- Cody Berman learned real estate investing at 19. After college, he bought his first property.
- He saved and invested in index funds to grow his money and lived frugally to keep his expenses down.
- He also picked up a lot of side activities and bought his properties strategically.
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When Cody Berman was in his senior years, he had the idea that he wouldn’t have to work for anyone if he could find a passive source of income. His golden ticket to financial freedom came through real estate investing.
Berman, who is now 25, earns $ 4,700 per month in passive income from his four rental properties. He took six steps to achieve financial independence.
1. He Learned What He Can About Real Estate Investing
When Berman was 19, he was introduced to real estate investing across the corporate world. He completed an internship in a private equity firm specializing in commercial real estate investment through buy and hold. The following year, he did an internship in a bank specializing in commercial real estate loans.
While these two internships were not directly related to residential real estate investing, they helped establish a foundation for financial and investment foundations. “At this point, real estate was more of an abstraction than something I could actually use in my own personal financial journey,” says Berman, who is based in Massachusetts and is the co-host of The FI lounge.
It wasn’t until his final year of college that Berman embarked on learning financial independence; after that, the idea that he too could become a real estate investor seemed feasible. He spent everything he could to create passive income – podcasts, personal blogs, YouTube videos – and investing in rental properties kept coming back.
2. He spent a lot of time researching properties
When Berman first started looking for rental properties, the first thing he did was work with his real estate agent to set up automatic alerts. To refine his research, he set specific criteria. For example, properties had to have at least two units, be less than $ 300.00, and be located in certain counties. Berman would receive email notifications whenever new properties that met his criteria appeared.
Berman spent dozens of hours analyzing different cities, comparing price-to-rent ratios, and doing a bunch of math and analysis to figure out exactly where he wanted to start investing. “Rather than haphazardly browsing Zillow or Realtor.com, it was a fantastic way to find potential new properties,” Berman explains.
3. He saved aggressively
Berman saved as much as he could for a down payment on his four rental properties. In three years, he saved and invested most of what he needed, a large sum of $ 170,000. He invested the majority in Vanguard index funds and hid around $ 10,000 in an Ally high yield savings account. As he mainly invested in index funds, he took advantage of the market appreciation and the money he saved increased.
During those three years, Berman worked in commercial real estate lending, which averaged $ 80,000 to $ 85,000 a year. Seven months after starting his first job, however, he quit to pursue his entrepreneurial endeavors. In the first year on his own, Berman made $ 70,000 and eventually hit his annual earnings up to $ 130,000.
Berman did not set specific savings goals. He just shelled out as much money as he could in case the opportunity arose. “Honestly, I didn’t have real estate in mind specifically when I was saving all that money,” says Berman. “It seemed like a fantastic vehicle for passive income so I took the opportunity.”
4. He shoved the side
Besides saving his income from his daily job, Berman did everything he could to earn an extra dollar. He started to get by during his university studies and continued for about a year after graduation. He earned an average of about $ 1,200 per month in ancillary income.
He has created websites, freelance articles, podcasts and video edits, organized a book tour, and dabbled in affiliate marketing. During the summer he did odd jobs like polishing boats, tasting alcohol, and doing some yard work.
Today, as a serial entrepreneur, Berman has invested in everything from helping to found a platform that teaches others how to manage successfully, to selling his own designs. and templates on Etsy and co-found a golf disc manufacturing business, all of which bring in extra passive income.
5. He reduced his expenses
In order to save for his rental properties, he widened the gap between his income and expenses. “This gap is all“Says Berman.” This will allow you to invest in assets that will pay you off without having to trade your time for money. “
To save for his four rental properties, which total 11 rental units (not counting the one he currently lives in), he lived modestly and didn’t like a flashy new car. He cooked at home most of the time and was extremely careful with his expenses.
This helped him free up more money for his savings. In turn, he purchased all four properties, located in Massachusetts and Connecticut, within a year. “Although I bought them all in the same year, those savings were piling up since college,” Berman explains.
For those who wish to achieve financial independence, Berman recommends saving aggressively so that they can maintain the gap between income and expenses. “While you are young and flexible, do whatever you can to keep this gap as wide as possible. I am by no means saying lock yourself in a room, never go on vacation, and never see your friends. , but there’s always a smarter, cheaper option, ”he says.
The more spread you can create, the more money you’ll need to invest and the sooner you’ll have the opportunity to “retire” from your passive income. Or at least do what you want with your life.