Key facts
- Millennial Cody Berman achieved financial independence before age 26.
- He used real estate investing, including house hacking and rental properties, to build wealth.
- Berman's first rule is to ensure a property's monthly rent is at least 1% of its purchase price.
- His second rule is to only invest in properties that he would personally live in.
- These strategies helped him and his wife build a rental portfolio contributing to their financial freedom.
Cody Berman, author of 'Retire by 30,' shared his 'golden rules' for real estate investing that contributed to his financial independence before the age of 26. He emphasized house hacking as a primary strategy to eliminate or reduce housing costs, freeing up capital for other investments. By late 2021, Berman had approximately $500,000 in stocks, 13 rental units generating about $3,700 monthly, and a digital-products business earning over $10,000 per month.
Berman and his wife continue to practice a form of house hacking, currently living in a smaller house on a property while renting out a separate apartment and office space, which generates $800 per month. He has since sold some rental properties and increased his exposure to real estate syndications.
The first rule Berman advocates is the '1% rule,' suggesting a property's monthly rent should be at least 1% of its purchase price to ensure positive cash flow. This criterion led him to search beyond his then-expensive Massachusetts location, ultimately finding his first rental property in Connecticut.
His second non-negotiable rule is to only invest in properties he would personally live in. This principle emerged after a difficult experience with an early duplex investment that, despite strong cash flow, led to tenant issues. This led him to prioritize properties that attract reliable tenants and are easier to manage, focusing on quality over solely cash-flow metrics.