Must be ILLEGAL! Investing in Real Estate at 19 Years Old w/ with Caleb Hommel

Should people be buying real estate at 19 years old? You're 21 now.

Absolutely.

Looking back at 2 years of experience, buy it at 18. I love this. He bought at 19 and your biggest regret is you didn't buy younger.

Exactly.

Hello and welcome back to another episode of Multifamily Strategy. Today on the pod, we have one of my favorite owners. He's been on this channel many times, especially on the YouTube channel Multifamily Strategy. We have today Mr. Caleb Hommel. Caleb, welcome back to the channel.

Dude, thanks for having me.

Dude, I'm so excited to have you here, and sorry we didn't get you on earlier. We've had a few before you, but this is one of like— it's one of the earliest people through our mentorship program, uh, definitely the most successful. What he's accomplished is amazing. But what Caleb did outside of anyone else, the business that he built for himself is unreal. The age that he did it at, the way that he structured his deals— I am so excited for this episode. Today, we're going to be talking creative finance. We're going to be talking about what it looks like to start from ground zero and at a ridiculously young age. So, Caleb, let's get started here. For context, what does your portfolio look like today?

Today, currently owned, um, on the real estate side of things, it's 79 units across the state of Texas. Um, 5 different deals.

All right. And how spread out are these deals? This all over Texas? Are they specific areas? Where in Texas?

Yeah, that's a great question. So I started off spreading out. I've since changed that. We can get into that a little bit later. Um, yeah, so I'm on the borders of Texas, the border towns, love those. I'm also in Houston, and then more recently I've been building closer to Central/East Texas, um, in a city called Stephenville.

Awesome. So Texas investor, uh, you're at about 79 multifamily units, which is absolutely insane. How old are you today?

I am currently barely legal to drink, being 21 years old.

All right, 21 years old, 79 units. Caleb Hommel, Where did you start? Before you had the real estate, I imagine pretty much it went like high school real estate, so there's not a whole lot of in between there. But what was your starting point when you invested in real estate? What got you started?

Yeah, gosh, what got me started with real estate? During the whole COVID fiasco, I was a junior in high school. I know most real estate investors don't get to say that right now. So, I was a junior in high school, born and raised in San Diego, California. And if anybody knows anything about California and anything, we got completely shut down during COVID So didn't have much to do. I picked up some little book called Rich Dad Poor Dad at 16 years old, started reading through that, and then after that the plan was, hey, I'll finish college, I'll finish high school, go to college, get a high W-2, maybe buy some duplexes in a few years. Turns out went a lot faster than that. Ended up finishing high school, playing a little bit of college baseball, actually dropped out of college baseball and college as a whole, and then picked up 10 units about 9 months later.

All right. Let's talk about that first deal. So, you graduate college— or not graduate college, you graduate high school, you go to college, you drop out. Did you just immediately go buy real estate or what were you doing between "I dropped out of college" to "I own a 10-plex"? I think for most people, that's a crazy big jump. And you were 19 or 20 at that time?

Still 19. Just turned 19.

So, you're a teenager, you drop out of college. How does one get into their first deal and what did that look like for you?

Yeah, that's a great question. So I started out, um, plugging you here, um, I started out learning with you through Multifamily Strategy. Joined it, it was a lot different back then. I mean, I'm sure you remember every single payment I made would bounce in the red every single time, and then you'd give me a week for DoorDash to make it up. So yeah, I started out, um, was making calls all the time. I decided to go the broker route, which I highly discouraged now, um, where I'm currently at my business. So I think I called 1,000 brokers throughout state of Texas, was just hammering the phones over and over, underwriting every single deal. And this is when the market's red hot, right? Like, this is like 3% interest rate, like, ridiculousness where every broker's like, every owner's basically like, why would I ever seller finance when you can just go get debt cheaper at a bank? And then so it's an interesting workaround being like, I'm actually 18 or 19 years old and can't get a bank loan. So just beat my head against the wall over and over and over again. Finally found a deal after about 9 months of cold calling. I'd get up, cold call from 7 to 3 o'clock. Calling brokers and owners. And then from 3 o'clock to about 9 o'clock every single day, I'd go out and do DoorDash to make money to pay for the course and to live.

Dude, that is insane. So the first deal is 10 units. What did that deal actually look like? What were the— give us some of the details here. What are the terms of the deal and why the heck would they sell to a 19-year-old?

Yeah, so terms of the deal. So it's 10 units in the city of McAllen, Texas, growing super fast. Love it down there. So I got 10 units for $900,000, 10% down, 4% interest on a 45-year amortization. So it's basically interest only if we're going like that payment-wise. And then on top of that, the coolest term I've ever used in a deal was 6 months of no payments. So I closed on the deal, had 6 months of no payments. And to your point, why would anybody ever do this for a 19-year-old? Um, they didn't really know I was 19 at the time we were negotiating. Nothing of, um, dishonesty there, but it's when you learn the lingo, you know what you're talking about, you can run your numbers, you can run your math, you can negotiate. The age doesn't really become a factor. I mean, currently where I'm at, I never get pushed back for my age when I'm doing these kinds of deals.

Well, and I think you said something really important there. Why give information they don't need? Is your age material to doing the deal? No.

Absolutely not.

It doesn't matter. Here's what you did. You instilled confidence. You said, "I understand what the deal is. I understand what you're looking for. And here is what I would need to make the deal work with the pieces that you gave me that I need to close this." and he closed the deal. That's fantastic.

Exactly.

Now, on that deal, did you buy that yourself? Did you have partners? What was the structure of that deal?

Yeah, so I had partners on that. Being a 19-year-old who's in the red every single month, turns out I don't have $90,000 to go put as a down payment. So, got the deal under contract, then raised capital, partnered with 3 different people on that deal, each with $30,000, and they funded the down payment on that one.

Should people be buying real estate at 19 years old? You're 21 now.

Absolutely.

Looking back at 2 years experience.

Buy it at 18. Buy it at 18.

I love this. He bought it at 19 and your biggest regret is you didn't buy younger.

Exactly.

Oh dude, that's amazing. So fresh out of high school, you buy a deal, get into that 10-plex. You did it once. What did deal— what did the second deal look like?

Yeah, so deal number 2 was an 8-unit in Laredo, also a border town. Actually went under contract on that about 3 weeks after I went under contract on my first deal. So it was like a bang-bang situation. Super similar structure, $700,000. 10% down, 4% interest only for 2 years, then 4% amortized over 30 years for the next 5. And then after that, balloon, and same thing. I had 2 months of no payments on this one. I wanted the 6. The seller wasn't comfortable with it, was trying to double it down, but super similar structure and just rolled right into that.

I think we need to— I think we need to pause and just address this. You have 2 deals, number deal number 1, deal number 2, both of them you start the deal without having any mortgage payment. Why was that important to you?

Yep.

And more importantly, why would they say yes to that term?

Great question. So for me, it's important. One, I was 19 years old. I didn't have cash. I wanted to build up at least some sort of reserve. Granted, I should have done it for even longer and built up more reserve. We can talk about that a little more down the line, but that's why I wanted it. For them, it's if I'm hitting their price, I'm hitting their down payment, I'm giving them the interest rate they want. What is one mortgage payment difference? Materially, it's not horribly important. One or two. For the other one, six, I hit all of his goals and we were negotiating an interest rate and he didn't care about getting paid for six months. I was giving him a fat down payment and I'm giving them a big chunk of cash up front. Why would they care about one to six mortgage payments? It's not that big of a deal when it comes to the whole scale of the deal.

100% agree. So you can buy a deal and if to make it work all you have to do is just not pay your mortgage for a little bit of time. There's a way that you can put this into a contract. What does it look like to, one, ask the seller about that? But two, what does it look like to actually put that verbiage in a contract where it's enforceable? How do you do the communication around special clauses?

Yeah, great question. I mean, how to ask for it. I think a lot of people, especially near my age bracket, get really weirded out just asking for what you want. They're like, oh, that's not reasonable, that's not fair, blah, blah, blah. It's like, who cares? Ask for what you want, not for what you need. So that's how you just do it. You just ask. It's not brain surgery. And then as far as putting into a contract, I don't do my own legal. I always use a legal team. That is what I always recommend. But you always do your own legal review. And so in the contract, it needs to be specified that you don't pay your mortgage because the last thing you want is somebody taking advice from this video or podcast and not paying their mortgage for 6 months and losing their property. That is the last thing we want.

Newsflash, you do actually have to get that approved by everyone and the lawyer. You sign for that. You do that. That move has been deemed the Hommel hack. That is a Caleb Hommel original clause, and it is something that I used on a hotel conversion deal because when we emptied the hotel, there's no revenue. If you're trying to protect revenue, that is an easy way to do that. It's like, "Hey, I need a few months to transition it. I'm bringing it from hotel to multifamily. While it is empty, Can I have a minute to go ahead and get my project started without having the capital outlay? I got them the price they wanted on the terms that I needed. And I, I took that right out of Caleb's playbook, which I think is really important to emphasize. I am a fan of free mentorships, of books, of paid mentorships, of learning in any way that you can, how to play the game from other people. However, at the end of the day, you have to stand on your own two feet and you have to be able to write your own You know, you have to be able to write your own deals and operate on your own. Caleb went out regardless of who he learned from. The application and the ideas he came up with, it's Caleb's business, which is— what you've done at 19 is incredible. It took me another decade to start buying real estate, and I started a lot smaller than you did. I started with a duplex and then a second duplex. You started with you know, 5 side-by-side duplexes on one parcel. I mean, that's, that's insane.

Yeah.

It didn't suck. Talk to me a little bit about your baseball career. I'm actually, I'm very curious about this. So you, you, and I have the advantage of knowing Caleb here, but you had a baseball career that you took very seriously through high school. It's my understanding that you were one of the top teams in the country, correct?

Yeah. We weren't bad. I mean, basically with baseball. So for lack of a better term, I sucked my freshman year, sucked my sophomore year, back up, whatever. Junior year was California during COVID And again, everybody knows what happens. California completely shut down. Texas didn't though, I heard, which is awesome. A big reason why I'm here now. And then senior year, um, exactly, house is being built. Uh, senior year didn't do too bad. And so kind of the big lesson that I learned from baseball I think I've carried into business currently is it doesn't really matter where you start. If you just outwork everybody, you're just gonna win. That was the biggest thing. These guys I was sitting behind all through high school, eventually I was the one playing over them, starting over them, having the success. And that just came— I mean, that was 3 grueling years of every day wanting to quit, wanting to give up multiple times, more times than I can count. And it's just showing up the next day and keep showing up. And I've carried that into business every single day. There's days where it's hard, there's days where it sucks, and it's just okay, dust myself off, get back up, and we're gonna go.

I love it. I was gonna ask how does that apply to business today, but you pretty much answered it. It's you have the attitude of like, were you the best player on your team?

No.

Okay. And you said that you sucked your freshman year, so you didn't come in naturally the most talented.

Absolutely not. I mean, I'm 5'10" and bulky. Like, I'm not like, I'm not the guy who's 6'4", 2.15, runs a 4 flat, throws 90 miles an hour. That just wasn't who I was.

Has that related to you in business as you're buying real estate, as you're operating? Has the fact that it's like, hey, I'm younger and I'm different than other investors— has the mindset of, hey, I'm not a traditional baseball player and I'm still going to exceed, does that translate one-to-one into doing business?

I don't know about one-to-one, but very close, right? I mean, when you're coming in, it's always kind of chip on my shoulder. Like, proving people wrong isn't the reason I do it, but it's also a really nice bonus to doing it, right? It's like, oh, you're like, what are you doing? You're an idiot. Go back to school, go get a 9 to 5, go work at a restaurant. Like, who are you to tell me what to do? Kind of thing. And so just carrying the chip on my shoulder in baseball, kind of same thing translating to business. And if you dig that well a little bit deeper every day, you look back 100 days and you're like, wow, I can go so much farther than I did. I mean, for instance, something you do that we've talked quite a bit about, the 90-day burn. And it's like the same thing. You just dig that well a little bit deeper. You just go a little bit farther than the next guy. And then you look back after a certain amount of time and you're like, I can just outwork everybody and I just have new skills that these other people haven't developed from staying in their comfort zone too long.

Why is success so important to you? Like, that's what I'm hearing here is that you have a drive that other people don't have and you have this chip on your shoulder, your expectation for yourself that's different than other people, and has resulted in a portfolio that is larger than other people, especially in your age bracket. So what does I guess what does success mean to you and why is it so important to you?

Yeah, when I was starting out, it started out very like service level, I guess. Very like worldly, I guess, is the word you could use. I just wanted nicer things, wanted a nicer life. One thing that hasn't changed, I still want to provide for my parents, still want to provide for a future family. That's— nothing's ever going to change that. A big thing that's changed in the last year, year and a half is when I met this guy named Jesus. And there's just something bigger than business. It's not just about the money here. You can't take it with you. And it's just giving back and glorifying his kingdom is the biggest reason I do it now. And just sharing the gospel to people who are trying to get started with business as well.

Well, there is a mindset difference there, right? The way that you frame the way you live your life, your beliefs. And this is, it honestly is for people of all beliefs. I happen to share a belief with you, but your faith and the way that you see the world is going to affect the way that you interact with everyone and everything that you do, regardless of who you are. That is something that's going to play a massive role. And so, the framework in which you operate does change everything. I found that super true in my life. I'm like, "Okay, if I believe that there is more to life than just what I'm doing right here, then this absolutely can't just be about making more money and it can't just be about buying more apartments." You can love the game. You can excel in the game. But that's a great question. So, in the framework of money, and in faith. And this is general for everyone, but in your life, how has your faith and your perspective affected the way that you go about business and real estate?

I mean, great question, right? So, when I started out, like I said, I was just fully in the world, didn't have a faith, like just didn't believe in anything, just believed I was here and this is all I have and I just got to outwork everybody and have everything in the world and I'm just going to keep buying all these extra things, yada, yada, yada, yada. And since that's changed about a year ago, it's changed just how I live my life and what's been most important to me with the things of faith and money tying in together. It's like being a good steward of my finances has become more important to me than ever. Hey, where should I put this? Is this the right decision to make? Am I glorifying God when I do these things? That's how I pretty much approach every single decision in business. And like you said, it's like you don't have to buy every apartment. Like, heck, I've got 4 more deals on the table right now looking at more apartments and like going bigger and scaling. And awesome, I'm I'm not bad at the game. I understand at least a little bit how to play the game at my age. But it's like, why am I doing this? Who am I giving back to? And it's— that's what's really changed my perspective on why I even do anything I'm doing.

In building your portfolio and building your business, what does cash flow look like today? Like, have you reached financial freedom at 21? Is it still building? How much cash flow is there?

I mean, it's still building, right? If we're talking about real estate and business, like, there is not very much stress on cash coming in whatsoever. I have things I like. I live where I want. I moved to Dallas. I love it here. So cash flow-wise, that's not really an issue, like in the 5 figures, all that good stuff. Pumping a lot of it back into the business as much as possible just for exponential growth. But kind of where I see it going as far as that is, I'm not really sure at this point. I mean, I'm kind of a competitive freak with a lot of things, so I like being the best. It's hard for me not to want to be the best and strive to be the best with business, real estate, whatever. But at the end of the day, it's basically just as much as I can give back and glorify God through the whole thing. Like, that's kind of it. Like, each person's given different types of gifts is kind of something I've really picked up on. Some people are great with like lawyers, doctors, whatever, yada, yada, yada. I'm just not bad at buying real estate and I've just kind of done that. I enjoy playing the game. So moving forward for me, as far as end goal, I mean, it'd be cool to cross the 4-figure mark in units. That's definitely a goal. The 5-figure mark, I mean, down the line, I've got a young enough start where I have the chance to do that. Those are goals, but they're not the most important thing.

I love that.

I love that.

And so expanding because it's— if I'm understanding correctly, you're expanding because you are trying to do your best to manage the resources that you've been given and grow the things that are in front of you.

That's pretty much it, right? Like I've been given like, like the amount of blessings in my life are innumerable and I'm in an incredible position with just the knowledge on how to buy real estate, starting businesses at a young age. And it's— I have this ability to steward this money well and just deploy it for something bigger than just myself. That's what the goal is. It's like, heck, anybody can go out and buy real estate. That's like cool. I would love to hit 1,000 units one day, but if That's all it is. That's never going to fill my heart. That 1,000 units or that 10,000 units or whatever number I want to get to is never going to be enough. And so, that's all just secondary to the one thing.

So, as you're building this, you mentioned real estate and your business. What is the business that you're growing? How does the business work? Tell me about that income stream and what that looks like. Yeah.

So, the business is called Dago Sales. It's basically an online sales company. I help out coaches pretty much all over the U.S., different industries, all this stuff, move their mentorships and products. Basically social media management on top of that, Instagram, Facebook, LinkedIn, whatever, you name it. That's pretty much it, just an online sales company essentially with social media management.

That's amazing. How many clients do you have today?

I am up to 5 right now.

Okay. So newer company and I am one of those clients, which is why I was curious about your company. Caleb's done amazing stuff for me, like what you do is insane. And I know you're very picky on which clients you will take. What does a successful client look like in your company and why are you so picky with who you'll work with?

Yeah, so I mean, I've hired and fired multiple clients. I like the same thing in business, like VAs, assistants, contractors, whatever. I've fired more people than I can count at this point. As far as firing clients, that's a little different. People are kind of like, why would you fire somebody who's supposed to bring you in money? What? As far as being picky with clients, just because there's a certain client that you have to fit a certain mold for success. The big thing is successful client is willing to market. Like, if you aren't going to post any content and I'm a social media management company, turns out those things aren't going to mesh. Another big thing for a client that I see in business a lot too, I think you can attest to this, is trying to do too many different things at once. If you've got 10, if you've got 10 to 15 different offerings, that's just not going to work. People like, if you like, it's like an In-N-Out menu, right? It's the easiest place to order ever because you know exactly what you're going to get when you go inside. If you're going to like some of these other restaurants where it's like 100 different items on the menu, it's like it's taking you longer to order. And it's the same thing with the customer and business and like business for mentorships. If like, oh, you have this option and this option, I could do this and this and this and this. It's like that just doesn't work. I need you to have like 1 or 2 options tops. It is very simple, straightforward. And then also just the idea of being open to change. A lot of these people, I mean, in business you can attest to this. I'm the same way with certain things. It's like, hey, this is how I do it, this is how it works. I'm kind of set in my ways. And that's very tough to do if you're working with somebody on the sales side of things and you're like, hey, I've seen this for X amount of other people. We've generated X amount of revenue. I have case studies. This works. And there's like, nah, I'm good. And it's like, that's kind of tough to work with.

Well, and that's the thing. It's too many offers. I see a lot of people do. It's incorrect pricing of their offers or it's just general disorganization. If you want to create an online product that has actual value, Um, these are things that I've found. I'm curious if you agree. One, I think the most important thing, if you are a coaching business, you need to be the coach. I see too many people offload it and they go, oh, I'm just so busy doing the thing. I, I have my past students teaching the class. It's like no one wants to come to learn from someone who is not the one doing the thing they came to learn from. Uh, so that—

Couldn't agree more.

I think that's really important in creating community. Uh, two, you have to have a place for community where people actually interact and have and build on each other. And then 3, you actually do have to be very good, not just at marketing, but when it comes time to teach, you have to be a gifted instructor. You need all of those things. And your product, you essentially work with what? There's people with courses, mentorships, and do you do events?

I do do events. I actually love selling events. High-ticket events are actually my favorite thing to sell, honestly. I wish clients stuck. Like, it's just a high turnover thing because it's like an event isn't an ongoing thing usually. But touching on that point, you're making like your points for successful clients, right? I mean, those things aren't all equal. Like they go in an order. Like the biggest thing for me is if you're saying you're a coach and you're offering mentorship, you need to be the one mentoring. If you're offering a prerecorded flat fee course with no live Zoom calls, your sales are going to go down. But I don't care if you're a mentor. If you're not offering mentorship, I don't care. But you need to be on those Zoom calls if that's what you're advertising. It's so like people, I guess, as far as like influencers go, I'm not coming to learn from Joe Schmo 39@gmail.com. I don't care what he's done. I care what you've done. I've seen you on YouTube. I've seen your articles. I've seen your email blast. I've been following your content for years. I want to learn from you, not some guy you pass it off to. And that leaves a bad taste in people's mouth afterwards. Right. And that's with building. I mean, I'm working with these guys. We're trying to build revenue streams. We're also trying to build a brand. We're not just trying to build a one-off thing. We want like repeat business. I mean, the best, best recommendation ever in reviews are word of mouth. That's what we're trying to get. We're not trying to have people go into real estate events and being like, uh, you know, took their course and their mentorship and gosh, I feel like they did a one-over on me. And it's like, that's not what we're looking for.

With what you've told us in business and in real estate, uh, you've expressed the maturity that is above a 21-year-old and how you're treating people, how you're valuing clients. How you understand the business that you're in. How did you get this way?

Yeah, as far as getting where I'm at today, I mean, it was going through a lot of hard stuff. People who really have never faced adversity in their life don't really mature. And when you go through a ton of hard stuff and you put yourself in a ton of uncomfortable situations, you tend to grow faster. Like, and going from a kid with $300 in his bank account to a $79 million portfolio and a sales company that's bringing in well into 5 figures a month, that took a lot. And getting thrust into uncomfortable situations, it's like, well, paying 5 figures of lawyer bills, for instance, like currently. It's like, that sucks. Being 21, that sucks even more. And it's also the people you surround yourself with, right? I mean, like, obviously we're very close. I have a very tight-knit community of older entrepreneurs, very grounded in their faith as well. And like, being around those people who pour into you is super important. That's how you're going to get to that next level. But just staying with your friends from high school who are just at college drinking, partying, whatever, that's not going to get you farther in business and get you leaps and bounds ahead.

No, no, it's not. And having that discipline to not do those things at a younger age is the delayed gratification. And most people can't do that. And if you're one of the people who can, this is a business that you should be in. As you've learned the game, and you have 2 years of experience, but you've been through a lot. You've seen business, you've seen hiring, firing, multiple projects, renovations at a very young age. Thus far, what is the highest stupid tax that you have had to pay, Cale?

Highest stupid tax I've had to pay. Um, goodness, there's two of them. Um, not, not knowing who to partner with or why to partner was number one. And number two is not raising enough money. I'll touch on number one first. When you're looking for a business partner, a lot of people, I see this from sales all the time, right? People are like, oh, I feel like I need a business partner to get started. Like, like X and Y, this, like, I mean, you had a business partner, Christian, like other people have business partners, all this stuff. You go in together. It's like, that's not a reason to do business together. Granted, accountability partner. Absolutely. I'm down for that. If you guys are like, hey, we're each doing our own separate silos. We like, if you look at the pieces, hey, I don't think we'd be the best fit for each other. We're very similar. That's probably not going to push our partnership very far. Okay, great. Do accountability partners. Awesome. Cool. But if you're trying to mesh that together into business partners and you guys don't have the same goals, like incentives have to be aligned, you have to be running the same race. I can't be running one way and you're running the other. So that was the first stupid tax I paid and that kind of caused a rift in some business relationships and some personal relationships. And that was a stupid tax I had to pay being 18 years old. There was no way I was going to know that. So, had to figure out the hard way. And then as far as raising capital, I think on the real estate side of things, people get really psyched out when you talk about like asking people for money. They're like, "Oh gosh, like you mean you have to like ask people you know for money for your deal?" Yes, how else are you gonna get the money? And for me, when I was getting started, I was the same exact way. I was afraid to ask for what I needed. And it was like not even what I wanted, it was both. I need to ask for more and I was afraid for that. And I was like, "Oh gosh, I don't know, an extra $20,000 when I'm already raising 6 figures is gonna spook some people off." It's like, no, it won't. Just go for it, ask for that, and if they say no, then you readjust. You can readjust equities, readjust pieces, readjust interest, whatever. But for me, it was not raising enough capital. I was getting started and had to go earn more money, then switch around partnerships, bring in some other loans to get projects finished, which was a headache to say the very least.

Well, how awkward is it to raise capital, close your deal, which is step 1, and then have to go back to people and say like, hey, you know what, we actually need a little bit more money to get this done, as opposed to just asking for that money up front And never having to ask again.

It sucks. I mean, that's— I finally learned my lesson, right? This last deal I did in, um, Stephenville, my first bank loan, for instance, um, raised well more than the down payment. It was 20% down. I probably raised closer to 30%, um, just because we're gonna have a lot of high turnover, um, a lot of month-to-month leases. We're going in, jacking rents. We know what's gonna happen. So it's there. I was like, hey, I'm actually gonna take my own lessons I've learned and raise some more money for once so I am not in a pinch. And it's like, oh, when you're onboarding a property, you understand this, especially like a bigger size deal like 26 units, a mid-sized deal, excuse me, it's like there's gonna be more figuring out. It's like, hey, we got more units, we're trying to get more turnover, people are figuring out where to send the rent, rents coming in late, housing checks are coming in late, we're trying to figure this all out, they're sending to the wrong place. It's like having that nest egg and that breathing room at the beginning is so helpful.

Well, you just said something there that's really interesting too. When you are actually negotiating these deals, you're buying them, everything up to this point was seller financed. You just said your last one, there's just a passing, but I don't know if everyone caught that. Bank financed, you're 21 years old. Tell us about this deal. 26 units. What bank's giving you this loan and how are you qualifying for loans at 21 years old?

Yeah, so it was a local bank in Stephenville, Texas. Small regional bank. Smart. Smart. So, it's 26 units for $1.6 million. Yeah. That's— yeah. Also, caveat there, easiest bank experience I've ever heard of. I don't know if that was just me having all these horror stories. But it was so easy. 1% was the only fee to the bank, the loan. I was like, what? That's it? Closing costs were way lower than I expected, so that was awesome. But as far as actually qualifying for this thing, so it was $1.6 million, 20% down, so I had to qualify for 80% of that. And am I going to do that myself? Like, granted, I've built a sizable business for a 21-year-old, but in the grand scheme of things, no. So that comes from partnerships, right? You can leverage partners who have more equity, who have the track record. I partnered with a guy who's a very successful business to say the very least, very successful entrepreneur. He could qualify for the loan a million times over. So for him it wasn't that big of an issue. The same thing with the capital piece, like he funded the down payment, helped qualify the loan, we both signed for it. It was like, oh, you need X amount more? Okay. And for him it's just that security as well. It's like, hey, incentives are aligned here, we have the extra money in the account to finish the projects, we're gonna steamroll the projects, we're gonna get the money back out, get him his money back. So, that is how the bank deal worked on this last one. And interest rate-wise, people are being interested about that, it was 7.5% interest only for the first 2 years.

That is a higher interest rate than you had on your other deals.

Than everything.

How does cash flow look on this day 1? It is a bank-financed deal, which means you can't negotiate your terms. So, you had to win on price on this.

And that I did.

Okay. Yeah.

As far as how it looks day 1, so we're cash flowing closer to 5% or 6% day 1. We have 1 vacancy currently. We're in the process of filling actually right now. I got a ding about that a little bit ago. Um, so we're at 5 to 6% day one. Um, if we get— so the plan is to get units from $550,000 to at least $750,000 across at least 20 to 26 units within the first 2 years of the installment period. From there, we'll be cash flowing closer to 35%, and then once that amortization kicks in, we're going to go down a little bit. And then obviously seeing where the economy's at with rates, then we kind of make an audible from there. But the thing is, we're going to be cash flowing a ton when we go amortized at 7.5% interest only. I think or 7.5% amortized over 30 years. Excuse me. If rates come down, awesome. If they don't, we still have a stellar deal on our hands. So very nice. That's kind of the benefit of higher rates. If you can make it, if you make your deal work with a higher rate, if rates ever come down, you're like, I'm set.

Oh, let's talk about that. If you can make your deal work in today's market, this is why I love markets like this. People slow down, you have less competition. You come in, if rates are the problem, it is the best time to buy. People who bought wrong are going to get wiped out. People who didn't fix their variables going to get wiped out. So opportunities come on market. You lock in things where they work on today's numbers, which is what you did. You get paid to wait. Now, if interest rates go up, your interest rate's fixed on this, right? It's fixed term or fixed rate.

Absolutely.

So you fixed your variables. So interest rates go up, your cash flow stays the same. Interest rates go down, all of a sudden your valuation goes up, your cash flow goes up because you can go ahead and refinance, cash out refi, pay off the investor. Your worst case scenario is your deal that works today continues to work into the future throughout the entire term. Your best-case scenario is if rates go down, which you never know, but I think probably in the next— within the next 2, 3 years, we'll start to see rates come back closer to the 5s. We'll see. A lot happens in a few years. But if they go down, your deal is now better. Buy when rates are high, but only buy deals that work. What's a deal that works for you, by the way? What constitutes a deal that works for Caleb Hommel?

Gosh, it was a lot different at the beginning, right? At the beginning, I probably would have saw this deal day one and been like, "Ah, I don't know." Changed a lot. So, went from— we touched on this earlier— went from statewide in Texas to now very centralized in eastern/central Texas, very centralized there, right outside the Metroplex area down to roughly Austin. I get kind of in that area as my sweet spot. So, very centralized there, looking at only deals there. So, one, it's got to be there. If it's not there, I'm probably not interested. I actually got to send a deal in West Texas today and I'm like, ugh, no thanks. Great, actually numbers make phenomenal sense, but decided to pass. So that's number 1 is location. So I've got a lot more centralized, a lot more localized. And then on top of that, it's helped me understand markets way better. Like, I know where I'm investing. So it's like, hey, I can look at this deal, it's 6%, 7% day 1, whatever. And I can look at it and be like, hey, these rents actually should be $300 higher. I'm gonna go $200 conservatively, let's say $100 below market today. And you're gonna like, That's not even factoring in for 5 years of rent growth during that time period. So, I mean, the big thing for me has changed to a lot more upside on deals as well. I'm not looking at deals that were— I'm just— obviously I want to slay it on terms day one, but now my thought has changed to looking for a lot more upside on the back end of them as well.

What do you think you're the best in the world at? For all the things that you've done, and you've done so much right for the age that you are, and you've learned from your mistakes, which is fantastic, but as you are Growing and developing, what is Caleb's superpower and how has that affected your business, both in real estate and in your sales company?

Yeah, gosh, I was gonna go for a different answer, but honestly, I think I'm the best opener in the world. I can just open opportunities out of nowhere. Granted, working on the closing, fine-tuning that, but the benefit of being an extrovert is I never shut up. So I just always talk to people what I'm working on. Like for raising capital, it is the easiest part of my business. I'm always talking about what I'm working on. I can never shut up about real estate, never shut up about business. So I'm like, hey, you remember we were talking about X, Y, or Z? You were interested. Yeah, I have an opportunity. Okay, how much are we looking at? We're looking at $400,000. Okay, cool, I'm in. And it's like, bang. It's like, okay, talking to sellers, like different sellers down in Steamboat, going down there all the time still. Hey, you remember when we were talking about this? I had this idea. Would you be open to this? Yes, of course. And just never shutting up opens up so many doors for me. It's always talking, always being on the phones, always doing something. Has completely changed my business and opened unlimited amount of doors and blessings.

Dude, that is absolutely fantastic. If someone wants to follow up with you and I'm going to ask this in two parts, if someone wants to learn more about your real estate or just connect with you, where would someone find you?

Yeah, easiest way to do it is Caleb.Hommel on Instagram. You can shoot me messages on there. I'm usually pretty active.

Okay. And if you are an online presence, you have a course, an event, you have— so if someone's interested in learning more about your sales company, How would they contact you for that?

Yeah, um, reach out to the sales company. One, you can go on Instagram, or you can email me at caleb@dago-sales. That's caleb@dago-sales.com. I'm always on there. You can reach me at any time. Perfect.

We don't endorse any company on this channel, but I will say this, uh, Caleb has absolutely exponentially grown my business. He is a freak of nature. If you're considering needing this team and this is a missing piece of your universe, Absolutely. Just send them an email and see where it goes because they are phenomenal to work with. So, Cael, thank you for all that you do for me. If you are a fan of the channel, appreciate that. If meeting owners is something that is, maybe you don't have time or you wanna learn more on the road, this podcast is about meeting owners for you. We meet the best, the brightest people from all walks of life, different portfolios, different strategies. We interview the owners here. On Multifamily Strategy. Like, follow, and listen anywhere you listen to podcasts. And if you want the full video episode, go to YouTube, Multifamily Strategy, follow us there. That's a wrap. This is an episode. Caleb, thank you for joining, and we will see you all on the next episode.