A millennial retired early by investing in real estate and one index fund. He explains why he likes owning both assets.

Todd Baldwin got an early start on investing, buying his first property at 23.

He put $19,000 down on a $506,000 six-bedroom house outside Seattle, moved into the primary bedroom with his girlfriend at the time, now his wife, and rented out the remaining rooms. The rental income covered his mortgage and utilities and generated about $1,500 a month in additional cash flow, he said.

By 25, Baldwin's net worth crossed $1 million, mostly thanks to rental income, he said. At 28, he became a multimillionaire and felt comfortable leaving his six-figure corporate job to double down on real estate.

Real estate helped Baldwin accumulate wealth — in 2019, he added a second property, a duplex that he turned into a short-term rental — but he has also used the stock market to grow his wealth without taking on more work.

In 2021, he invested a little over $1 million in Vanguard's S&P 500 ETF, VOO. By the time he spoke with Business Insider five years later, the position had gained about $800,000, according to a screenshot of his Vanguard account.

"It almost feels like a loophole," said Baldwin.

The Seattle-based millennials' results are exceptional. He started investing unusually young, earned a high income, and bought property in the Seattle area during a period of strong appreciation and lower interest rates. He also acknowledges that his market played a major role in his success.

"I did work hard, and also we were just sort of right place, right time," he said.

Still, the broader strategy he used is accessible to investors who are starting with far less: Use real estate, when practical, to create cash flow and build equity, while consistently investing in low-cost index funds that can compound with little ongoing effort.

The two asset classes have served different purposes for Baldwin: Real estate gave him more control and helped him accelerate his wealth-building early on, while index funds have allowed him to keep growing that wealth without demanding more of his time.

How to get into real estate

Baldwin started with house hacking, a beginner-friendly strategy for investors who may not have enough cash to put 20% down on a traditional investment property. Because house hackers buy a primary residence and rent out part of it, they may qualify for an FHA loan with a down payment as low as 3.5%. That allowed Baldwin to put less than $20,000 down on his first home; a 20% down payment would have exceeded $100,000.

The second major benefit of house hacking is the rental income.

In Baldwin's case, rent from roommates covered his mortgage and generated about $1,500 a month in additional cash flow. The trade-off, of course, was living with roommates.

While the strategy worked for him and his wife, Angela, before they had children, it would not fit their lives today, he said: "There's no way I'd have roommates around my kids. But if you're young and you're not married and you don't have kids, it can be a phenomenal way to get ahead."

House hacking may not be equally effective in every market, Baldwin noted. He benefited from buying in the Seattle area, where properties cost more but rents were high enough to support a room-by-room rental model. Renters were willing to pay roughly $1,000 for a bedroom, he said.

Beyond allowing Baldwin to live for free and generate monthly cash flow, house hacking helped him build equity as tenants paid down his mortgages and capture appreciation when he sold.

He earned substantial profits on both his first single-family home and his second property, a duplex. He bought the duplex for $900,000 in 2019 and sold it for $1.5 million in 2026, according to a seller's statement reviewed by BI.

Including appreciation, mortgage paydown, and years of Airbnb income, Baldwin estimated that the duplex generated about $1 million in total value: "When you combine the $600,000 from the sale, the equity paydown, and the cash flow from the Airbnb business, it was right around $1 million that one building made for us in seven years. Our down payment was only $90,000. It's crazy."

Index funds offer a simpler path to long-term wealth

Baldwin's real-estate returns came with substantial work, including managing tenants, maintaining properties, and operating short-term rentals.

"With Airbnb, you're running a hospitality company," he said.

Index funds, meanwhile, have required virtually none of his time.

"It's just a completely different ball game than real estate," he said. "It's easier in a lot of ways, but you don't really have control over it, so there are pros and cons of both."

Baldwin has since sold both of his properties. Part of the appeal was freeing up more time to spend with his family and oversee the construction of their compound, his next major real estate project, which will include what he calls his "dream house" and a separate home for his mother.

His stock portfolio, which consists primarily of VOO along with money in retirement accounts from his former corporate job, can continue compounding without tenants, repairs, or day-to-day management.

He prefers broadly diversified index funds to more speculative assets such as cryptocurrency. Baldwin said he profited after buying crypto early but eventually sold his holdings because the volatility exceeded his risk tolerance.

Crypto can produce rapid gains if an investor chooses the right asset, he said, but he views that outcome as more dependent on luck.

"With crypto, if you bet on the right one, you can get rich overnight," he said. "With real estate, it might take you 10 years, but you're going to get rich. And with stocks, again, it might take you 10 years, it might take you 20 years, but you will get wealthy. You don't have to become lucky. It will just happen if you're in it long enough."

Although Baldwin currently owns no rentals, he has not abandoned real estate. The compound will eventually include a treehouse and a converted train caboose that he plans to list on Airbnb, allowing him to generate rental income again once construction is complete.

For now, however, index funds give him something his earlier real-estate strategy could not: a way to keep growing his wealth without giving up more of his time.