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Cody Berman's Two Golden Rules for Real Estate Investing
Cody Berman, author of 'Retire by 30,' used the 1% rule and a 'would you live there' test to build a portfolio of 13 rental units and achieve financial independence by 26. Here's how the rules work.
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Cody Berman, author of "Retire by 30," credits two simple real estate rules with helping him build a portfolio of 13 rental units and achieve financial independence before turning 26. He shared the principles in an interview with Business Insider.
Berman's strategy began with a house hack – renting out part of his home to cover or eliminate his housing costs. "I think house hacking is probably, on the expense front, the biggest lever you can pull bar none," he said. Housing accounts for about one-third of the average American paycheck, he added. "If you can eliminate that or vastly reduce it – or, even better, if you can turn your housing into an income – all of a sudden, you gain a third or more of your monthly expenses back to invest in other things."
Over time, Berman and his wife, Lauren, built a portfolio that included 13 rental units generating about $3,700 a month in cash flow by late 2021. They also had roughly $500,000 in stock market investments. The couple continues to use a version of house hacking today. They live in a small house on a property that also has a separate apartment and office space, which they rent out. Instead of paying rent, Berman said they actually make $800 a month from living there.