Is this 22 year old going to be the next Sam Zell? Caleb Hommel on the Owner Meeting Podcast

Hello and welcome back to the Owner Meeting Podcast with Christian Osgood, your host. This is a Multifamily Strategy production, and we are here with my very good friend, Cale Bahamut, who's coming on for another episode. This kid started at 19 years old. He's at just about 200 rental units today at 22. It's about a 2.5-year career. He's done deals with joint ventures, creative finance, conventional finance. He's refinanced several of these. He just got a $5 million bank loan direct from Fannie at 22 years old. That is supposed to be impossible to do. He started with no money. The man, the myth, the legend, Caleb Hommel. Welcome back to the channel, my friend.

Thanks for having me. Appreciate the big introduction, dude.

You're a big deal in real estate. I don't think most people understand just how far you are. Unlike me, you are not as loud of a marketer, which is fine, but I don't know that the world knows how much stuff you've bought or just how impressive you are. So big intro is what you deserve, my friend. Dude, I'm loving the background, loving the studio. Where are you joining from?

Shockingly downstairs in your house.

I didn't want to move the other chair to the studio today, so I relegated Caleb to the basement. Thank you for Thank you for joining from Studio B. I actually have 3 studios at my house, but you're the one that I usually do a lot of mentorship from if I'm on the laptop. So welcome on into the podcast from wherever you guys are joining, whether you're on iTunes, Spotify, YouTube, wherever you're viewing. This is the Owner Meeting Podcast. We want to bring the owners of the best businesses, especially real estate, but all business, to you to learn from them, their success, their mistakes, Save you money, make you money. This is how you build business. You get connected with the people who have done the thing you want to do. Caleb, in many ways you're living the dream for people. First question I have for you, let's just kick off with the thing that I think everyone's wondering. You joined at 18 years old to Multifamily Strategy. Yep. You graduated high school. What made you at 18 and 19 years old think you could succeed with no money, no credit, no experience, no job? What made you think that you would succeed just diving headfirst into real estate?

Yeah, that's a heck of a question. I think the biggest thing that just allowed just the belief of success and the belief in myself was played a lot of competitive baseball growing up. Definitely wasn't as good as most of the kids. You could say growing up you had kids that were already getting scholarship offers, all this stuff, yada, yada, yada. Being 5'10", 215, nobody really cared what I did or how much I worked. Started off kind of at the lower levels and then by senior year of high school had become one of the better hitters in California. So kind of had gone from horrendous, you could say, to actually seeing pretty good levels of success, going to college, playing baseball in college, and then got there, started looking around. I was like, do I really want to go slog out this baseball thing or is this a means to an end? I really hate school. I already did something hard once. Let's go try something hard again and try to build a business out of it.

That's absolutely incredible. With your first deal, for those who haven't seen your past episodes, and we will get into this $5 million bank loan you just got.

Yep.

But when you got started, how did you get into and fund your first deal? Because as we know, it's not free.

No.

To get into real estate, you have earnest money. You have the main obstacles that people who have little to no money have is like, how do I even get the seed capital to get through? The first 2 months of I went under contract and I'm closing a deal. How did you pull that off for deal number 1 and deal number 2 as you were getting started?

I have a Chase credit card to thank for that. That funded EMD and some early preliminary expenses while under contract with a credit card. When Christian Osgood said I truly had no money, it was like payments to join Multifamily Strategy at 18, payments bounced. What would you say? Every single month for about 8 months. I always go DoorDash the next week and make it up. So if I can't pay for it—

Yeah, we no longer do a subscription model. It's now all just one time. I don't believe in mentorships that are incentivized to keep you there longer.

I would completely agree.

I want you to succeed. So we changed our billing model since then, but it used to be nominal price per month. And, uh, yes, I can say for a fact, uh, after your first payment, your next 3 all bounced.

And I, I remember the call getting— I remember where I was and I got the call from you asking what was going on. It was like, I'm DoorDashing, I'll figure it out. But if I didn't have, if I didn't have the money for that, I sure as heck didn't have like $7,000 to $10,000 in EMD earnest money ready to go.

Well, you figured out as part of your career, you figured out liquidity.

Yes.

For context, Caleb today lives at near the penthouse of one of the nicer buildings in Dallas. He has a beautiful view of the Dallas skyline, new furniture. You're about to get married. He's engaged. Incredible. You have estimated, I don't know if you have 7 figures, but you have at least 6 figures in your bank account right now. You have income coming in. You have all of these rental properties unbelievably farther than I was at 22, which at 22 I was screen printing t-shirts for $11 an hour, freshly graduated from college with no idea what to do with a degree I didn't know how to use. You've absolutely killed it. So first of all, Huge inspiration to a lot of people. You've since figured out how to get liquid buying deals.

Yeah.

And you have done syndication, you have done JVs, you've done it both ways. When you're closing on a joint venture, which is I think where most people are starting and should start.

Couldn't agree more.

How are you getting liquidity while you're also building a portfolio? I think a lot of people get stuck there. I know I certainly didn't know this for my first few years of real estate.

Yeah, it definitely wasn't something where I went in off the bat, we're like, hey, I'm going to go in and buy this deal and get liquidity. That was not the expectation going in. The expectation was, hey, it's a slow burn. We're going to build generational wealth. There's going to be cash flow every month, but it's not going to be this giant injection of cash off the bat. And then you started learning about assignment fees, what that could look like on a joint venture, and then eventually doing syndications, realizing, oh, there's actually an acquisition fee. And there are these different types of things. It's just structured slightly differently from a joint venture to a syndication, just making sure you're staying in. The black and white, not going too much into the gray area of like taking a certain AC fee on a joint venture that's more than you should, or on syndication, some things like that.

I wish more people would say that. Taking too big of fees. I see a lot, and this is why I think people have a bad taste in their mouth about syndication still. Couldn't agree more. Is people do this like 5% acquisition fee, 2% asset management fee, 2% property management. Like you look at the fee structure and you're like, oh my goodness. Where do the investors actually get paid? And those are the groups that ended up doing capital calls on their investors because they ran out of money and needed more money.

Yeah. And then it's funny that those people, this isn't to say deals can't go bad. Stuff happens, economy hits, 2008, whatever. But it's like, it's funny, those investors who were taking the 5% ACV, the property management fee on top of paying a PM is the thing that gets me. It's like, hey, I'm going to pay a third-party PM and then charge my investors as well. It's like, that makes no sense to me sometimes.

But Caleb, we're managing the manager.

Dumbest thing I've ever heard.

I agree.

But it's, and that's funny, those groups are the ones whose deals get capital calls, but the GPs aren't the ones putting all the money back into the deal. Their pockets are lined. They're fine. They don't care. They're under contract on 1,000 more units, not even thinking about putting any of their money into anything.

What's the difference between an assignment fee and an acquisition fee? Because they're, they're both paid to you, the deal structure at close. But when do you use each and what is a reasonable price to actually charge for that?

Yeah, in my head, assignment fees are typically associated more with wholesaling, which is associated with joint ventures, smaller deals. You're not, you don't see a lot of people wholesaling 100, 200, 300-unit buildings. That's not something I really see as much. I see offers for it, but don't see it going through. Assignment fees, excuse me, are typically on wholesaling. It's kind of like wholesaling to yourself is kind of when those come into play. Let's say I put a deal under contract as Caleb Pommel and/or assigns that, that for assigning that project to an LLC, which I am going to be a member of, is usually I go below 1%. Typically I've seen on JVs with the assignment fee, you could go a little bit higher than on the AC fee, the acquisition fee for syndications. Those typically are a few percent upfront. So I think the AC fees are a little higher than the assignment fees are, is typically what I've seen.

I've seen that consistently as well, and a lot of that is covering the fact that they're typically more expensive to put together, right? You have more legal fees, there's more hoops to jump through. A syndicated structure with the capital raise, the reporting, the effort, and the financing that you get for them, it is actually more literal work to put it together, which is what you're getting compensated for.

Dude, on Riverwalk, we just did the 76 unit unit I just took out. Most arduous underwriting process I could have imagined. It was like I was not aware of what I was stepping into. There was one, I had a late payment on a card I'd canceled from when I just turned 18. Literally $20 late payment. Told B of A I was canceling the card. They acknowledged it via email and over the phone, and then I still get a late charge. I get an email like, hey, what is this late charge from over 36 months ago? I'm like, how did you even know about this for less than $20?

Oh, and we had investors on that deal who had a similar name to other people who lived in a totally different area of the state, and they had them sign a than them saying like essentially, or an affidavit saying like, hey, that's not me. Insane. The level of scrutiny is very, very high.

The level of legal bills was also very, very high on the LIHTC deal that is syndicated with Fannie Mae. Dear goodness.

Very difficult. And you pulled it off, which is what— so let's talk about that and let's talk about your next deal, Anson Park.

Let's do it.

So you just closed 76 units.

Yep.

13.5 acres.

Mm-hmm.

Clubhouse, pool, computer lab, gym, playground, the whole nine yards. You got at 22 a $5 million plus loan from the bank. Now, right now in the market, Fannie is not giving out money for free. They are not a fan of syndicators. That's why the scrutiny is so high. It is very hard to get the debt that you got on this, and you went 80% loan to value, which is very rare in today's market. How did you get these terms and how honestly, how much did you have to scale your business to even qualify for this?

Yeah. So let's start with how did we get the terms? So Fannie Mae, like they kind of break it down into certain markets per se. Like there's certain cutoffs. I learned this actually under contract that for agency debt, there's maximums they have per area. So some areas it's 80% LTV, some areas it's 70% LTV, some are 65% LTV is more tertiary you go that requires a higher DSCR. So Stephenville, where we bought this one, actually lies within an area that is a 1.25 DSCR requirement with 80% leverage. So one, we already had a deal that could size potentially. And I mean, let's talk about the deal we bought. I mean, I think day one DSCR I saw was above a 1.5 to 1.6. The DSCR was ludicrous. So when we have that level of deal and we take it to Fannie through a delegated underwriting service, it makes it— getting the debt was a pain. But I've heard horror stories of it being a lot worse for sure. Yeah.

Shout out to Mark and Robbie, literally getting it done.

Best originator, best debt broker I've worked with.

Yeah, they're with Arbor. They're absolutely, they are incredible. And they had a lot of patience because this is a debt product that I had not been through. Caleb had not been through before. We've done bank debt. We've gone through local credit unions. We've gone through banks. We've done the standard things. Yep. They had the patience to work with us on a very sizable loan. And now that we actually have the debt from Fannie, now it's much easier to get it again. But I just want to point out what a huge accomplishment that is. You got a bank to look at you as a 22-year-old, and granted, we're working on it together. So me as a 33-year-old, you as a 22-year-old, but we're the point people on this deal.

Yeah.

You're talking young people. At the time, you were not super, super liquid. You have some liquidity, but you didn't have really high liquidity. You do have very high income.

I'm not funding the down payment by myself, that's for sure.

And we figured out how to put together that deal. We got debt that's hard to get. What you pulled off at 22 is something that most people don't pull off till much, much, much, much later in their career. Now you qualify for bigger and different deals. So the natural response to this, within a few weeks of closing the 76, I believe within about 10 days.

I think it was about 10 days.

You went under contract for Anson Park 1 and 2. Tell us about that deal.

Yeah. Anson Park 1 and 2 is in Abilene, Texas. Those who don't know, Abilene, Texas, even before the news that broke a little bit earlier this year, was a pretty stable market. You've got 3 colleges, you've got a military base, you've actually got some aviation mechanical engineering areas with American Airlines subsidies. You've got pretty stable economy there. And then you go ahead and add the fact that the Stargate project between OpenAI and Oracle announces a $500 billion development, which happens to be less than— what would you say that was, a 6-minute drive?

It's probably 4 to 6 minutes. It's on Old Anson Road, the name of Anson Park being, you know, it's on Old Anson Road. It is right next door, I believe. It is the closest or maybe second closest apartment complex to the development.

I think we're second close. I actually know we're closest because the other complex we're looking at attaching to this one and buying the next deal right after this is the second closest one, I believe. So we're going to be the two closest complexes to the Stargate project.

That's ridiculous. Okay, so how many total units then, assuming that the other one comes together? So you have Anthem Park 1 and 2, which is one package, then you have The other property, how large is that?

So with Anson Park 1 and 2, which essentially is one project, was developed in two phases in a few years. That is 144 units. Then the other project is 81 units right down the street.

Dude, that's a lot of real estate. You're talking like 225 units.

Exactly. I'm talking 225 units.

That is a wildly large transaction. How big of a capital raise is this going to be?

We're looking closer to the $5.5 to $6 million mark on the total capital raise. Woo-hoo-hoo-hoo.

All right. Uh, now the last capital raise you did was what, about $2 million to close out the 77?

Yeah, right about $2.1.

This is a lot larger raise. How far into that raise are you so far?

We're looking around the 20 to 25% mark. We aren't even, we aren't even through feasibility yet, so we have plenty of time to go. We've got plenty of extensions built into these things, especially for LIHTC. A lot of people don't know out there, the hardest part of closing LIHTC is dealing with the housing community. The Department of Housing and Community Affairs will randomly throw extensions on those timelines sometimes for, it seems like the littlest things ever. So we've got plenty of time to raise the rest. Really zero stress about it.

That's, so you, you just raised $2 million, like first time ever you've done a 7-figure raise.

Correct.

You're already over $1 million into your raise for your next $5 to $6 million raise. You're 22 years old. And by the way, Cael is running point on this raise. This is, I, I helped with the, I helped prep the pitch deck. That's, that's, that's about as much as I've done on the, on the capital raise part so far. So Cael is presenting this, finding people, reaching out. How did you build your network to a size and build the confidence going under contract? You've never raised this type of money before. You'd never raised $2 million in your life.

Not at all.

How did you have the confidence to raise $2 million? How did you come off that with the confidence of like, oh, I just did 2, let's do 5? That, I think for most people that seems incomprehensible.

Yeah. Confidence, we can go back to kind of tracing it all the way back literally to that high school baseball story of thinking, hey, nobody really is supposed to do this. And I did something that wasn't supposed to happen. Granted, baseball in Southern California is already extremely competitive. Did that and I was like, let's go buy real estate. Ended up buying 100 doors. Then I was like, why don't we just get work? If I want to go bigger and I want to be who I say I want to be, I'm going to have to climb this mountain at some point. Why not now? So got Riverwalk out of the way. And as far as building the network goes with that, it's actually some advice I heard on a podcast a long time ago. I can't remember if it was Brandon Turner or somebody else, but it was something super silly of just talking to everybody about what you do and have applied that to essentially my life. And anybody asks what I do, it starts off with real estate before any of my other businesses. That's the first thing that comes up and everybody That I've ever met pretty much wants to get into real estate or is in real estate in some capacity. And if you just keep talking about what you do enough, that's going to lead to people are like, hey, do you know Caleb's actually working on a deal right now? You've got a few hundred thousand dollars to place. You should go talk to him about this. If you just keep talking about what you do enough, it works. I actually had one of both of our good friends, Mr. Wang, text me this week and we had talked about that on the podcast.

I love Matt.

Yeah, we had talked about this advice actually over a year ago, one of your Robinhood events. I had a text from him, came in at like, I think it was past midnight Central time, because he's on the West Coast. And he was like, hey, the advice, literally this advice we talked about led to him. He's about to go under contract on another deal. It looks like after this one. So it's just the confidence comes from just doing hard things kind of over and over. And then that network comes from just talking about what you do with anyone and everyone you come across has been my biggest finding.

So this has been the biggest gifting in watching what multifamily strategy has become over the last 5 years. Guys like Matt Wang, Christian Osgood, Phil Toth, you, I've had all you guys on the podcast. We've got a lot more mentees who bought real estate, but these are people who go and they buy again and again and again. And what you find is people think that you need to start with the duplex or the single family house. No, you don't. But the speed in which you can go, like you got to 100 units and you went, oh, that's not that bad. Bought a 76. Bought another 26, bought a 44. You're buying 144 and you're like, hey, you know what? While we're out here, let's buy the 81-unit next door at the same time. The illustration here is if you are sitting here stuck on the single family or the duplex or the house hack, it doesn't mean you can't buy those. And house hacking can be a great strategy, but the business that you can scale is easier to scale than you think. It's not that it's easy, but it's unbelievably easier than I think most people make it.

I would totally agree. I think even going back to like certain problems we face in our current business, or even going back to when I was getting started, it's this mindset of you just, you put it, it's in the, you don't know what you don't know box. And a lot of people are too scared to even venture into that box and kind of jump in the deep end and have the confidence in themselves that they will figure it out. So they just keep playing in the kiddie pool, so to speak, with buying one single family a year. Okay, now I'm in a fourplex. Okay. 5 years later, I might buy an 8-plex. It's like if they just had the confidence to dive in and be like, realize the fact they're going to make some mistakes along the way. Nobody's going to be perfect, but you're going to sink or swim. And having the belief in yourself that you're going to make it through would have allowed them to scale so much farther. And I've already seen that in myself in a few years. I wish I would— I sound so stupid because I'm already at 22. I wish I would have gone bigger earlier. Talking to Kathy at our inspection, who's managed over 80,000 units at one time in her career. It was these bigger complexes are actually easier to run, harder to buy because the capital raise size of deals are bigger when you're scaling up. So much easier to run. You don't have to be offsite. Everything is onsite. Everybody is at the complex. Your property manager lives there. Your maintenance man lives there. And just having the belief, once you get to that point, the game already I'm seeing on deals that are coming across my desk even today has started changing even more.

Well, and now what you've done is you're really buying a business, right? You're buying a business that has some onsite staff. You have employees. Speaking of, at 22, you have a portfolio of real estate, which is the core of your business. You also have a portfolio of companies. What does your portfolio look like today? Like just give us the high-level buildings and unit counts and then other companies that you own and operate.

Yeah, I think I'm at 100. I actually don't even know how many real estate units I'm at. I'm at 180. I'm either at 185 or 195 units. Currently buying another 144 to 224. So I'll be over probably what, around that 300 to 400 mark by the end of the year, pretty easily. 400 actually. And then on top of that, have the property management company Apex Asset Management based out of North and Central Texas, primarily in Stephenville, Waco, and Abilene. And then on top of that, also have Funnel Stacking, which is for coaches, consultants, and mentors. We handle the sales and funnel, in the name Funnel Stacking, the funnel build out for these mentors to allow them to build their programs and mentorships.

And that company's been incredible too, watching what that's done. It helps power Multifamily Strategy, but we have some, there's some other clients that you represent that are just awesome, big names, real estate and other coaching programs. I love what you've done with that company. How many employees do you have in that? Because you're the CEO of that company. How many employees do you have currently in that company?

Gosh, after staffing this weekend, we'll be at 1, 2, 3, 4, 5, About 8 more there. We're going to be about 12 to 14 people in the org probably by after we finish this next round of hiring.

That's not half bad. Caleb has taken that company. I love the way that it works. So this is just a shameless plug to it, but they only take coaches who've actually done the thing that they talk about. So there's no, there's no people who are like, hey, look at my boat and my cars and my fancy watch. Not that. Some of his coaches don't have those things.

Absolutely. They do.

I'm thinking of Anthony with the Section 8 guys. They— yep. He's hilarious, but they actually do the thing. Like you can go out, you can watch them do their properties. They— their student success is incredible. You take the non-influencer brands and you build them a million dollar a year business.

Mm-hmm.

Which is— it's just, it is incredible to see the way that it's scaled the community. I think the thing that I'm most excited about with watching you grow that company is the ability to find people who really, a lot of these people have been burned by 1, 2, 3, 4 other coaches. Absolutely. You get them into a program that actually delivers and then you get these amazing testimonial success stories of you have all these students who learn from the right people and the brands grow organically. Incredible what you've done with that company. Apex, you and I own that bad boy together. That company is expanding like I never imagined it could. But you've ended up with this portfolio of businesses. I don't even know how many people we employ there. If you account the, for the, for the maintenance stuff, lots.

Yeah. I, we probably employ what, in everything, at least 25 people at this point, I'd imagine. Yeah.

We have 25 people minimum working around the clock.

Yeah.

It's just incredible to see the scale and impact you've had. You've moved to Texas, you've been here about 2 years, and the impact that you've had on Texas, you employ all of these people, uh, you know, within state and out of state. The companies are all moving. You've done a lot of good for a lot of people. You provide great housing. The reno work that we've done together, I'm really, really proud of. We came into beat up entry-level housing on some of them. Some of them are just nice, but a good deal. We had beat up property that's mismanaged. We fixed the management, we fixed the actual properties. We invested, I don't know, at this point, probably about half a million dollars back into Stephenville, Texas so far. At least, at least maybe a little bit more. It's been a fun adventure to see what you can do at your age. A lot of it seems almost impossible in buying Anson Park. Because that's exciting. That'll more than double your portfolio.

Everything you've done is dwarfed by one transaction, which is kind of insane to think about, right?

Yeah. What is the overall strategy? For that deal? So we know you're raising another $4 million, you're going to be bringing in people, but what is the actual vision for the project?

Yeah, actual vision. I was also just doing the unit count after that one. I'll be about 415 units. I was doing the math. There was too many properties to do in my head. Let's just write it out on a calculator. I'll be at 413 units after that. Actual vision for Anson Park, and then the other deal we're buying next door, we're not mutual yet, Usually, so we're buying a lot of LIHTC. We're kind of doubling down on tax credit deals. Texas is one of the only states where you can buy these low-income housing tax credit properties and actually remove them from said program successfully, exit the program, and actually take them to market rate over the next few years. So that's the same plan with Anson Park, same plan with the next deal we're looking at is we're going into these super stabilized communities. That's the beauty of LIHTC. I get people all the time asking me, hey, why don't, Why didn't the previous owner execute a qualified contract? That's when you have these titans, these REITs that you and I are now buying from with 3,000 properties. They don't even know this thing's on their books. They just see low-income housing tax credits. It's stable. It adds so much stability to their books. All these deals are 92%+ occupancy. So we're going to come in there. We're going to work on executing the qualified contract. We're going to work through the process of bringing this out of the low-income housing tax credit program. We're going to take the 3 years to burn off the subsidies, and we're going to take this thing to market rate, and we're going to be exiting from almost double is kind of the game plan on this project.

It's ridiculous what you can do. And by the way, by removing from these programs, we're not eliminating all the low-income housing programs.

Absolutely not.

There's a ton of different ways to do low income and with government subsidy, with working with tenants, we're not trying to displace people or push 'em out of a property.

We are just looking— Yes, we are.

I'm kidding. No, you're looking at the highest and best use of the property and how we use the existing system to house people in a program that makes more sense than simply Let's restrict the rent and get people in here. Let's get people the help they need with the systems they have, but also maximize the profitability of the property. So you can do both. Sometimes we get the question of like, well, can you actually do good and make money at the same time? And the answer is absolutely you can.

Without a doubt.

Yeah.

And it also helps, even helps people more if you think about it, because after we're buying these projects, we're removing them from that program. That opens up more funding and more availability for said program. So that actually allows these programs— that was actually in Trump's big beautiful bill— is there was stuff specifically for this to allow for more of these light tech opportunities to build, which is great for developers. The tax write-off these developers get is ludicrous on the tax credit side. It is also for these next owners after these 5 years after the developers build it, they can sell and then these next owners can actually step into projects with a lot of upside, a lot of stability. And ride that project out and eventually get it out of the program and see a nice exit for themselves and have people a good place to live.

And that's the way that we want to see these things come together every single time. That is the, that is the push is you come into the project, you run it well, you don't displace a bunch of people and you do the improvements. 76-unit, you know, we're already getting, you know, contractors will be coming in pretty soon ripping out the old playground, building a new playground, fixing the old tattered flags. We're adding all the safety features that needed to be added originally. Fixing ductwork, the whole nine yards. Yeah. Getting the projects done right. Super exciting to follow what you're doing, Caleb. If people wanted to connect with you, if coaches wanted to reach out to you about your program, if investors wanted to reach out to you about the Abilene deal, I don't know where you're at with filing and capital raising and all, but with your deals and your companies, if someone wanted to connect with you, what is the easiest way for them to find you?

Yeah. Easiest way to find me is on Instagram. It's Caleb.Hommel. It's pretty easy. Real estate pops up pretty easy there. That's the easiest way to reach me, whether you want to talk sales, business, real estate, Anson Park, Abilene, Stephenville, you name it. That's the best place to reach me.

That is fantastic. Caleb, thank you so much for joining. I'll see you downstairs in my house here in about 5 minutes. Everyone, thank you so much for listening. Follow, subscribe to wherever you're listening to this, and we'll see you all on the next episode.

See ya.