The Fed & Ross Gerber are FLIPPING my Startup | HouseHack.

the Federal Reserve shake-up may end up

changing the timing of when and where we

invest for house hack in this video I'm

going to be covering multiple updates

about not only how the Federal Reserve

will be affecting us but also how Ross

Gerber is taking our money we'll also

talk about where we're thinking about

investing I've got some very large

updates for you as well if you're a

non-accredited investor this is a very

big deal and I have a lot of good news

for you so I'm very excited to present

that good news for you in this video

I'll also be covering some other q a

that's been posted in the Discord chat

if you have not yet joined the Discord

Channel remember you at no cost can chat

with me by just typing into your browser

metkevin.com

chat if you go to this it'll redirect

you to our Discord and if you tag me

there I regularly look for individuals

who've at tagged me in Discord and you

could leave the questions there so

remember metcav evan.com

chat now do keep in mind that tomorrow

is the end of the month tomorrow is

October 31st and at the end of every

single month we do have a deadline that

deadline is how many warrants which are

kind of like call options you could get

by investing in house hacked earlier you

invest the more of these essentially

call options you get but because they're

with us they're a warrant and all of

those are broken down in detail of

course in our PPM at househack.com but

basically if you are not a course member

you can get up to 50 warrants on October

31st and if you are a course member or

you take advantage of that Halloween

coupon code expiring then you get an

extra 10 in warrants now this will also

be applicable for non-accredited

investors and this is where we've got

some news coming up but just to finish

this as long as you sign your

subscription agreement by October 31st

you'll be eligible for these warrants

this is basically an opportunity for you

to double down in the future on your

investment maybe not fully double down

but add an extra 60 to your investment

maybe two years from now at the original

day one valuation which is a really

great opportunity not just for you to

increase your ownership within the

company but also for the company to

raise money after we've deployed a

certain set of money allowing us access

to more deals so it's really win-win

it's win-win for the investors and it's

win-win for the company it's basically

like having a larger first round founder

run investment pool which gives us more

capital and more buying power and more

leverage so every single month oh

quickly as long as you wire by November

4th you would be eligible for this right

so you sign by the end of the month why

you're by the end of the first business

week and you're good at the end of the

next month which will be November 30th

will be down to 40 percent

plus 10 and then at the end of the year

we'll be at 30 percent plus 10. so you

can kind of see the incentive of funding

earlier here and this is where we get to

non-accredited investors which is quite

exciting non-accredited investors we

hope will be able to launch in January

worst case it'll be February so in

January this would look a little bit

like this January 31st 20 plus 10 or

February would be uh 20 is next year

leap year 29th would be 10 plus 10. so

you actually still have someone of an

opportunity to get in on having these

call options but the big thing is we're

expecting non-accredited investors to be

able to invest at the same founder

valuation which is very exciting that

same founder valuation where one dollar

equals one dollar and this importance

can't be understated let me give give

you an example Mr Beast Everybody Knows

Mr Beast on YouTube is looking to raise

150 million dollars at a 1.5

billion dollar valuation that means you

put a dollar into this company your

share is only worth approximately 10

cents of what the actual uh shares or

actual money raised is the other 90

cents is going towards sort of the

imputed value of the company right so

this is actual cash

actual cash and this is the imputed

value of the company assuming the

company is solely value and is let's say

out of cash right just to make this

simple let's say there's zero cash at

the company and you put a dollar in at

150 million dollar raise with a 1.5

billion dollar evaluation that means 10

cents of your dollar is going to actual

cash and 90 cents is going towards what

you think that company is actually worth

and their potential future earnings

right to make this very very clearly

different at house hack for every dollar

we raise the valuation is one dollar

that's why one for one this is what's

known as selling founder shares and

founder shares have zero of this upfront

dilution that you'd actually be seeing

over here which is generally what you

see at other companies when they raise

monies you see some form of upfront

dilution very very typical because

they're an operating company we believe

because we're not actually an operating

company yet we believe we're only

raising money at net asset value and we

think this is most fair to our investors

and keep in mind my goal quite frankly

this is also somewhat just sort of like

another goal of mine is I want initial

investors whether you're accredited or

not non-accredited I want initial

investors to think wow Kevin really made

me a lot of money I want to do another

deal with Kevin right I look I'm 30

years old when I'm 35 I want to be doing

this for another 30 years and if I screw

people early on that's terrible that's

that's a terrible way to set yourself up

for for uh for for investing in the

future with other individuals right so

what's important as well just briefly to

remember is if you are an accredited

investor and you want to get in before

the non-accredited rounds remember we

actually don't need that much from you

it's relatively simple if your income as

an individual is over two hundred

thousand dollars just send us your W-2s

or your tax returns for the last couple

years if you're married it would be 300K

just send your tax return in your W-2s

you just go to househack.com click apply

to invest upload the documents simple if

you need to get a letter you could get a

letter from a CPA or an attorney

tomorrow and just fill out the form

tomorrow October 31st and send your

money by the end of the week and you're

good alternatively if you don't want to

send us your financials just get a

letter from

househack.investready.com okay so what's

the news for non-accredited investors

well this is actually really exciting uh

we are in the process now of getting our

audited financials this is a really big

deal the SEC requires audited financials

something that's actually not required

of a regular uh accredited investor fund

before that so all of our financials are

now going to get audited which I think

is actually excellent and should just be

required for all sorts of funds but they

generally aren't anyway all of our

financials are getting audited and of

course those will be made available once

they're complete and we launch our reg a

fund our reggae fund I'm pushing really

really hard for January and the cool

thing about this is this means if you do

not have a net worth exceeding million

dollars or your income is less than two

hundred thousand dollars a year less

than three hundred thousand dollars a

year as a couple that's okay you can

invest you would be able to invest up to

10 percent of your own self-certified

net worth we do not have to verify this

you can do this with your own

attestation obviously do the right thing

but with your own attestation the point

of me saying this is that I don't have

to verify your assets and things like

that right which is good it's less work

on house hacks but where the goal is in

January we can launch this and you can

invest up to 10 of your net worth and

the neat thing is you can uh if you are

a non-course member you're just a viewer

the minimum investment is going to be

twenty thousand dollars with no

accredited investor paperwork necessary

none of that nonsense if you are a

course member the minimum is going to be

five thousand dollars and I I'm doing

this separation on purpose because I

believe that individuals who invest in

their future in learning perspective on

finance rather than people who think

that necessarily I can't learn anything

from anyone else I I personally believe

that uh these are kind of the investors

that we really want to give a special

opportunity to and so we're lowering the

the minimum required for course members

that's the non-accredited update worst

case scenario this ends up getting

pushed back to Feb worst case March

something like this the downside with

this time frame is it's all subject to

the Security and Exchange Commission

it's actually not up to us it's up to

how much commentary they come back with

and how often they come back with more

requests which is okay because I'd

rather the SEC asks us all their

questions in the world first rather than

come back later with a bunch of concerns

or questions right while we're operating

we don't want that we want to deal with

all of that up front so really important

that we deal with that up front which is

very very exciting to us that we're

going to get that handled now what's

going on with the Federal Reserve Ross

Gerber taking our money and locations

that we're thinking about investing in

all right so here's the thing first when

it comes to the Federal Reserve we have

to remember that we need to be prepared

for the Federal Reserve to potentially

continue to raise rates right so there's

option number one option number one is

is fed raises rates more raises more all

right and then option number two is the

pivot that's option two now we have to

be prepared for both of these scenarios

and I just like to explain uh the the

strategy for each of these so first If

the Fed continues to aggressively combat

inflation whether they're right to do so

or not they just continued their

aggressive push towards towards raising

rates and rates end up going higher than

markets are expecting then the answer

that we need to focus on is this

oh that's a squeaky Market

patience we have to focus on patience

the reason we focus on patients is

because the more the Federal Reserve

acts aggressively the more pressure will

come onto real estate valuations and the

more we expect to see real estate

valuations pushed down and the longer we

wait the better so patience is really

really important with an aggressive fed

however there is also the potential for

a Federal Reserve pivot this is where

the Federal Reserve quickly pivots

somewhere around maybe January to March

and we see not only a substantial pause

but we start seeing the FED plant seeds

for a real U-turn and potentially

actually reducing rates sooner than the

market expects this is going to lead to

a little bit more

urgency and the reason for that sort of

urgency is as soon as mortgage rates

start plummeting we expect to see some

form of a floor established under

valuations of for real estate and so the

FED flip-flop is going to be really

critical in watching the fed's timing

which I I personally honestly don't

think anybody thinks about or dreams

about the Federal Reserve as much as I

do that sounds really weird but it's

true uh you know watching them like a

hawk is actually critical for how and

when we launch so this becomes very

important but in addition to that it's

also going to affect where we're going

to invest in real estate so I'd like to

present which I haven't done before some

of the initial locations and my initial

rationale for targeting these regions

okay these these are not definites yet

we might end up killing some of these

ideas but these are some of the areas

that I'm highlighting at first because

of what's happening with Market timing

and this I expect to change so uh and

when I say expect this to change I don't

expect it to flip-flop I expect uh house

hack to start in one area and then move

to another in fact let me just make that

very very clear I think it's very very

important that house hack have sort of

an initial location and then we

basically

rotate outside of that location and then

we expand and then we expand I think

that's very important because first of

all travel times are then smaller for

for not only myself but executive staff

it's easier than for us to check in on

our local staff but it also makes us

more of a local expert which is very

very critical to make sure we're getting

absolutely the best deals and we expand

from where we're good into new areas and

expand the model so

first we know this we know that

companies like Pulte Homes are telling

us that they are aggressively

discounting inventory this is how we

know we're not at the bottom yet right

we know that properties are being dumped

because companies are saying they can't

be margin proud this is a really great

opportunity for us in addition we hear

things like this we hear that Western

markets are facing the toughest damage

right now whereas areas like South the

southeast and Florida and Texas are

actually performing better as people are

looking for more attractive climates

attractive job growth and uh you know a

focus on really the Sun Belt region and

this creates a very interesting

opportunity because I'm a big fan of

following jobs not only I'm a big fan of

following jobs I'm a big fan of

following where new offices are being

built we want to stay away from those

1960s 1970s style offices that are too

dark and don't support modern a

structure like modern internet speeds or

modern floor plans so we need to be

around newer Office Buildings you see

this same transformation happening in

New York City where you've got a lot of

folks moving West within Manhattan

because the easterly buildings are just

the 1960s 70s junk buildings that nobody

wants anymore so people are moving over

the areas that used to be like meat

packing areas like Greenwich Village or

whatever that are turning into more

modern office areas so while we're not

necessarily investing in Manhattan at

this point the point is we want to focus

on where those new office developments

coming and a lot of this is not

necessarily only in areas of the Sun

Belt we see substantial job growth and

new offices and attractive climates in

Western markets as well but Western

markets are getting hit more because of

sort of that that pandemic move away

where people more people now than ever

before can work from home and so that

people are able to move to less

expensive areas and so these are trends

that we really want to pay attention to

we want to be in the Southeast and we

want to be in the Sun Belt but if we can

find markets in the west that have

already been substantially discounted

and have attractive climates and have

job growth then those areas could get

punished the most now under high

interest rates but could have one of

some of the best potential rebounds now

to be determined we don't know all of

that with certainty but here's what

we're looking at right now let's go

ahead and jump on over to this

particular chart and this is the core

logic case Schiller report and one of

the phenomenal things about this chart

is it tells us in August both

non-seasonally adjusted and seasonally

adjusted exactly where most of the pain

is and you could see highlighted here in

pink are actually your real pained areas

take a look at that Dallas Denver last

Vegas Phoenix Portland San Diego San

Francisco and Seattle whereas the areas

that are not yet suffering a lot of pain

are Tampa Miami Detroit Cleveland

Chicago Charlotte Boston and Atlanta now

this creates a really interesting

opportunity because if we can do the

following watch this uh let's go ahead

there we go get that out of the way if

we could do the following watch this

if we can have a mandate of focusing

where are the new jobs and the new

Office Buildings right if we can then

also focus on attractive climates very

important I believe

and we could start where the most pain

is once we see a bottom forming right

start where pain is

then we can move over to the areas that

haven't been hit as hard in the future

so move East

in future so what does that potentially

mean for us well it potentially means if

this here is a map of the United States

it's a pretty terrible example of the

United States but well

what it potentially means is we start

investing here and we make our way over

probably will look like somewhat like

this right and then maybe we make our

way up something like this

these areas could be the most attractive

because they could end up seeing the

most pain first which could end up being

areas like Salt Lake City Boise

Denver San Diego Ventura County Santa

Barbara uh you know Portland Seattle

you've got uh you know Phoenix and Las

Vegas and then maybe you move over to

Dallas like we saw on that case Schiller

report and in the future you know after

we sort of loop around here maybe then

we end up in like Detroit after

potentially considering Manhattan do we

ever consider Atlanta how about most

Florida locations the Tampa the Fort

Lauderdale to Miami right this is a

trajectory that I'm expecting right now

this could obviously change but I like

looking at where the most pain is and

then making sure that we only go to

paint areas if we actually still see a

flow of strong jobs and new offices an

attractive climate this area right here

has probably the most attractive climate

in America however people do seem to

prefer warm over cold so that becomes

your next attractive climate here but

what this really does is it gives us an

expansion plan to where we could really

become perfect in in sort of the

southwest region first and then move

over across the United States now this

this could entirely change and it really

depends on how markets evolve because

the last thing we want to do is go into

an area that turns dead or stale for

example there are some cities that did

really really well in the pandemic but I

think there are zombie cities now a

zombie city is something that is is so

critical to understand a zombie city is

usually defined by a city that has

really really high cash flow and on

paper looks really really really amazing

but it usually only has one uh one one

job provider right and if that one job

provider whether it's an energy facility

or it's uh you know a government

facility or it's a a you know private

Enterprise if that one job provider goes

away the town basically goes bankrupt

and the reason you tend to see high cash

flow in some of these potential zombie

areas oftentimes with low population

growth is because there's so much risk

associated with those areas see cash

flow is actually a measure of risk

usually the more cash flow the more

risky now you can change that by getting

good deals I can go into a low cash flow

area and get a high cash flow property

by either changing its use or just

getting a good deal or both but as as

sort of a broad brush stroke High cash

flow usually associated with higher risk

low cash flow usually associated with

lower risk so you have to balance this

by making sure you're getting good deals

whether those are wedge deals wedge rent

deals wedge condition deals you know

fixer-uppers whatever it may be so those

are important things that we have to pay

attention to now next what's up with

this Ross Gerber guy you know why why is

Ross Gerber uh taking all of our money

well uh it's not taking all of our money

but he's going to be taking a big chunk

of our money and we actually have a very

beautiful partnership and so we're going

to be sending him a check for about 21

million dollars again not all of our

money but a big check we're going to be

sending them about 21 million dollars

and uh we're asking him to invest that

uh 21 million dollars into treasuries

now uh Ross is not only a financial

advisor I'm a financial advisor as well

but Ross also runs an investment

advisory firm and we can retain them and

Ross is giving us an extremely good deal

not only is he a board member at house

hack but he's giving us extremely good

deal on on the manage of this this

funding but we're providing him this to

invest in treasuries and we expect that

over the next year at about 4.25 percent

we would be able to make about 892

500 not guaranteed obviously depends

when we invest uh but obviously when we

go into secure like zero risk treasuries

we do expect to get roughly something

around this uh in terms of funding or

not funding as a return we would be

getting 800 about 90 almost nine hundred

thousand dollars here risk free by

October 2023. now the cool thing is

we're not purposely putting all of our

funds in this and new funding will maybe

go into three or six month treasuries so

we have those available sooner see what

we're actually going to be doing is

something like a first in last out

approach for for those those of you who

are into accounting that's first in last

out Philo oh you can't even see that I

wrote it too high the Philo approach

there you go and the reason for that is

the first in money we want to lock in

for for longer terms like a longer time

frame so these could for example be 12

month treasuries our next batch of if

this is let's say we'll call this B1

right here right if we go to B2 and we

get our next 10 million dollars we might

put that into six month treasuries if we

then go to B3 and this is our

non-accredited round and we end up

raising 50 million dollars we might end

up putting that also into six month

treasuries because see if we put six

months in uh you know these come out

October let's say these end up going in

in November and they come out uh

somewhere around May and then these come

in in January January February and end

up coming out in August well you can

actually see is what we're doing is

building a ladder portfolio where we're

getting 900k about on 21 mil over here

we'll get a return on this money with

six-month treasuries we'll get a return

on this money with six month treasuries

and we're really setting ourselves up to

have the money available to go shopping

uh by Q3 of 2023. of course that number

could change if we have an aggressive

fed that could end up becoming Q4 if we

have a dovish Fed that could end up

becoming Q2 either way with new money

coming in we could use new money first

and the old money we could park into

treasuries to make sure that we are we

are maximizing our return to

shareholders so this is just an example

of of how we're going to do this and

rather than uh you know like look I I

know I can do this as well I can throw

this money into to treasuries by going

to treasury direct.gov but rather than

manage that myself I think it's more

important for me to be focused on where

are we going to buy and building those

relationships with a agents around the

country so that way we can get the best

deals let Ross do something that he's

already done as a professional extremely

well and uh you know potentially this

becomes uh something that's mutually

beneficial to both companies where for

example Ross is able to benefit because

of the association to house hack but

also house hack is able to benefit

because we have a professional money

manager who's been doing this for over

30 years holding on to and laddering our

treasuries for us which could

potentially attract more funding to us

okay now let's talk about average deal

size so average deal size probably for

units will probably be somewhere between

150 to 300 000 per door when we're

looking at units and I would expect that

single family would probably be around

500 to 600 000 so we're not trying to go

luxury here we're trying to go middle to

Upper Middle right I would say probably

lower class would be somewhere around a

hundred thousand dollars a door for

units maybe three hundred thousand or

less for uh for for single families

that's not a disc I'm just just trying

to make sure it's clear that this is

more of the middle approach whereas

upper income would be like 500k a door

for units and maybe like a million a

door for uh for single family and I just

want to make it very clear where our

focus is I've always believed that the

most liquidity you could have in real

estate is focusing on the median uh

that's like your typical three-bedroom

two-bath house uh post-war kind of house

where we we have real opportunities to

to fix and fix some and renovate and

then rent out remember we're not

flipping and I think that's one of the

big misconceptions that I hear of a lot

is people think that somehow we're

flippers or somehow we're we're you know

gonna suffer like open door we're not

like open door open door doesn't rent

out properties in my opinion one of the

big differences between us and Open Door

his Open Door seems to have thousands of

Staff who buy properties for over market

value just to buy them to get a six

percent commission fee and then just try

to resell them and they're really trying

to profit off of the commission model

whereas what we're trying to do is make

sure we get a good Equity boost so for

example if I go buy a home for five

hundred thousand dollars and that home

is in a 700 000 neighborhood well now I

have optionality let's say that costs

the cost to renovate that property is

fifty thousand dollars that extra one

hundred fifty thousand dollars right

here this is profit

but it's not realized profit because

obviously we would have selling fees if

we were to sell it this profit that 150

000 is actually just

untaxed Equity this is really good

because it increases the net value the

net asset value of the company the book

value of the company goes up without us

having to be taxed which is great uh and

now we have a 700 000 property that we

have optionality for we have a lot of

options the first things that we could

do is we could do short-term rentals

which we have to be careful here with

short-term rentals because we do see

demand not according to Airbnb and their

earnings calls demand is going up but uh

there there's a lot of talk that demand

in areas and I'm starting to see this as

well as going down could be seasonal but

it's something to pay attention to and

then of course we could do long-term

rental and we could also do what's sort

of called a flex term rental it's sort

of like a medium-term rental but that's

a little bit more of something in the

future uh and then of course one we have

a portfolio of these we could do some

incredible things as well well that's

really a topic for a different video

whether that's you know selling Equity

to Pension funds or whatever the point

is it would all benefit uh house hack

whatever we decide to do but this is how

we get optionality is getting a good

deal at an under market value now we're

into a deal for 550 but we're able to

get long-term rents or short-term rental

rents on a 700 000 property with having

untaxed Equity within the actual company

so some really good opportunities

now another question that I frequently

get has to do with International

investors look if you're International

you can invest if you're International

just get us a CPA letter get us an

attorney letter if you are international

not accredited same thing you just have

to wait for the non-accredited around

but this is a uh sort of a full update

for you on how Sac on some of our latest

plans and intentions and I hope you

found it helpful remember go to

househack.com to learn more this video

can't be a solicitation but

househack.com and the prospectus there

prospectus is your solicitation you can

learn more there if you have questions

go to Discord metkevin.com chat ask

questions there and of course get your

ladder the easiest thing to do is if

you're accredited get your letter and

make sure you go to

househack.investready.com to get your

letter or just post your W-2s and tax

returns by tomorrow on househack.com by

hitting that apply button upload your

documents and Wire by the end of the

week to get your maximized warrants

thanks so much for watching and we'll

see in the next one bye