I Built a Real Estate Empire by Age 25
Al Chapman bounced back from a failed dot-com business to become a successful real estate investor.
From Kiplinger's Personal Finance magazine, September 2005
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In 2000, I dropped out of Colgate University and moved home to Chattanooga to work on my first start-up, an online game called CoolWallStreet.com. Players competed for prizes by "investing" in stocks with pretend money. Revenue came from advertising. But I lost everything except a few thousand bucks in the dot-com crash.
Still, I wanted to be an entrepreneur, and in spring 2001 a landlord I knew challenged me to repair one of his properties and to find a buyer for it. We did a deal called an owner-financed mortgage. The owner kept paying the mortgage while I paid him about $100 a month. The payoff: I would get title to the house with no money down (except closing costs of about $1,500). The mortgage was just $35,000 because the house was in a transitional neighborhood.
I partnered with a friend to repair the house. One hot day as I was lying under the house trying to find a sewage leak, I thought, Man, if I can get rid of this property, I'll never do this again. My friend felt even worse. He bailed out.
A young woman renting a place across the street seemed interested in the house, so I suggested she buy it. She said, "Are you crazy?" But soon she found financing and bought the house for $49,000. After I subtracted $5,000 in construction materials and other costs and paid off the mortgage, I pocketed $9,000 for just three months of work. Pretty wild!
That fall I got a job with SunTrust and began preparing mortgages for the bank. I bought a quadplex, lived in one apartment and rented out the other three. I soon bought and sold eight more houses.
In spring 2003, I quit my job to invest in real estate full-time. I tapped a $50,000 equity line on one house and hired an assistant. I hired contractors to handle maintenance. Next, I bought an office building in Highland Park, where I live now.
Talk of a real-estate bubble doesn't worry me. I've protected myself by buying houses that were selling for less than 65% of their appraisals. I've also diversified by renting out 25 of the nearly 100 properties I've bought.
-- As told to Sean O'Neill