How Two Friends Built a $2M Real Estate Portfolio Together
Understanding the Journey of Caleb and Chuck
High school buddies, Caleb Hommel and Chuck Sotelo, embarked on their real estate investment journey inspired by the classic book 'Rich Dad Poor Dad.' While they were focusing on their online college classes, an idea sparked their ambition to explore real estate.
The Inspiration from a Book
“My mom suggested I read 'Rich Dad Poor Dad,' and after sharing the book with Caleb, we both felt that real estate investing was our path forward,” Chuck expressed. However, they faced a dilemma about executing their plan, as they had limited experience and even less savings.
Starting with Limited Resources
With only a couple of hundred dollars each, they enrolled in a mentorship program to learn about real estate. To support themselves and manage expenses, they worked for DoorDash, aiming to build their knowledge and resources in the process. This part-time work also gave them insights into their target market and strategy.
Diving into Real Estate Markets
A key piece of advice from their mentor emphasized the importance of persistence in finding the right deal. After one semester, the duo made a bold decision to drop out of college to focus entirely on their pursuit of acquiring properties.
Criteria for Property Selection
Hommel and Sotelo narrowed down their search to multifamily properties in attractive markets, particularly in Florida and Texas. They had three main criteria: it should be occupied by tenants, it should be a multifamily property, and the seller had to offer seller financing, a method allowing buyers to make payments directly to the seller.
The Challenge of Financing
Given their financial constraints and a fixed income from their part-time jobs, they knew seller financing was essential due to the refusal of banks to loan money to them. Their perseverance paid off when they made over 500 calls over six months, eventually securing their first deal: a 10-unit building in Texas for $900,000.
Raising Capital from Investors
To fund the down payment, they managed to gather $90,000 from family, friends, and other investors, promising an 8% annual return. They reached out widely, striving to create a community of supporters and co-investors.
A Clever Structure for Success
The deal was structured to allow them to eventually buy out the investors, enabling Caleb and Chuck to own the property fully in the future without initial investment. They replicated this model to successfully acquire additional properties, including an eight-unit building for $700,000 and another ten-unit property for $725,000.
Reflecting on Their Achievements
As of 2023, the duo proudly owned 28 rental units across their three properties. “Anyone can venture into real estate,” Hommel asserts, “It’s all about taking that first step.” Their journey serves as a testament to the power of ambition, teamwork, and strategic thinking in achieving financial independence.
Frequently Asked Questions
What inspired Caleb and Chuck to start investing in real estate?
Their motivation came from reading 'Rich Dad Poor Dad,' which encouraged them to pursue real estate investment.
How did they finance their first property?
They raised funds from family, friends, and other investors, promising an 8% return to support their down payment.
Where did Caleb and Chuck focus their property investments?
They targeted multifamily properties mainly in Florida and Texas, leveraging seller financing for their acquisitions.
What financial challenges did they face?
As college dropouts, they generated minimal income working for DoorDash, making traditional bank loans difficult to secure.
How many properties do they currently own?
As of 2023, Caleb and Chuck own 28 units across three multifamily properties, demonstrating their growth and success in real estate.
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