When Cody Berman was in college, he had the idea that he could avoid having to work for someone else if he could build passive income. His golden road to passive income came by using real estate for rental income. Berman, who is 25 now, makes $4,700 per month in income from his four homes he rents out. He took six steps to get this outcome.
1. He learned
When he was 19, he found out about to real estate investing. He had an internship at a private equity firm that focused on commercial property investing. Then he interned at a bank which was doing large real estate loans.
This helped build his foundation of knowledge about investing basics. It was not until his last year at university that Berman went deep into learning about getting financially independent. After this, the idea that he could invest in real estate seemed possible. He read and learned everything he could about passive income and rental properties came up over and over again.
2. He researched
When Berman started researching rental properties, he worked with his real estate agent to get Instant alerts. To focus his research, he used certain criteria. For example, the properties needed two units at least, and be less than $300,00, and located inside particular counties. Berman would receive notifications every time a new home went up for sale that met this criteria.
3. He saved
Berman saved like a mad man to get a down payment for his properties. After three years went by, he had most of the cash he needed — a total of $170,000. He invested this into a Vanguard index fund, and put around $10,000 into an online savings account.
During this time, he worked in the real estate lending sector, which made him around $80,000 per year. Seven months into this job, he quit to go full-time at real estate investing. His first year he brought in $70,000, and got his yearly incoming to $130,000.
4. He hustled
Besides saving, Berman did a lot to make extra money. He started freelancing during school and continued a year after finishing his degree. He got around $1,200 per month with his side-hustle income.
He created websites, did freelance writing, video editing, and tried out affiliate marketing. During the summer, he took odd jobs, like sampling alcohol, buffing boats and doing yard work.
5. He cut down on expenses
To save money for his properties, he forced the gap between his expenses and income as wide as he could. “This gap is everything., he says. “It allows you to invest in assets that give you money without having to give up your time.”
To get the money for his four properties, which include 11 rental units total, he had a modest lifestyle and did not care for owning a new car. He cooked his meals at home, and very careful about his spending.
This allowed him to get more cash toward savings. In turn, he got all four multi-unit properties within one year.
If you want to achieve this same thing for yourself, Berman says you should save aggressively so that you can get your “income-expenses gap” wide.
The bigger this gap, the more you have to invest, the sooner you can “retire” on your passive income.
Author: Scott Dowdy