This is a story of success of two college dropouts who built a $2 million real estate empire with less $1,000 in savings
This is a story of success of two college dropouts who built a $2 million real estate empire with less $1,000 in savings
High school friends Caleb Hommel and Chuck Sotelo got the idea to start investing in real estate after reading “Rich Dad Poor Dad” while taking online classes in college.
“My mom told me to try out ‘Rich Dad Poor Dad’ and I thought it was really cool, so I gave it to Caleb. That’s when we decided that real-estate investing is the way to go, but we weren’t sure exactly how we were going to go about it,” Sotelo told Insider.
The duo had zero experience and close to zero dollars in their bank accounts. With just a couple of hundred dollars each, they signed up for a mentorship program and began working for DoorDash Inc to keep up with their monthly dues. That’s when they realized they wanted to target multifamily properties.
A mentor in the program had advised them to spend a lot of time finding the best deal possible. One semester into college, Hommel and Sotelo decided to drop out, so they could fully focus on searching for their first property.
In order to get the best deal possible, the duo targeted real estate markets in Florida and Texas that met three requirements. It needed to be a multifamily property, it needed to be occupied by tenants and the seller had to be willing to offer seller financing (a real estate agreement that allows the buyer to make incremental payments to the seller on the purchase).
Seller financing was a must because there weren’t any banks willing to give loans to a couple of college dropouts making about $400 a month from DoorDash.
After about 500 phone calls over a six-month period, the duo finally landed their first deal: a 10-unit building in Texas for $900,000. They raised $90,000 for a down payment from family, friends and other real estate investors by offering 8% interest annually.
The pair reached out to “anybody and everybody” to gauge interest, Hommel said.
They structured the deal so that they could buyout the investors at a certain point down the line, which means Hommel and Sotelo will eventually own the property outright even though they didn’t put any of their own money down.
The pair used the exact same approach to acquire two more properties last year: an eight-unit building for $700,000 and a 10-unit building for $725,000.
Now at age 20, they own 28 units across three properties together.
“Anybody can get started in real estate,” Hommel says. “It’s just going out there and taking action.”
Produced in association with Benzinga
