Overview of Sleeping at Work to Build an 8-Unit Portfolio in America’s Most Expensive City
This BiggerPockets episode features investor Ben Chester, who built an eight-property portfolio (including three Airbnbs) while keeping a W‑2 job and living/operating primarily around New York City — one of the most expensive real estate markets in the U.S. Ben’s path is a story of extreme hustle, creative financing, aggressive tax optimization (via short‑term rental depreciation strategies), house‑hacking, and opportunistic buying (including a high‑profile purchase — Billy Joel’s former house).
Key themes and takeaways
- You can invest and scale a rental portfolio while living and working in an expensive market if you combine creativity, conservative underwriting, and tax strategies.
- House‑hacking and creative living arrangements accelerate savings for down payments.
- Self‑managing short‑term rentals while keeping a W‑2 job can enable massive tax deductions (depreciation/bonus depreciation) to offset W‑2 income.
- Creative, but risky, financing (e.g., 0% intro business credit cards) can fund rehabs — only advisable with a reliable payoff plan.
- Conservative goal: underwrite to break even (not rely on optimistic cash flow), especially when maintaining a full‑time job.
Ben’s story — timeline & notable moves
- Early hustle: After college, Ben lived at his workplace (a sleep clinic) to save on rent, sublet his leased apartment, and later turned that operation into a tech/short‑term rental business that ultimately failed.
- Debt & reset: Left that venture personally on the hook for about $120k in guaranteed debt, then returned to W‑2 employment to pay it down.
- Personal house‑hacks in NYC: Rented a small one‑bed, partitioned it to house multiple roommates to cover housing costs and aggressively save.
- First out‑of‑state move: During COVID he house‑hacked a quadplex in Dallas using an FHA 3.5% down loan with a co‑buyer — cash flow from day one and tax savings helped build momentum.
- Back to NYC: Continued acquiring entry-level one‑bed co‑ops (~$500k entry range), often with quirks/repairs — used conservative underwriting so properties generally broke even.
- Expanding search: Looked within a one‑hour radius of NYC for waterfront/lake houses that could be renovated into destination short‑term rentals.
- Creative rehab financing: Used 0% introductory business credit cards (and transferring credit lines between business cards) to fund rehabs, then paid them off within the intro period.
- Tax optimization: Discovered a short‑term rental tax strategy that, when self‑managing STRs and holding W‑2 income, allows large depreciation (including bonus depreciation via cost segregation) to offset W‑2 income.
- Big purchase: Bought a Hudson River property once owned by Billy Joel for
$2M, rehabbed ($300k), listed it on Airbnb — large appreciation and substantial tax benefits reported. - Current portfolio: About eight properties, mostly in New York state; three are Airbnbs (including the Billy Joel house). He remains employed full time.
Strategies & tactics Ben used
- Extreme living/hacking to save capital: lived at work, sublet leased apartments, and converted one‑bedrooms into multi‑occupant units.
- House hacking: living in one unit of multi‑unit properties (quadplex) to cover expenses.
- Low‑down financing options: FHA 3.5% (used in Dallas) or conventional 5% investor programs when available.
- Get licensed: became a realtor to reduce acquisition costs (commissions) and access MLS deals.
- Expand geography: search 1‑hour radius from primary market for undervalued/destination properties.
- Rehab funding hack: leverage 0% intro business credit cards and transfer available credit lines to increase the 0% balance (Amex/Chase allow this).
- Entity structure: use an LLC per property (and business cards per LLC) — but be aware of bank requirements and personal guarantees.
- STR tax strategy: self‑manage Airbnb units while holding a W‑2 job to deduct depreciation and other losses against W‑2 income (requires proper accounting and legal/tax setup, cost segregation studies).
- Conservative underwriting: aim for properties to break even under conservative assumptions; rely on W‑2 income for cash flow stability.
Numbers, results & examples (as stated in episode)
- Personal guaranteed debt from failed business: ~$120,000.
- NYC entry‑level co‑ops Ben pursued: ~ $500,000 one‑bed range.
- Dallas quadplex: down payment ~$30k–$40k (FHA 3.5%), cash flow from day one.
- Lake house rehab: expected $30k–$40k, ended up ~$150k total (rehab + holding + furnishing).
- Billy Joel house: purchased ~$2,000,000 + ~$300,000 rehab; appraised/market value ~ $2.6M a year later.
- Tax mechanics: Ben stated you can offset up to ~$305,000/year of W‑2 income with passive losses (this aligns with special rules when materially participating self‑managed STRs and using bonus depreciation — consult professionals).
- Example: buy a $300K property with cost segregation; you might get ~$100K of bonus/accelerated depreciation leading to a substantial tax benefit (savings depend on marginal tax rate).
Risks, pitfalls, and cautions highlighted
- Living at work / extreme hacks: ethically/legally questionable and not for most people; potential HR/legal fallout.
- Credit‑card rehab financing: 0% intro cards are powerful but dangerous if you can’t pay them off before rate resets — leads to very expensive debt.
- Underestimating rehab costs: Ben’s $30–40k expectation ballooned to ~$150k on one property.
- STR market risk: short‑term demand depends on travel/discretionary spending; can be more volatile than long‑term rentals.
- Insurance & compliance: STRs and flippers can trigger coverage issues with standard policies — specialized insurance is important.
- Tax complexity: cost segregation, bonus depreciation, and deductibility rules are complex and require proper engineers, CPAs, and documentation to withstand scrutiny.
- Co‑op buying: co‑op boards can reject applicants (Ben was rejected initially), and co‑ops have unique rules/requirements.
Practical action items / recommendations (for listeners who want to emulate parts of this)
- Start with control: lock in housing costs with a long‑term mortgage if you plan to stay in an expensive city.
- House‑hack to accelerate savings: partition units, rent bedrooms, or live in part of a multi‑unit to lower personal housing expense.
- Consider FHA or low‑down options for owner‑occupied multi‑unit purchases.
- Expand search radius to nearby markets for unique value‑add opportunities (waterfront/lake houses within 1 hour can be destinations).
- If using 0% intro cards for rehab, have a solid, conservative repayment plan and backup cash reserves.
- Get legal and tax professionals early: cost segregation engineers, CPA who understands STR rules, and an attorney for entity structuring.
- Self‑manage STRs only if you can qualify for the tax benefits and are prepared to operate them (or have vetted managers).
- Underwrite conservatively: assume break‑even cash flow and rely on W‑2 income for stability while you scale.
- Use real estate license and network to reduce acquisition costs and find off‑market opportunities.
Notable quotes & highlights
- “I was even willing to sleep in the office I was working in to kickstart my investing career.”
- “The biggest expense no one thinks about is actually the tax side.”
- “I bought Billy Joel’s house” — a standout, high‑profile purchase that also illustrates the payoff from combining location, rehabbing, and tax planning.
Final note
Ben’s story emphasizes creativity, persistence, and aggressive tax planning. His approach can work — but it involves elevated operational, financial, and legal complexity. Anyone attempting similar moves should conservatively underwrite deals, use trusted advisors (CPA, attorney, cost‑seg engineer), and avoid high‑risk financing schemes without a firm repayment plan.