A 25-year-old who earns $4,700 a month in passive income from real estate says he took 5 steps to buy his first property (2024)

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• Cody Berman learned about 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 expenses down.
• He also picked up many side hustles, and bought his properties strategically.
• SmartAsset's free tool matches you with up to three fiduciary financial advisors that serve your area in minutes. Start your search now.

When Cody Berman was a college senior, he got the idea that he wouldn't have to work for anyone if he could find a passive income stream. His golden ticket to financial freedom came by way of real estate investing.

Berman, who is now 25, brings in $4,700 a month in passive income from his four rental properties. He took six steps to reach financial independence.

1. He learned what he could about real estate investing

It wasn't until his senior year of college that Berman dove headfirst into learning about financial independence; after that, the idea that he too could become a real estate investor seemed feasible. He consumed everything he could on creating passive income — podcasts, personal blogs, YouTube videos — and investing in rental properties kept coming up again and again.

2. He spent a lot of time researching properties

3. He saved aggressively

Berman saved as much as he could for a down payment on his four rental properties. Within three years, he saved and invested the majority of what he needed — a grand sum of $170,000. He invested the majority in Vanguard index funds, and tucked away about $10,000 in an Ally high-yield savings account. As he was investing primarily in index funds, he benefited from market appreciation, and the money he saved grew.

During those three years, Berman worked in commercial real estate lending, which earned him an average of $80,000 to $85,000 a year. Seven months into his first job, though, he quit to go full throttle with his entrepreneurial pursuits. The first year on his own, Berman raked in $70,000, and eventually got his yearly earnings up to $130,000.

Berman didn't set specific savings goals. He just shoveled away as much money as he possibly could in case an opportunity presented itself. "I honestly didn't have real estate in mind specifically when I was saving all that money," says Berman. "It just seemed like a fantastic vehicle for passive income, so I capitalized on the opportunity."

4. He side hustled

Besides saving his earnings from his day job, Berman did everything he could to make an extra dollar. He started side hustling during college and continued about a year after graduation. He averaged about $1,200 a month in side-hustle income.

He built websites, did some freelance writing, podcast and video editing, organized a book tour, and tried his hand at affiliate marketing. During the summer, he worked odd jobs, like buffing boats, sampling alcohol, and some yard work.

Now, as a serial entrepreneur, Berman has dipped his toes in everything from helping found a platform that teaches others to successfully side hustle, selling his own designs and templates on Etsy, and co-founding a disc golf manufacturing company, all of which bring in additional passive income.

5. He cut back on expenses

To save for his rental properties, he made the gap between his income and expenses as wide a possible. "This gap is everything," says Berman. "It will allow you to invest in assets that will pay you without having to trade your time for money."

To save for his four rental properties, which add up to 11 rental units total (not including the one he currently lives in), he lived modestly and didn't care for a flashy new car. He cooked at home most of the time, and was extremely careful about his spending.

This helped him free up more cash to put toward his savings. In turn, he bought all four properties, which are located in Massachusetts and Connecticut, within a year. "Although I bought them all within the same year, those savings had been accruing since college," says Berman.

For those who would like to achieve financial independence, Berman recommends saving aggressively so that you can keep the "income-expenses gap" wide. "While you're young and flexible, do everything you can possibly do to keep this gap as wide as possible. By no means am I saying lock yourself in a room, never go on vacation, and never see your friends, but there's always a craftier and cheaper option," he says.

The more of a gap that you can create, the more money you'll have to invest, and the earlier you'll have the option to "retire" on your passive income. Or at least just do whatever you want to do with your life.