Hey everyone Me: Kevin Here it's time for an update for all House Hack investors or anyone curious about a House Hack. I'm going to reveal what our monthly burn is for House Hack at this point where we might be able to save money and where costs could change. I'll also make some projections but I want to be very clear: we don't do projections for Househack I Don't tell you how much I think the company's going to be worth in the future I Really don't like projections because honestly, any company that did projections two years ago or in you know, 2020 2021 it was all BS So I hate that kind of stuff I Just want to make an honest investment opportunity for people who are interested in House hack. And as I always have to say, this video is not a solicitation.

You have to go to Househack.com or read the PPM there that's a solicitation. but I just want to be very honest. House Hack is a very simple company. It's a company that I have a lot of great Ambitions for but we're going to do very simple things.

We're going to buy home and rent them out Now you might ask, oh well, how's that similar or different from a Reit or how's that similar? Different from those companies that let you cut up you know, slices of homes into little shares and then let you you know, invest in those? look I've answered this in many videos before you could look at the House Hack playlist and get a detailed explanation. But let me make it very simple. I Don't think there's anybody else in the United States that runs a real estate company like this that buys wedge. Deals They buy deals based on the cash flow they think they can get and they rent them out.

Why bother with wedge deals if the equity doesn't really make you potentially more money. To be clear, buy more money I mean more cash flow, right? It's hard to get wedge deals. It takes effort, it takes work. But the actual Equity boost increases the value of the company.

It increases the amount of deals we could do. It increases our margin of safety. Even though it may not necessarily change the cash flow on a particular deal, it's harder to do it. But I I Think it's the model that should be used in real estate.

And quite frankly, I don't see anybody else doing it. and I think we can create a very successful company scaling the wedge deal model throughout America right? The companies just want AUM and they rent them out. That's why. Maybe you could kind of say how Sac is kind of like a read with a wedge component, right? But we're not actually filing as a read: a real estate investment trust because really, we're planning on building the company and reinvesting Equity not Distributing it That way in the future, we can open up other verticals like medium and short-term rentals.

We can create a branded Hospitality approach when the time for that is right. You know we want to make sure we're building on strong foundations and not get into crazy airbnbs when the Airbnb bubble is potentially popping in front of our faces. right? We're not buying homes yet because the real estate market is still plummeting, we've no idea where rates are going to settle and we're not slicing dicing properties where we have this motivation to look for the highest cash flow properties in day dangerous areas or shady areas, or take the worst possible tenons just to pump up a cash flow number and then sell it as like an Nft for a house or a token or a share in a home. I Hate that because those kinds of things just like syndications.

Very very high fee and they have an incentive to invest in my opinion, in lower quality real estate. That's just my opinion. This is totally my opinion. Maybe that's exactly what you're looking for and that's just what Househack is not.

But to be very clear, Househack is a company where I plan to buy both apartment buildings and single families though probably predominantly single families in Diversified markets in the United States TV to TBD exactly where and we'll look for properties that we think we can buy for as an example, four hundred thousand dollars in a six hundred thousand dollar neighborhood and maybe spend fifty thousand dollars fixing the property up so we can get a nice long-term quality tenant for either long term or even medium or short term, depending on what's most appropriate at the time. But we want quality tenants, low turnover in-house Professional Property Management That we will handle. And the beautiful thing about all of it is we think we're going to be able to buy homes for 450 000 that are worth 600. that way we're insulated in case the market goes down.

If the market goes up, we've got more equity and in the future we can slice out portions of the portfolio to retirement funds or whatever and get more funding to buy more homes. And so, in my opinion, this is a very simple model. It's not like we're creating some kind of widget that's like that much big of a surprise. The hardest thing on me is going to be traveling to the probably four, three to four locations to start with that we're investing in and basically be an expert in those areas.

Uh, now I think I'm a very well versed real estate investor I've got a long background in real estate. It's how I got started. You could look at my real estate playlist and see all of my information about buying wedge deals. All the wedge deals I Bought the wedge deals I've sold my Theses on real estate right? This video isn't for that.

This video is instead to focus on All right. Kevin What's the monthly burn? That's what we came here for. All right. So let's uh, let's just go through it and and keep it very simple.

So uh, I think the easiest way to do this is, uh, just kind of, uh, delete things here one at a time and then that way I can kind of undo the deletes. uh, and we can kind of go through them in a way that I can explain them. So I have a little spreadsheet that I put together. This is not like unofficial accounting.

This is just a very simple ballpark for everyone. I don't want people to to hang their hats on this, right? This is not a guarantee. These are just ballpark estimates and the numbers could be wrong. Okay, but I don't expect they're too terribly far off.

So uh, Lauren me the board. We make no money. It's zero. Very, very simple.

It's zero. Okay, then we do have uh, an investor relations, uh, accounting person. They've got a lot of work ahead of them issuing the stock certificates, making sure everything is correct, helping people make sure that if they're investing in their Roth or their retirement account, they're uh, properly accounted it for them. They have certificates issued to the correct entity, whether it's an LLC or themselves personally or their trust or their retirement account.

It's grueling, painstaking work to make sure everybody's situation is perfect, but I'm a big fan of making sure it's all perfect. so we're really investing money in IR to make sure that everything is perfect. So this is about a ten thousand dollar a month? Uh, expense? Uh, one third of staff. So I have an individual who then helps with investor relations and emails and and office work for three of my companies and so we're only building one third of his salary to house hack I Think that's fair.

And the nice thing about that is you've got somebody who really has their hands in all businesses and is is really aware of everything that's going on. And the nice thing about that is not only do I feel like if we had somebody full-time just for this company, they wouldn't have enough to do, but then we'd be overpaying them right? So we're able able to kind of spread out their daily workload which I think is really good. So one third of them. then we've got a one-third of another licensed CPA that works for three of my companies.

It's about five thousand dollars. That's one third. Then we've got one third of cyber expenses, utilities, computers Administration Rent like office space, miscellaneous expenses, property taxes, insurances, you name it, it's probably about three thousand dollars a month. I I'm I think I'm being generous with that.

It's a ballpark. We're still signing for new insurances right now like we're We're establishing our board and directors. Insurance Like all of these things are are, uh, you know it's a startup. So like, uh, some things need to be renewed.

some things need to be formed. uh, filing for trademarks, right? Some of these miscellaneous things. these are all things that I'm kind of lumping together here. so plus or minus about 3K Then we've got uh, marketing monthly I Think this is high and so that way, if, uh, if my number above is a little low, this is probably a little high.

We pay for the texting service. that's probably somewhere around two thousand dollars a month in the email services like MailChimp Uh, so that's that. and that's you know you have to remember, we have to market for investors to some degrees, to some extent, communicate with investors in Mass because obviously we would like to have more investors for Househag. Even though we don't really need more money for Househack to be viable, the more money we have, the more power we have in negotiations.

Potentially in the future when we want to buy uh, from Builders or conduct bulk purchases or whatever, we have more power to do that if we have more cashola. So there's obviously a benefit to expanding the reach for house hack investors. And that's also why we're doing the reg A Which the reg A is kind of a plus or minus TBD Exactly what this is going to be, but we think it's going to be about 50 000. That's not a monthly burn figure.

that's sort of one time that covers like the audits, the filing fees, the attorneys, and everything involved with the reggae. That's on top of the other expenses for starting the company. uh, the wedge finder app, the deal finder. you know, buying that, the startup costs for the initial legal fees, and all that that wasn't paid out of cash though that was paid out of some initial stock.

Uh, and so this right here is the reggae. We expect to be plus or minus 50k. And the cool thing about the Reggae is it's going to expand our base to more investors who don't have to be accredited. We expect that to maybe launch Gosh at this point, probably leaning towards the end of February maybe early.

March I'm still optimistic about January but I think that's turning into Hopium. It's probably Feb March for the a non-accredited and and I Don't know that there's a massive huge rush, but hey, look if if we have more investors who want to come in with the Reggae I think that's going to be a wonderful opportunity for them to take part uh, in the company. and remember the way we're raising money for the company. The valuation of the company is roughly roughly plus or minus because we've got some small little adjustments for for some of the startup costs.

Uh, it's roughly one to one. Uh, we can break all of that down and we will probably when we do the uh, when we release the audited financials and then we're gonna have like a real audit, right? And that's cool, because that's all going to be part of our Reggae filing. So this is more of just sort of like an interim little update here. And uh, we want to make sure that, uh, we're as transparent as possible, but without having all of the exacts right now, we're not going to be able to go through all that.

but that is coming. so stay tuned for that big Reggae Audited accounting. I Just want to give you an update of kind of like, okay, where is money right now, right? Okay, good. So continuing on.

Reggae? Uh, one time plus or minus a 50k. All right. Uh, travel right now is is really next to zero and that's because we don't really have a need to do much out of the office at this point that we expect to change though in the future, Right in the future, there's going to be a lot of traveling and we want to make sure we're as cost effective and as efficient as possible while also actually being able to go right. We don't want to be in a situation where like, oh, you know, we're not going to go until two weeks from now and and we lose some flexibility on getting deals so we have to figure out exactly how to be very flexible.

and I've already got some solutions lined up for that. so I'm very excited about that while at the same time keeping travel costs reasonably low. So if we add this together, not including that 50 sort of one time there, that works out to roughly a monthly burn of about twenty three thousand Two hundred dollars. Now we're sending out an investor relations update letter.

uh about uh, what? we have updated here. which is we have moved 21.5 million dollars? Uh yeah. Okay, I'll talk about that note I Put a little note there for myself to talk about this. We have moved about 21.5 million dollars into a ladder treasury portfolio and the the fee we're paying for this laddering is so so so so tiny.

We we could not do it like for that fee. We could not do it ourselves. So we think we're in a really, really great reasonable position. We're on 21.5 million dollars of cash, which is not all of the cash that we've raised, but it's it's a large chunk of it.

We are expecting to earn a rough yield net a fee and this is plus or minus. Okay, I'm not I Don't wanna anybody to think these are guarantees. this is just rough numbers. The rough yield right now net of fees uh, is about 4.1 which is kind of cool because on an annualized basis assuming we can maintain that yield for an entire year which we might not be able to, right? It depends.

The yields could go up, the yield could go down. It depends. It's a ladder portfolio. Roughly right now.

the net annual yield should be about 881 000, which is really, really awesome. Uh, because the bonds that we're buying are bonds that we think will actually be worth more money when it's time to buy real estate. That's because when it's time to buy real estate, we believe is when interest rates start falling Again, when rates fall, bonds tend to go up in price. So if you're holding bonds and all of a sudden rates fall, your bonds at higher yields are more valuable and so then you can actually sell them back for more money.

That's trading bonds. We don't really plan to trade bonds, We plan to just hold a ladder portfolio. And then as they come due and like May of next year and July of next year in October of next year, we get cash. And then we could either reinvest that or we could buy real estate, which we want to buy real estate.

We're just not exactly sure yet when the perfect time to buy real estate is. The point is, we're ready to strike right like this: money we should be able to dump back onto the market if we needed to. The bonds, hopefully sell the bonds at a profit if we needed to, or we just wait for them to expire and roll off. Which is fine because they're all short term.

You know, a few months out, uh, to a year out? You know some of them a little bit more, some of them a little less. Uh, we can just wait for them to roll off and we don't have any Market risk that way. That's really cool. And let me just clarify how that works.

If you buy a bond today that has a four percent yield and it's due in October 2023 and you pay a thousand dollars for that bond, that thousand dollars can fluctuate in value. It could be worth eleven hundred dollars. One day. It could be worth nine hundred dollars one day.

Doesn't matter though, because if you hold it to maturity, that market risk goes away. You get a thousand dollars back plus your yield. Basically, I'm oversimplifying because bonds are bought at a discount and so you're You get a thousand dollars back. But that encompasses already the premium that you've I'm oversimplified, but that's roughly how it works and so that makes our monthly cash cash flow roughly.

No guarantees. Things could change about fifty thousand dollars a month as we're just waiting for, uh, the market to uh to fall in real estate which it already is. Moody's is expecting home prices to fall 15. They've already fallen six to ten percent.

Uh, not only that, but I think Moody's is wrong I think home prices are going to fall 15 to 25 percent. The longer rates stay high, the more pain we're going to have. We're starting to see I mean obviously 31 declines in year over year sales volume we're seeing listing cancellation Skyrocket Price drop Skyrocket It's just when we get to March or April we're gonna see year-over-year numbers for real estate and I think every headline on newspapers is going to be year over year. Home price is negative and that's going to create a lot of fear for housing.

So I think we're in a safe spot to be patient. Uh, not only because we're literally farming yield, but our burn for a corporation for a company is extremely low. Low Extremely low. I Mean this is there's like no burn.

Okay and and I Want to be clear. The reason we can do this is because uh, myself and Lauren Uh, the board and and some core individuals aren't actually expected to get any compensation until after this company. IPOs So we'll at some point get some kind of stock options and we expect those to essentially be locked up or not really vest until after IPO We may never even IPO But but that's my goal is to IPO and uh. and and then even after IPO we don't want to just be able to let people with stock options dump at IPO because I think that's the wrong way to run a business.

So there should be some sort of strict block-ups where it takes like four or five years to be able to fully sell. If somebody was even fully inclined to sell, they might not want to sell. I I Don't think I would sell all my shares like I I Love this like this is this is my baby. This is.

this is my dream. So I'm really, really excited about this. So uh, super low monthly burn? Uh, the stock. The future stock options obviously helps with that.

Oh, but what also helps is that I've got these other businesses right? So I'm able to take uh, accountants or staff and have them work on my other businesses while House Hack is not really doing much right now other than raising money. So for example, we have four construction workers. they're employed by another business of mine in the future when it's time to start doing our in-house Property Management All I have to do is go. Okay, you're done over there.

Whoop! Now you're on House Hack payroll when we're actually operating right. And that keeps our cash flow low to basically uh, well, that keeps our cash burn low. very, very low while we sit around and wait. And in the meantime, we're yield farming which is freaking awesome.

Uh, and so we're very, very very, very excited about that obviously. Uh, your incentive to invest in House Hacks sooner is your ability to get extra bonus warrants. You can learn more about that at Househack.com or watch the Househack playlist. You can see that playlist by going to Metcaven.com Links there's a link for the House Hack playlist.

Uh, or just go to Househack.com You should see the playlist there or the videos there. If you have any questions, you can always email us at IR Househack.com You could leave a comment down below is another option, but uh yeah, I'm excited. Stay tuned for the reggae audit. I think that's going to be done in a week or two? It's been going for like three weeks now.

Uh, the Auditors have everything. It's really it seems like it's going great and I'm very excited about that audit because then we put this entire company in front of the SEC and uh, we'll We'll get to see what kind of comments the SEC has for us. They're pretty scrutinizing about real estate, which I actually think is a good thing for investors. Uh, you know a lot of people are like oh I don't like the SEC I actually think a lot of what they do is is needed I think it's uh, it's wonderful.

So I'm optimistic uh and I'm very excited about about just the opportunities we have ahead of us. So I I couldn't be more excited to buy real estate in the future. Also, I wanted to clarify uh and I Don't know if I I like how hard I want to commit to this, but I'm pretty committed to this idea. Lauren and I We have just two, uh, development projects left and what we're thinking about doing is selling those and then Lauren and I personally will never have rental property uh, tentatively again again.

I I'm not like 100 clear on that commitment level so that could change, but this is a conversation Lauren and I were having. We're like, why would we personally want any tenants? We don't want any househack investor to think that like, oh, we're scooping up deals before house hack. We're just gonna let the tenants be at House Hack and that's where all of our real estate exposure uh, could eventually be so uh, you know, with the exception of like, a personal residence and stuff like that, Um, but yeah, we're very excited. So this is, uh, this is a full little update here.

uh, ballpark numbers? obviously everything subject to change. Read the solicitation at Househack.com and uh, super excited to have you here watching and supporting the channel and supporting the Endeavor. It's gonna be fun! Thanks so much folks and we'll see in the next one.