Cody Berman, author of 'Retire by 30', achieved financial independence by age 26 through strategic real estate investments. According to reports from Business Insider, Berman's journey began with house hacking - renting out part of his home to offset housing costs. He explained that housing accounts for about one-third of the average American's paycheck, making it a significant expense lever. By eliminating or reducing housing costs, investors can redirect that portion to build wealth and achieve financial freedom. Berman emphasized that 'house hacking is probably, on the expense front, the biggest lever you can pull bar none' and noted that 'one-third of the average American's paycheck goes to housing'.
By late 2021, just before turning 26, Berman had achieved financial independence with approximately ₹40 crore ($500,000) invested in the stock market and 13 rental units generating about ₹3 lakh ($3,700) per month in cash flow. As reported by Business Insider, his digital-products business also contributed more than ₹8 lakh ($10,000) per month in mostly passive income. Berman and his wife, Lauren, continue using house hacking by purchasing property with a one-bedroom house and separate four-bedroom apartment, living in the smaller unit while renting out the larger space. They currently live in a property with a one-bedroom, one-bathroom house plus a separate building with a four-bedroom, two-bathroom apartment and 600 square feet of office space, making ₹800 monthly from living there instead of paying rent.
Berman implemented the 1% rule as his initial screening criteria for real estate investments. According to Business Insider reports, this rule suggests a property's monthly rent should equal at least 1% of its purchase price to improve chances of generating positive cash flow. For example, a ₹4 crore property should generate at least ₹40,000 monthly in rent. The couple used this rule as an initial filter, stating 'That was our starting criteria. How do we find a place that meets the 1% rule?' They expanded their search beyond Massachusetts to Connecticut where price-to-rent ratios made more financial sense. This rule served as their starting criteria for finding properties that met their investment criteria, with Berman noting it took time to find properties that met the rule - they toured a couple of dozen properties before buying their first rental.
Berman learned a crucial lesson about tenant selection after purchasing a ₹1.4 crore ($170,000) duplex that initially appeared strong with ₹1.9 lakh ($2,250) monthly rent and ₹1.1 lakh ($1,350) monthly expenses. As reported by Business Insider, the property quickly became problematic with tenants causing issues and one tenant being arrested on the porch for drunk driving. This experience led the couple to adopt the principle of investing only in properties they would personally want to live in. Berman explained they seek tenants who pay rent on time and cause minimal problems, stating they want 'people like us' in their buildings. The experience changed their evaluation criteria, with Berman noting they now use the 'would we live here?' test as a nonnegotiable rule when buying real estate, stating 'It sounds silly, but it's a golden rule now that we live by'.
