It's Over: Recession Cancelled, Tesla/Lyft, United Health MASSIVE CRASH & HouseHack Example

United States backed off of what were

extremely imprudent and potentially

economically very damaging prohibitive

tariffs to the point of embargo on

China. That was a good thing for the US

economy. The Goldman Sachs just flipped

on their recession call though people

are now worried about the tariff midterm

which markets aren't really pricing in

right now. geopolitics are progressing

awfully slowly and progressing might be

a generous word. We're going to look at

the United Health financials and we're

actually going to show what House Hack

does in this video because maybe we

haven't explained that super clearly.

So, we're going to do a really cool

before and after in this video and I

think you'll love it. But anyway, let's

get started with the recession is

cancelled. So per Goldman Sachs, the

significant reprieve that tariffs have

provided are a quote more significant

deescalation than widely expected. We'll

go ahead and show you this uh on screen

here. This is directly from their

institutional piece. Uh in the US, we

raised our growth forecast this year to

just 1% up from a half% forecast Q4 to

Q4. lowered our yearend unemployment

rate forecast to four and a half% from

47 and reduced our 12-month recession

odds to 35% from 45%. Now,

statistically, most of these, you know,

research shops have about a 20 to 15%

ongoing recession risk every single

year. Really just taking sort of the

historical time frames that you'll see a

recession, divide it by the number of

years, basic. So 35% represents really

only a slightly elevated risk uh to

reflect tariff developments and

meaningful easing in financial

conditions over the past month. Now if

financial conditions are not only credit

spreads which have narrowed but also

stock prices which obviously have gone

up. Both of those are an easing of

financial conditions. So, the most

traditional easing of financial

conditions that we think of are bond

yields. And bond yields have obviously

gone nothing but up. And honestly, with

this Moody's downgrade, I I don't really

know that risk assets are going to care

because every time it's happened in the

past, it's just been a buy the dip

opportunity. And this market right now,

it's like if there's a switch that's

like, do we buy the dip or do we not buy

the dip? The switch is on, we buy the

dip. Okay. So, the market I don't think

is really going to give a fly in

hoodies. I think people are calling for

this black Monday or whatever. I I don't

know. Could it trigger stop losses if

you have a, you know, a big red candle

at the beginning of the day on Monday?

Maybe. But I I think it's relatively

overblown. I'll tell you what I'm more

worried about in in just a moment. And

frankly, even that isn't that big of a

deal, but it could be. So, we'll talk

about that in just a moment. Uh Goldman

Sachs thinks that the Fed is going to

begin a series of three rate cuts in

December. So basically they think the

Fed's going to delay their first cut all

the way until December and then they'll

cut every other meeting by 25 basis

points which is pretty poulry and very

very slow but honestly if the

unemployment rate only rises to 4 and a

half by the end of the year which would

be like 2 to.3 depending on you know

from which time frame you start counting

maybe the biggest thing that would

really get the Fed to rush to zero would

be a rise in unemployment but that

hasn't happened yet. And whether it does

happen over the next two or 3 months is

anybody's guess. I'm also guessing that

there's a high likelihood businesses try

to retain employees just a bit longer

here to see, hey, are consumers going to

come back to spending from that slowdown

we saw in April. Uh retail sales got hit

obviously dramatically. Uh and let's

see, you know, if if we end up with

continued spending, who cares? You don't

have to lay people off. So we'll we'll

know that by like August or September.

Anyway, they say we recently upgraded

equities from underweight to neutral in

our threemonth asset allocation. That

said, we think asymmetry for equity

investing is still quite poor partly as

mark the market remains vulnerable to a

recessionary outcome after the recent

relief rally. In other words, if we do

have a recession, markets are pricing in

basically no protection. I completely

agree with that. Markets have basically

pretended like tariffs don't exist

anymore. And uh Goldman actually has a

pretty good chart showing us uh yeah no

tariffs definitely still exist and we're

definitely at a higher level than where

we were. Uh but you know when you look

at tariffs sort of broadly here we'll

put a little line across it. It kind of

feels like tariffs don't exist. You know

how like when you look at co charts

sometimes because there's like the huge

spike it makes the like end result look

so meaningfully

insignificant that it doesn't matter.

You almost have to like zoom away from

this. But just look at this for example.

Let's take the uh China effective tariff

rate on the US and uh you know we we'll

sort of draw this green line right about

here. There what is that whatever that

is. Uh and then uh if we go ahead and

draw another line here and then we kind

of look at where things sit now we could

see uh there's this meaningful gap you

know according to Goldman here. What is

that 15ish to maybe 30%. So a doubling

in the effective tariff rate based on

how uh they are calculating the

effective tariff rate. Most see the

effective trade weighted. So based on

what we actually trade tariff rates at

about 15 times larger than what they

were before. So that gap you know that's

going from like 2% to 30%. Uh that gap

is still meaningful but nobody knows

what kind of damage this is going to

cause. But I agree with Goldman that,

you know, if if the unemployment rate

moves that little, yeah, you probably

should expect pretty slow movements in

in Fed yield, you know, rate positions,

basically. Now, that said, they say,

hey, you know, maybe this doesn't bode

well for the future of stock prices. I

think it's a little too soon to say

that. Uh, you know, there are a few

charts that I like looking at. Here's a

chart called the excess cape yield. Uh

and basically what it does is it takes

cycllically adjusted earnings. So you

know they try to smooth out the seasons

and the cycle whatever. Uh and what are

our earnings doing and how much is the

S&P 500 returning in excess of

inflation. So this is basically an

inflationadjusted earning set based on

where we sit in cycles and seasons.

That's like the easiest way to try to

put it. And I know I'm way

oversimplifying.

Well, that level sits at about 2.8%. And

if you look at sort of history, 2.8% is

pretty low. It puts us somewhere around

that 2018 level, the 2006 and 7 level

over here. Uh, obviously things got a

whole lot less desirable in the dot era,

but it shows you how significantly

negative this chart got in the dot era

and we just haven't seen that here,

which is actually kind of bullish if you

think about it because we frequently

compare back to the 2000s and the

overvalued nature of the stock market,

how you know there's some parallels

between 2001 to 2003 and today. But when

you look at the excess cape yield, you

know, that actually went negative at a

certain point uh in in the dotcom era.

uh and this is historically how markets

react after uh you know the next 10

years and then they they look at the

rate of return that you can expect on

stocks every year for the next 10 years

when your excess cape yield is between 1

to 5% you might think the S&P 500

historically since 1928 would return

somewhere around 1 to 5%. So given that

we're somewhere in the middle of this

range, maybe we'll return somewhere in

the middle of that 2 and a half% per

year over the next 10 years. Basically

soft landing style growth,

smooth, you know, recovery out of this

disaster, but no crazy boom. Uh but we

don't have an excess cape yield, so we

wouldn't be expecting negative returns.

That's at least based on this one chart.

Obviously, if you now factor in things

like AI or radically growing growth

estimates for some of the largest

companies in America and if consumption

holds up, then this could be wrong and

we could return a whole lot more than

this in the stock market. So, it's kind

of interesting to look at it that way.

Uh, now personally, people always ask,

Kevin, where are you on the bear bull

scale? Once we got the uh May 12th deal,

I moved from a 29 to a 34. So, I'm still

more on the bearish side. And I'd say by

August, September, we'll have enough

data to feel comfortable that we're not

going to have some surge of unemployment

and some unemployment driven recession.

That is the worst case scenario for

markets. And it's very painful to a lot

of people. I hope that doesn't happen.

Obviously, if that does happen, like we

heard JPAL say yesterday, we're going

back to zero. That will cause its own

distortions and problems. Uh Bessant uh

this morning said that the Moody's

downgrade is a lagging indicator. it's

Biden's spending fold, Walmart's going

to eat some of the tariffs, kind of

doubling down on what we heard

yesterday, and that if countries are not

negotiating in good faith, then they'll

just get assigned a tariff rate,

basically. Now, this is interesting

because that tariff rate could be above

the sort of global 10% reciprocal tariff

we have on every country now. And it

remains to be seen what impact that's

actually going to have. We're also 45

days already. Can you believe this?

We're 45 days into the liberation day

pause, which is kind of crazy to think

about. H it's maybe closer to 40 days,

but we're coming up on 45 days into the

liberation day pause. Uh and tariffs are

still, you know, 5x on the entire world

what they were before liberation, 15x on

on China. Uh and and so keep in mind the

30% on China is in addition to some of

the older 2018 tariffs. So, you know,

some importers are paying 40 to 57% on

uh on tariffs import from China. But

some of those tariffs we already knew of

beforehand. Uh and right now there are

no current plans for more tons with

China. So a lot of people are kind of

like all right where does the world

settle? And that's the thing. No, nobody

really knows. Maybe we just absorb it.

Maybe importers just absorb it and

wholesalers. Bloomberg says that most of

the tariff impact so far has been

absorbed by the US side, not by

consumers, but on that importer

wholesaler level. and they measure the

changes that they're seeing in sort of

PPI versus expectations and they're

like, "Okay, yeah, we're basically

paying all of the tariffs ourselves

right now." That's their POV. Who knows?

I, you know, I'm sure other countries

get hit in lower production as well, but

anyway, we'll see. At the same time,

there are also concerns that there are

delays in China sort of reactivating

approvals for rare earth exports. And

China basically dominates this market.

There are a couple charts that are worth

looking at. This is a chart of China's

dominance by different rare earth, which

are obviously very important for things

like windmills, which Donald Trump hates

anyway, or electric vehicles, which

Donald Trump doesn't really like either,

unless it's a

Tesla, whatever. Also important for

certain computing components. But here

are various uh and certainly machinery

and and otherwise. But here are various

uh components or minerals, if you will,

that uh that and the blue bar shows you

China's dominance. I'm not exactly sure

why they made Canada roughly the same

blue color as China. But let's just put

it this way, the blue bar that you see

is mostly

China. And on top of that, if you take a

peek at this chart here, China mines 70%

of rare earth concentrates. This is

basically a way of saying they pick up

scoops of dirt and then they look for

the rare earths inside of that scoop of

dirt. They process 87% and refine 91%.

So basically they

dominate. What impacts that'll have, who

knows? So

basically, we're in a big old wait and

see for the economy. The market is like,

we don't need to wait and see.

Everything is fine. So market everything

is fine. Market probably going to look

through the Moody's crap. I mean,

Bitcoin's at 105,000. That's one

potential leading indicator for you. Uh,

which is bullish. And the bond market's

going to be pissed about the Moody's

downgrade. But then again, the problem

is how much is that 102 yield spread

going to rise now? Don't know. We'll

see. Uh and does that again leave us

sensitive to a

shock? Again, who knows? So, absent

shock risk, markets happy. And this is

where I've been saying, hey, if you're

worried about shock risk, the easiest

thing to have is a trailing stop. But I

will say if we get some form of red

candlesticks on Monday morning, you have

to be careful with the trailing stops

because you could get stopped out and

then people go by the dip like crazy. So

there's there's a little bit of risk

that the trailing stop on Monday because

really we don't know what the reaction

is going to be from institutions. Again,

historically we get

red, but we'll see. Okay, now let's talk

Lyft and Tesla. Now, I didn't actually

mention that in in the teaser, but we

got to talk Lyft and Tesla. Lyft and

Tesla have a partnership where Lyft and

Tesla together will offer $1,000 in

Tesla credits to you if you take

delivery of a Tesla and you complete 100

Lyft trips through July 13th. It's

basically a $10 bonus per trip, but it's

in, you know, Tesla credits. So you

could buy Tesla merch or or you know

supercharging uh money you you know

credits basically

whatever. What I'd like to do is think

about how critical this partnership is

though about a week ago when I went to

Alcatraz with Jack. Shout out to meet

Jack Alcatraz. You can see his Alcatraz

tour on YouTube. He threw a sound effect

in there. Tell me when you find what the

sound effect is. But on the trip over

there I talked about how Tesla would be

wise to buy Lyft. And the reason I

thought this is not because Tesla can't

make an app themselves. I know they can.

They do fantastic work with their

technology, but it's a $7 billion

company that I think Tesla can absorb

without any even notice to uh you know

the the overall valuation of Tesla. Like

you could absorb all of Lyft with stock

from Tesla and I don't even think Tesla

stock would react.

The benefit that you get is

distribution, but maybe you don't have

to buy Lyft if Lyft is already in good

partnership with Tesla because the

competition aspect is what you're most

worried about when it comes to robo

taxis. Whimo's got a really reputable

app. And you might hate Whimos. You

might say Elon says Whimos or Whimo

expensive to build and that's fine, but

they have the app with excellent reviews

and excellent reactiveness. like when

people go to San Francisco, they pull

out the app. Oh yeah, I'm going to just

call a Whimo or people's, you know,

reaction to pull out a Lyft or an Uber.

That reaction momentum is what is going

to be the hardest for Tesla to get. And

that's why I say either partnering with

Lyft, which they're already doing, is is

a wonderful thing for Tesla. It's

actually bullish. Uh if they just buy

all of Lyft, they guaranteed have that

distribution where people already open

up their phone, call Lyft on an app,

right? Except now a Tesla robo taxi

could show up. That is of course, you

know, to the extent that robo taxis are

actually close. Who knows? We're coming

up to June 1st. We'll see what Tesla has

for us in their Austin partnership. I

kind of want to go to Austin and try it

out. I think it'd be kind of cool. But

I'm sure every other creator on the

platform is going to be doing the same

thing. Either way, I see this as

positive lift Tesla uh that maybe Tesla

doesn't even have to buy them. We've

already got a built-in partnership. All

right. Now, catalysts for this week

coming up. Not much. Leading index on

for April, you know, based on April's

data, nobody cares. Okay. Any data sets

that are coming before May 12th, nobody

cares. Chicago Fed activity for April,

nobody cares. Initial claims Thursday,

nobody cares. S&P Global Composite,

manufacturing, and service PMIs

preliminary for

May, eh, that comes out Thursday at

6:45. Maybe we'll care a little bit, but

I don't think we're going to care that

much because most of it is going to be

preMay 12th. Make sure to stay for the

end of the video, by the way, because

I'm going to reveal the

multi-million to in the future if we

build out the reputation billion dollar

opportunities that House Hack is working

on. Stay tuned for the end of the video.

And remember, our nonacredited investor

round is open at househack.com. You get

paid a 5% yield through stock conversion

and then you get all the upside in the

stock from there. Go check it out at

househack.com. Of course, risk with

every investment, but I'm really excited

about it and watch towards the end of

the video. All right, now let's talk

geopolitics. Israel is launching an

extensive ground operation uh in the

Gaza Strip. Apparently, another 135 are

dead in the Gaza Strip. All public

hospitals in northern Gaza are out of

service. And there's really concern over

aid flow going into the Gaza Strip, but

that has been true since October 7th,

2023. There have been fears of famine,

illness, death, closed hospitals since

then. The Egyptian president echoes

this. UNICEF echoes this. Everybody's

basically echoing this is a problem.

Now, obviously the Trump administration

and Israel have seemed very close, but

Trump is playing a unique balance with

this with now headlines that Trump

shrugged off BB now who uh at a golf

course over the weekend and people are

like, "Oh, what's you know what's going

on?" Who knows? But what we do know with

certainty is JD Vance shook Zalinsk's

hand after the Oval first first meeting

since the Oval Office spat. you know,

now here at the inauguration of the Pope

and remember the last person's hand JD

Vance shook. Okay, I don't know. Maybe

this is maybe this is all part of the

bigger plot. Okay, I'm kidding. But JD

Vance did shake Zilinski's hand. So,

let's wait and see. Trump also suggests

that he's going to talk to Putin and

Zalinski, but we have to be really clear

when it comes to

Putin. Putin does not seem dead set on

wanting a deal. And I think Trump is

slowly warming up to that realization.

And I think that's why they're sort of

warming up to Zalinski a little bit more

than Putin because Putin just isn't

bending. The interest in Putin getting

this deal done seems to be roughly

zero. That is some form of permanent

ceasefire. However, there are cracks

forming inside of Russia. Russia's

military spending is spiraled out of

control as you know some are saying.

Some others are saying no, they're just

reinventing their industrial economy to

be a military industrial economy. Their

defense spending has doubled to about

149 billion in 2024. That was from like

the 60 billions in 2021. Worth noting,

by the way, that Russia right now spends

uh somewhere around

32.5% of their entire federal budget on

the military. In the United States, we

spend about 13% on the military. So huge

difference here in terms of spending. I

mean, they're spending almost three

times as much as a percentage of their

federal budget on the military. Russia's

apparently having to pay North Korea in

excess of $20 billion for services

basically to get, you know, recruits to

come fight for Russia. Uh, and the

economy is facing significant worker

shortages across various different po,

you know, portions of the Russian

economy. So, a lot of people like, hey,

maybe Putin will finally wake up to the

damage he's causing. Others are like,

"Nah, this is Ukraine is part of his

legacy and he's going to keep fighting

until he gets more and more and more."

We'll

see. Let's now talk about United Health.

United Health stock is down 42% year-to-

date, over 44% over the last 12 months.

Their Q1 balance sheet, let's just put

it this way, it's not that desirable. I

was actually surprised that a Dow 30

company does not have that desirable of

a balance sheet. Take a look at this.

And I'll hide myself so I don't cover up

numbers here. All right. So, on a liquid

basis, they have $96 billion in current

assets, but they have about $13 billion

of bills to pay, which is a lot. They

have to pay those bills over the next 12

months.

Now, the company does generate about $20

billion of cash flow if you annualize

out their Q1 2025 cash flow of about $5

billion, which means they would have

just enough money to pay all of their

bills. And so, if you subtract their

longerterm debts from their longerterm

assets, they've got about a hundred bill

sitting around. So, it kind of gives you

the the tangible value of this company.

So, think about it as they have net

equity of a hundred

billion and they generate around $20

billion a year in cash flow. Again,

annualizing their Q1. They actually make

a lot of money in that sense. So, on

their net equity, they're returning like

20% per year, which is phenomenal. Now,

you are paying a premium for that

business. Right now, you're not paying a

hundred for the business. you're

actually paying about $264 billion for

the business, which means you're paying

about 8x their cash flows uh for the

company. Now, sometimes what I like to

do is I like to take their cash flow and

divide it uh by their market cap. And

that's also still pretty good. That's a

7 12% yield. That's not bad on sort of a

free cash flow yield if they can keep

this sort of annual cash flow going of

five bill or sorry, 20 bill, five bill a

quarter. Maybe they can't. And that's

where the questions are because if we

just annualize out Q1, it doesn't look

that bad. Yes, their balance sheet isn't

that perfect, but it's not uncommon for

insurers to operate a little tight and

they've got the free cash flow. If we

can annualize Q1, if we have to

annualize Q1 of last year, it ain't that

good because they're only clearing like

1 to2 billion in free cash flow, it's

not as good. That said, the insurance

business is a very low margin business.

their optimum optimum I guess it

actually is it's not optimum it's

optimum but anyway their optimum

services business where they provide

services for pharmaceuticals and to

doctors and others only has an operating

margin of somewhere between 5.8 to 7.4%

depending on which quarter you're

looking at and the actual health care

business only has margins of between 4%

to 6.2%. It's a low margin business.

They pay out a lot of money. And so it

kind of makes sense that they go around

and try to find whatever loopholes they

can to milk as much money as possible

out of the system. But this is where the

fraud allegations are coming up because

they're doing things that are just

wrong. And this leads people to say, why

would you ever want to touch this

business? Because a lot of people are

looking at this as a buy the dip

opportunity, but others are like, I just

can't bring myself morally to invest in

this business. That's what some say.

Now, keep in mind, the CEO did just buy

$25 million of stock and the CFO bought

$5 million of stock. A lot of people see

that as just signaling, though, because

you might not know this, but the CEO's

stock package,

$61

million. So, so it's kind of like he

took a fraction of his entire pay and

sort of like reinvested it back into the

business to send a signal. And if you

look at their income statement, they do

pay out a lot of the premiums that they

spend, which again contributes to these

lower margins. They pay out about 84 to

85% of the premium dollars that they

collect. So imagine you were an

insurance company and you were

collecting $100. You're paying out about

$85 of that in premiums. It's kind of an

interesting stat if you're ever thinking

about insurance. And then they got a

whole crapload of costs on top of that

obviously because they have to deal with

the government administration and people

and and all the claims and underwriting

and processing. It's dealing with the

hospitals. It's it's kind of just a crap

business. The margins are really really

low and their balance sheet is tight.

Again, long term they've got money,

okay? And they produce cash flows, but

it's a tight and dirty ship. Think about

it like that. You know, it's not like

they're selling iPhones at a 25% margin,

right?

where they're bringing so much money

down to the bottom line because they're

selling you this beautiful app store

rapper as well. This is a tight and

dirty Now, let's talk about the

dirt. The Wall Street Journal did this

like Pulitzer Prizewinning expose on

them and I'm just going to give you the

bottom line on this. Okay, let's say

you're a health insurer and the

government tells you, "Hey, you will get

paid in lump sums for any Medicare

Advantage patient you have that has a

new diagnosis." Okay? So imagine you're

an insurance company and the government

says, "Hey, if you insure those 10

people over there and they have no

diagnosis, you get zero. But if each of

them has one

diagnosis, we'll give you 2500 bucks per

person. If they have two diagnosis,

we'll give you 5,000 bucks a person."

What incentive do you think that sloppy

government assignment creates for United

Health? Let's send nurses to every old

person's home on Medicare Advantage for

free house calls to see if you have any

ailments. And that's exactly what they

did. They hired nurses sometimes to go

to, you know, conduct six house calls a

day and basically hook up patients to

random BS, you know, diagnostic

equipment to find out if the oxygen flow

to your extremities, for example, like

your big toe is slightly below average.

So, we could diagnose you with some

arcane illness that you don't even know

you have. you have no problems with like

you it's not like you're falling off

your feet or whatever and you don't even

realize you have a problem but they're

going to register that as a diagnosis so

they can collect money from the

government meanwhile not actually pay

anything for you. So the reports that

the Wall Street Journal put out

basically said for every house visit

United Health made they earned about

$2700 in revenue 2735 and they were the

worst out of all of the different

insurers. Humanana at 1525, CVS Edna 300

or 232. Anyway, so you could see the

desire to conduct a lot of home visits.

United Health did the most and make lots

of money off them. Now the cat's out of

the bag and the federal government has

said, "Look, we're not paying for some

of these diagnoses anymore. You ripped

off a bunch. You ripped off the system

because now people have all these

diagnoses that they didn't even know

they had. their doctors didn't even know

they had and they were never treated for

just so you can milk some free money.

And so now obviously earnings for United

Health are kind of in the toilet.

They've withdrawn guidance because

they're like crap, we don't know how

much of an impact this is going to have.

All the good numbers we had were based

on basically fraud. And uh now we got to

pick up the pieces. So what pieces are

left? Well, again, it's a business that

on a free cash flow basis yields about 7

and a half% uh you know on on their

market cap. So yeah, the dip is sizable,

but again, you're getting into a legally

fraught and now a hated business with

terribly low

margins. It look a great buy the dip

opportunity, you know, for for people

who are just going to like put any kind

of like morality on the shelf maybe. But

look, I stay out of the insurance sector

cuz it's complicated enough as is. And

looking at this United Health stuff, I'm

like, man, I mean, I like I scratched

the surface and I'm like, this is a

disgusting business. I'll pick any other

business. So, look, if you buy the dip

and you make money on it, I'm happy for

you, but I can't touch this kind of

business with a 10-ft pole. And again,

I'm not telling you not to. I'm just

saying for me, man, it's not my world.

I I'll go stick to houses. Which

speaking of which, I'm going to show you

a before and after now of House Hack. A

lot of you have been wondering what does

House Hack do. In this video, I'm going

to show you exactly what House Hack

does. This is a fixer upper. It is a

single family home. This is not actually

the highest and best use for this

property, for this lot.

Spoiler. If you go back through this

little Matterport over here and you go

to the backyard, you're going to see a

property that actually has a really

juiced backyard. If I can get back

there. Uh-oh. Oh, the graphics, the

Nvidia graphic card is shutting down cuz

it's too much of a fixer. This is what

happens when you buy too much of a fixer

upper. You can't even get the ray

tracing and rendering to function.

Anyway, let me just put it this way.

Spoiler alert. This right here is magic.

But we'll get back into the uh backyard

in just a moment. House hack buys trash

properties that are disgusting. Okay,

this place needed a whole new roof. It

needed all these water leaks fixed. We

had to tear all this crap out and redo

it all. So, you you fix the roof, you

kill the leak, then you tear out all the

crap that's nasty. Get rid of it all.

Okay, this takes a lot of work. If

anything, if it weren't for that

backyard, which you're about to learn

about, this is almost too much of a

fixer upper from what I like. I like

paint, carpet, kitchens, bathrooms.

Okay, this is a lot. Somebody built a

whole like guest office in the garage.

Uh, a car literally drove through the

damn property. This is the garage in the

front, and it just, you know, like,

oops. I guess there goes the structural

support for the uh for the header beam

above the garage door. Uh cuz somebody

drove into it. Now, obviously that's all

been repaired and replaced with

structural hardware uh and quality

products. Uh but uh you know, you go

into the inside of this building, you've

got old 1960s louvered windows, you've

got water leaks, you've got holes from

old skylights, uh you know, trash coming

down the fireplace. So you you'll see

the after in just a moment. But my point

is when people say like, "Hey, how does

House hack make money?" Because House

Hack pays to its nonacredited and

accredited investors in our round, which

we're raising at a buck 40 a share.

Okay? Like I want to IPO this sucker in

in a few years and and I I want to take

care of everybody. I I can't make

guarantees, but I want this to be a big

I IPO. I really am so excited about this

business. I see it as my little

Birkshire Hathaway. And so the reason we

can pay out a 5% yield plus the upside

in the stock, knock on wood, uh, you

know, through conversion is because we

fix up places like this. We gain equity

in these properties when we do that. So

we buy them for one price, we spend

money, and then we gain equity on the

deals because obviously a house that's

fixed up and remodeled is going to be

worth a lot more than this. uh more than

even we put into it, right? And then we

collect yield from renting these

properties out and then we can

accelerate that yield by developing the

lots. More on that in just a moment. But

I want you to see this kitchen. Okay,

look how disgusting this is. And we tore

out like I don't even like tearing out

kitchen cabinets, but we tore out these

kitchen cabinets. I'm like, yeah, no,

I'm not I'm not putting anybody through

this this trash. Uh you know, old

countertops over here, hallway. I mean,

I think you get the idea, okay? It's

it's a nasty uh uh property and it

needed a lot of love and uh we gave it

to it. Uh I mean, this is this is a lot

of work. Uh and to and to do it right is

is a lot of work. Uh you got to stop the

leaks, you got to redo the bathrooms.

It's crazy. All right, so you get the

idea. Let's now go to some of the afters

and then I'm going to tell you the magic

of why we like getting involved

especially in properties like this. We

don't do this for all of the projects

because there's a limit in my opinion to

how much exposure you want to um to

development projects. You know, some

things you just you just kind of want

to, you know, not develop and just rent

out and other ones are just really

desirable development opportunities.

This is the after of the garage. Look,

it's a garage again. It's beautiful.

This is the after of the uh inside area.

Remember where those skylights were? We

actually replaced the windows on this

one. 2-in faux wood louvered blinds, the

the fireplace is beautiful. Again, new

light fixtures, new flooring, baseboard,

paint, drywall, all new kitchen,

cabinets, appliances. I mean, this is

gorgeous. Like, this is this is a house

hack property. This is the work that

House Hack does. And it's great. High

quality product. Look at this. Brand

spanking new everything out, new in. And

it's a lot of work, but that's our job.

That's what we do. So anyway, you get

the idea. Okay, that's what house hack

does. Now look at this beautiful yard.

Okay, this might take a couple years,

but the magic sauce in a property like

this, in a location where this is high

high value

location, okay, it's by the beach.

right is uh close enough being pay the

beach values is we can actually add five

units to this

property up to five units TBD based on

what our discussions are so far and we

have not submitted plans on it yet we're

just working on drawing the plans now uh

we could actually turn this one this one

property from a one unitit single family

just fine into a sixunit property. Yeah,

absolutely crazy. Hopefully we can get

to the six. Maybe we'll only be able to

get to five total. But

that in our opinion significantly

amplifies not only the value of the

property, but the cash flow that we get

because when you develop your yields on

cash are usually a lot higher. You know,

you could be somewhere between 6 and 12

to 10% ROIs on on an ADU development. Uh

but beyond that, the value that you

actually create for the lot explodes

because now you basically created a

commercial six-unit property that still

finances under 1 to four real estate

because of the way they count

ADUs. It's kind of crazy. Who knows?

Maybe they'll change that one day in the

future. So you have that buyer liquidity

should you turn around and want to go

sell this in the future. Uh and uh and

house wins. So so that's what we do.

It's a lot of work and a lot of people

don't understand. uh what we do and and

I think it's helpful to see this. So uh

anyway, if you're interested in being a

part of this and diversifying to this

sort of these sort of efforts, go to

houseack.com. You can invest in the

nonacredited round. You do not have to

be an accredited investor. You get 5% on

an annual basis paid to you monthly.

Obviously, it's a startup. There's risk

with every single investment, but this

is the stuff we do. And if you want to

be involved in it, go check it out over

at houseack.com. Thank you so much for

watching this video. And uh this is just

one example, one property that we've

worked on here. Uh and uh and I think it

could be a multi-million dollar ROI for

the house hack business. And it also

creates this reputation of us as a

developer which also has multiples on

the stock market that I think are very

desirable. Uh anyway, more on that in

the future. Obviously, again, risk with

every investment. I'm the CEO, so I'm a

little biased, but I'm very very excited

about this company. Okay, so this is why

when people like Kevin, but what about

the stock market? Like stock market's

cool. I like what I'm building. Anyway,

thanks so much for watching. We'll see

you in the next one. Goodbye and good

luck. Why not advertise these things

that you told us here? I feel like

nobody else knows about this. We'll

we'll try a little advertising and see

how it goes. Congratulations, man. You

have done so much. People love you.

People look up to you. Kevin Pra there,

financial analyst and YouTuber. Meet

Kevin. Always great to get your take.