Todd Baldwin with his wife, Angela, and their two children.Courtesy of Todd BaldwinTodd Baldwin used house hacking to jump-start his real estate portfolio.He later invested over $1 million in Vanguard's S&P 500 ETF, VOO.Real estate offered control and cash flow, while index funds let him grow his wealth passively.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 estateBaldwin 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 wealthBaldwin'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 thei
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