting up with Alex. So.

Jabbar:

Yeah. Oh, one last plug Sheeks Freaks.

Alex:

No, no.

Jabbar:

I can’t do that?

Alex:

No, no, no.

Jabbar:

Alright.

Alex:

There is one mastermind that you can plug and that's David's mastermind, the War Room. But we are not plugged in to somebody else's mastermind.

Jabbar:

Sorry.

Alex:

Military and veterans called the War Room, highly recommend it. It changed my life. But I'm not letting you plug somebody else's mastermind on my best friend's show.

Jabbar:

I'm sorry, is that rude? I really didn't mean to be rude.

Alex:

It's rude. And you're fired.

Jabbar:

Oh, man, I'm sorry. I'm sorry. I'm sorry.

David:

I have nothing to say here.

But on a real note, though, mastermind groups and and I acknowledge the war rooms are not for everyone unless for you. Like finding a mastermind group or just a group of people that is on the same trajectory as you is huge. And I think mastermind groups are especially powerful. Because there's a little skin in the game. It's not free. And there's a commitment, whether it's time commitment, $1 commitment or whatever. Until you're not like the people who are just tire kickers aren't in the group, or at least less of them are in the group.

And so that's incredibly valuable. Especially I think, for service members because you're around people who I don't want to sound negative about people in the military, but like, you're just around people who aren't usually looking for that financial trajectory. And so to get around people who are kind of counterbalances how much time you might spend at work talking about why the chow hall sucked today or how many dollars they spent on a stripper on Friday night.

I didn't hit home there.

Jabbar, this has been an awesome episode. Thank you so much for joining us. And thank you for just being you.

I don't know how not to sound weird when saying, like, thank you for doing this and proving to people that it's possible, because I can't go back in time and be like, look, I did this. It's possible, but I can absolutely be like he did this. It's possible because I didn't fucking buy a house when I was 25 I didn't know any better.

Alex:

Share this episode with your knucklehead friends at work.

Jabbar:

Yeah!

Thank you guys so much for having me. This was a great honor. It's been a blast and oh my gosh, I'm kind of happy. I'm really happy right now. It's just not showing someone to seem like a fangirl.

David:

It's been fun.

End:

Thank you for listening to another episode about my journey from military to millionaire. If you liked it, be sure to visit frommilitarytomillionaire.com/podcast to subscribe to future podcasts. While you're there, we'd love for you to rate the show. Give us a review on iTunes. Now get out there and take action.

Jabbar Adesada quote about drawing inspiration from others

Episode: 159

Jabbar Adesada

Join your host David Pere and Alex Felice in this episode with guest Jabbar Adesada as they get to know how a 20-year-old grows his real estate portfolio and tackles hundred-thousand-dollar real estate properties.

When people get into real estate, they tend to focus on what they don't have that may hinder their entry into real estate investing. But instead of thinking that, here, Jabbar explains why it's vital to maximize what you already have and how you can draw inspiration without comparison.

In this episode, Adam, David, and Jabbar talk about the right mindset towards risks, why David recommends having a network of lenders, Alex's take on HELOC limits, the first thing you should know about banks as an investor, and so much more.

About Jabbar Adesada:

After moving in with his father, Jabbar Adesada was given strict instruction to read books like “Rich Dad Poor Dad,” “I Will Teach You To Be Rich,” and “Automatic Millionaire.” Jabbar decided to put down his NBA/med school dreams and open up a brokerage account.

Lucky for him, right around the time he started investing was the 2020 stock market crash, giving him all the discount he needed to make his first profits. After running some “when will I be a millionaire?” scenarios, Jabbar realized that real estate, and not the stock market, is the best path to financial independence.

Outline of the episode:

  • [03:03] Host to Service Members – hosting service members far from home
  • [05:50] Jabbar's first property from a VA loan
  • [10:19] On accidentally finding an investment partner
  • [14:55] What do you have that you can start with?
  • [19:56] You only need six months of service before using a VA loan
  • [24:35] Every bank is different
  • [30:46] Debt is the risk!
  • [35:19] What banks do to loans during downturns
  • [39:15] It's the risk that you're unaware of that sinks you
  • [42:12] Never compare; just draw inspiration!

Sponsor:

The War Room Real Estate Mastermind Group!

wrmastermind@gmail.com

Resources:

Instagram:          https://www.instagram.com/jabbar_investar/

Tiktok:                  https://www.tiktok.com/@jabbar_investa

 

The Automatic Millionaire, Expanded and Updated: A Powerful One-Step Plan to Live and Finish Rich, Book by David Bach:

https://www.amazon.com/Automatic-Millionaire-Expanded-Updated-Powerful/dp/0451499085

 

I Will Teach You to Be Rich, Book by Ramit Sethi:

https://www.amazon.com/Will-Teach-You-Rich-Second/dp/1523505745/ref=sr_1_1?crid=35Y5BJJ6IIXEW&keywords=I+will+teach+you+to+be+Rich&qid=1641790173&s=books&sprefix=%2Cstripbooks-intl-ship%2C564&sr=1-1

 

Follow The Military Millionaire Podcast's journey on:

Website:              https://www.frommilitarytomillionaire.com/

YouTube:             https://www.youtube.com/c/Frommilitarytomillionaire/

Facebook:           https://www.facebook.com/groups/1735593999901619/

Instagram:          https://www.instagram.com/frommilitarytomillionaire/

 

Become A War Room Mastermind Group Member:

https://military-millionaire-academy.teachable.com/p/the-war-room

 

Grab your book copy of The No B.S. Guide to Military Life – How to Build Wealth, Get Promoted, and Achieve Greatness, Book by David Pere:

https://www.amazon.com/B-S-Guide-Military-Life-greatness/dp/1736753010

 

Zero to One: Real Estate Investing for Beginners:

https://military-millionaire-academy.teachable.com/p/from-zero-to-one-real-estate-investing-101

 

Grab hold of your 2-Week FREE Trial of Propstream Now:

https://trial.propstreampro.com/militarytomillionaire/

Sponsor: The War Room Real Estate Mastermind Group!

wrmastermind@gmail.com

Real Estate Investing Course: https://www.frommilitarytomillionaire.com/teachable-rei

Recommended books and tools: https://www.frommilitarytomillionaire.com/kit/

Become an investor: https://www.frommilitarytomillionaire.com/investor/

SUBSCRIBE: https://bit.ly/2Q3EvfE

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My name is David Pere, I am an active duty Marine, and have realized that service members and the working class use the phrase “I don't get paid enough” entirely too often. The reality is that most often our financial situation is self-inflicted. After having success with real estate investing, I started From Military to Millionaire to teach personal finance and real estate investing to service members and the working class. As a result, I have helped many of my readers increase their savings gap, and increase their chances of achieving financial freedom! – Click here to SUBSCRIBE: https://bit.ly/2Q3EvfE to the channel for more awesome videos!

THIS SITE IS INDEPENDENTLY OWNED AND OPERATED. ALL OPINIONS EXPRESSED HEREIN ARE MY OWN. THE VIEWS EXPRESSED ON THIS SITE ARE THOSE OF THE AUTHOR OR THE AUTHOR’S INVITED GUEST POSTERS, AND MAY NOT REFLECT THE VIEWS OF THE US GOVERNMENT, THE DEPARTMENT OF DEFENSE, OR THE UNITED STATES MARINE CORPS.

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