- Ben Leybovich — author, investor, and creator of Cash Flow Freedom University — started investing in real estate after he was diagnosed with a condition that impacted his physiology.
- With over a decade of experience under his belt, Leybovich thinks he’s pinpointed the “absolutely perfect” strategy for first-time real-estate investors.
- “I don’t see how that’s not perfect for anybody,” he says about his approach.
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Ben Leybovich — author, investor, and creator of Cash Flow Freedom University — never set out to be a real-estate investor.
“I’m a violinist by training, and I was diagnosed with a condition when I was in college,” he said on he “Real Estate Investing” podcast. “The doctors said I’d probably want to do something else because it was an autoimmune condition that impacted physiology.”
With the prospect of being a professional violinist now off the table, Leybovich knew he needed to find work that would be accommodative to his condition — and real estate seemed like a perfect fit.
“Real estate just lends itself to being creative, starting with nothing, and doing/making something,” he said. “In real estate, you have other people’s money, leverage, creative finance, and the inefficient market characteristics of an inefficient market.”
He added: “You have all those things working for real estate that are not as easy or plentiful to come by, or easy to execute, in other markets.”
Fast forward to today, and Leybovich’s portfolio generates about $165,000 of annual rent revenue from a multitude of investments. In total, those properties produce about $40,000 of annual cash flow.
But when Leybovich’s first started to dip his toes in the real estate market, he quickly realized that the conventional path — invest in a single-family fixer-upper — wasn’t for him.
“I figured out that for me it didn’t work so well,” he said. “I went on to small multifamilies, like duplexes, fourplexes, sixplexes, and tenplexes. I stayed in that for about a decade, picking up intellectual worth and moved on from there.”
The know-how that Leybovich was able to garner from a decade of experience left him with, what he calls, an “absolutely perfect” investment strategy for a first-timer.
Let’s take a closer look.
Why house hacking is an ideal first strategy
“So, as a first investment, a house-hack is absolutely perfect,” he said.
For the uninitiated, house hacking is a real-estate investment strategy that utilizes the extra rooms/units of your primary residence. By renting these spaces, a house-hacker can cover costs associated with the property and even generate positive income.
It’s a strategy that Craig Curelop — 27-year-old entrepreneur — used to eliminate $90,000 worth of student loan debt and achieve financial freedom. Curelop says “it’s hard not to get rich” by employing the methodology.
Because the property is designated as a primary residence, Leybovich says that a house-hacker can enjoy a loan with a lower down payment, a lower rate, and better terms than a loan for a traditional investment property.
But Leybovich takes the strategy one step further.
He understands that not everyone is going to want to constantly have new tenants coming in and out of their home. For that reason, he suggests acquiring a property with an ADU — an accessory dwelling unit — which equates to a secondary dwelling with it’s own entrance. That way, your privacy and lifestyle isn’t encumbered.
What’s more, in his personal approach, Leybovich also rents his property out on Airbnb, Vrbo, and HomeAway.
“It’s all systematized, more or less, and communication happens via email, and it’s just right there,” he said. “I don’t have to deal with the leases. I don’t have to deal with the prospect of evicting somebody. I don’t have to deal with collecting rent.”
He continued: “They pay with a credit card through Airbnb, Homeaway, Vrbo and the money just shows up in my account. That’s just fine by me.”
By leveraging this technique, Leybovich says that he increases his returns — since the income he generates from nightly rates comes out to more than a monthly rate — as well as the frequency in which he’s paid. To him, it’s a perfect passive strategy.
“Instead of getting paid monthly, as you would on a typical rental, here, you’re getting paid 3x to 6x a month depending on your set-up with Airbnb and all those platforms,” he said. “But the style that I do where we don’t share any spaces, where they’re over there and I’m over here, I don’t see how that’s not perfect for anybody.”
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