The Housing Market is Flipping my Startup!

Nothing like a great article from the

Wall Street Journal to talk about the

real estate market and provide a house

hack a Q2 update. Uh EBIT Profitel still

doing great cutting costs, cutting GNA

expenses, but now investing more into

R&D. Why? Because we expect in Q4 or Q1

we are going to release uh a beta of our

software as a service real estate AI

app. We actually think it'll be the uh

first ever uh that uh provides AI to

both investors and real estate agents.

And really, it's just product that we

use internally anyway. And we figure,

hey, the real estate market is a, you

know, 4 to5 trillion market. Why not

license this product that we use to

other buyers or agents across the

country when, you know, we can't go shop

in every single market. In fact, that's

really what this Wall Street Journal

article refers to is this article talks

about this breakdown of people who are

buying single family rental properties

and how much money there is to be made

in buying, renting out and hodling

essentially these single family homes.

And what you find is it's not private

equity with, you know, thousands of

properties and billions of dollars. uh

it's actually more investors with three

to nine properties that dominate the

market. You know, house hack would be

more in this sort of blue territory over

here, but nowhere near this sort of like

private equity level. But this idea of

investors buying homes, total investor

purchases of single family homes now

around 30% nationwide, some of it is

being driven by big discounts from home

builders like Lenar and Dr. Horton who

are really trying to clear inventory. Uh

in fact, you're finding that now is this

fantastic time for smaller investors to

buy homes. And so that's what this Wall

Street Journal article is about. Small

investors who own fewer than 100 homes

are securing more discounts and

financial incentives from sellers eager

to close deals quickly as inventory

piles up as traditional home buyers sit

on the sidelines. This is a huge

advantage to a house hack and it's

exactly in line with our strategy. Uh

small investors are more active because

they see a solid business and buying,

fixing up and renting out single

families. There's no shortage of uh of

deals out there. We find uh smaller

firms uh in in you know they're talking

about the Strand in South Carolina uh

taking on more risk. We personally don't

think we take on a lot of risk at all.

and we'll talk about our uh AI and R&D

spend at the moment, but uh you're

seeing a lot of deals in Texas and

Florida because of the over supply, the

overbuilding. We've been warning about

that since 2022. We saw that happen. So,

not a surprise at all. Here are the

discounts uh from inventory from LAR and

Dr. Horton. So, certain parts of the

country certainly overs supplied whereas

other parts of the country, you still

look at California for example, very

under supplied still and underbuilt. Uh

but uh in line with this uh article, we

may as well give sort of a quick road

mapap of what our uh our intentions and

game plan uh game plans are and how

they're evolving for house hack. Uh so

uh remember that when we started uh

house hack, which remember you can

invest in house hack, it's uh open to

nonacredited investors. Uh you could go

to househack.com and uh read the

paperwork there, read the disclosures,

the ppm, the offering circular, right?

Every investment has risk. Uh but we we

still have our 5% bond round open. Uh

but this is convertible uh into stock uh

at a buck 40 a share uh as uh as as soon

as as soon as 2027 or later. The goal is

to IPO 2028 to 20, you know, 30

depending obviously if we're like in a

big recession during this time. We'll

we'll delay it a bit, but that's when

our goal IPO is. That's still on track.

This is the round. The reason we're

structuring, by the way, the current

offering as a bond, a convertible bond,

is because you basically you get

preference on the company. Bond holders

always get preference over equity

holders. You get a 5% yield paid to you

monthly, right? So, it's an annual yield

paid monthly. Uh, and it converts into

stock with no premium. So, like we

actually think this valuation is pretty

low. We will probably close this. Uh my

my goal is to close this round uh once

the Fed starts dropping rates because 5%

is just going to be too high at that

point. So probably September 17th. Uh so

I I'll say maybe, right? Cuz it's it's

not just up to me. It's up to the board

of directors, obviously. But the board

of directors did just approve

uh we just approved our uh AI spending

uh and investment plans uh for our SAS

biz uh just last week. We did uh and our

plan is uh in Q4 to have uh our limited

beta and wider release uh into 2026

uh for agents uh and investors. And we

actually really want to target exactly

this market right here. And so we're

really excited about it because, you

know, we look at, for example, just the

numbers that we have in the community

here. Uh, you know, we like the Meet

Kevin community. Uh, we know we have uh

over, you know, 4,000 I think it's

actually like 3,700 something like that.

Uh, real estate investor uh course

members, you know, something. I can't

remember exactly what it is, but it's uh

plus uh over, you know, um I can't I

think it's like 1,800 agents, maybe even

more, right? So, like we look at this

community as as people who would be so

perfect to be as, you know, part of our

beta testers and then obviously

eventually we'll expand this into uh

software biz. But what what we don't

want to do is is no Elon. Uh you know so

this is actually really critical and

this is something the board uh and I

spoke about in depth. So something that

we want to provide to investors when it

comes to house hack is is we just want

to give people the confidence that you

know no politics no politics uh not

anytime soon. you know, obviously can't

make a guarantee like forever, but

now is not the time to integrate

politics and mess with politics or like

run for governor or something stupid.

Like now is the time to focus. And so

the focus for house hack right now uh

needs to be really really clear and

simple. and that is September uh to

December uh we'll probably buy, you

know, $10 million of real estate uh

holding about $4 million uh of real

estate for builds or reserve. That's the

tentative plan. So, we'll be buying

wedge deals. You know, we think what we

do is when we buy deals, we think we

once we fix them up, we're up 20% on

them is usually what we think. Uh so uh

we could see a $2 million, you know,

plus or minus boost from those wedges

this year, which is great.

Uh this is on top of the, you know, uh

the assets that we already have. Uh all

of our tenants are paying, you know, uh

all tenants current uh and paying

timely.

Uh and we're fully occupied, which is

great. Uh there's there's really you

know there are no issues here. The uh

gross margin

uh is about for a property is about 32%

expense. So gross margin I guess would

be 68%.

Which is roughly in line. Usually you

see about 65% gross margin. Uh which is

great. Uh this is fantastic. We're

reducing our GNA as well. Uh which is

great. reducing GNA uh by decreasing uh

some uh internal costs and open to uh

open to interns. Again, uh if you're

interested, I did put out a post on X

and uh one of them is for our

contracting AI team and the others would

be in-house, but uh some of them could

also just be for meet Kevin, so it's

separate, but uh you know, hiring AI

talent. We've got a good contracting

team already for our AI talent. Uh,

which is great because it gives us a lot

of flexibility and we're doing some

great things. Uh, legal, uh, if you get

a bar license, California, Texas,

Florida, you could be a new graduate,

uh, or you could have experience.

Doesn't matter. Just follow the

instructions, send us your application.

We're always hardworking, non-entitled

badass, as I always like to say. But,

uh, we think we're very, very efficient

with our expenses. And uh that's that's

a big deal for us because you know

recession or not we always like to say

hey you want to be prepared and be in

the best case pol uh best best position

with the company right so no politics uh

now when I say no Elon strategy as well

I want uh investors in house hack to

know that about 5% like I'll I'll put it

this way uh maybe five to 10%

uh dedication towards uh or or I should

say spend not dedication because

dedication would be more spend on AI. Uh

I uh you know we the board and I board

and Kevin do not want to pull an Elon

where you know one year Elon says we're

going to manufacture 20 million

vehicles. Uh then a few years later, JK,

we're going all in on robo taxis and

Optimus robots and we need a whole new

plan. Like that to me is is a bad

strategy.

You know, other people might disagree

and say, "No, this is great. This is

what Elon should be doing. He's

pivoting." I I don't think like

Houseack will not make that kind of

pivot. Let's put it that way, right? So

that's why we think if we put we can put

a lot of our efforts in but we don't

want to spend more than like 5 to 10% of

our capital on artificial intelligence

uh because we got to prove our model

first right so we're going to we're

going to show the AI SAS that we have

we'll we'll do our limited beta in Q4

probably you know course members and uh

you know anybody who signed up at

mekevin.com you guys will hear about it

first and then we'll like beta test with

you all and and the goal is to get to a

wider release in 2026 or so. The cool

thing about this is uh it'll really

allow us to be sort of data dependent.

Uh and and we'll see because if you know

let's say we you know we can uh license

our product for $199 a month and you

know through through YouTube um

we get to 5,000 subscribers, right?

Let's just say if this product is so

amazing or whatever, right? I mean, if

you think about it, that works out to

like $2,400 a year, which if you get one

wedge deal with this this sort of

product that makes you $100,000, $2,400

is cheap. It's like a discount. This

might honestly be too low. But if you go

199* 5,000* 12 uh you know that works

out to

uh about 11. Oh well I could I guess I

could have just hit equal.

That's awesome. AI.

It's really just a calculator built into

the notepad, I guess. But uh yeah, I

mean that's that would be $11 million of

annual recurring revenue. You have to

understand that is like that would like

uh you know 5x the gross you know our

our income now

uh which is like insane.

So like what SAS could do for house hack

is insane. uh you know that on a

valuation basis

uh you know people say companies will

trade uh for 20x ARR you know 20x ARR

is what is that $238 million

uh it's insane so like there's this

really big opportunity we think with

house hack right now and and so this is

why we we're going to end the fund raise

you know probably before uh this is why

we want to probably end the fund raise

before

uh we really go wide with our uh AI

product. We we we don't know if it'll

catch on, but we think the potential is

really high with with what we've built

because we've been building our, you

know, sort of we called it big data

before it was AI. We've been building

this out since 2018, since before

Houseachack even existed. Uh and so it's

it's going to be really really exciting.

uh and and we think we can, you know,

easily uh grow this, you know, just

through through, you know, the smart

investor people who watch the channel.

So, we're really excited about that. And

we think that like we think the downside

is really limited because again, we're

not going to pull like this Elon all-in

strategy and pivot. So you the way you

got to look at house hack is look at

house hack as you know $75 million in

assets and uh right now

maybe we'll spend 500k on AI you know m

maybe you know plus or minus so honestly

5 to 10 is is is wrong it's probably

more like you know 1% on AI spend for

now until we prove it right so 5 to 10%

% would be more like if we really

started rolling right so if the AI takes

off if the AI really takes off and this

would be like annual right uh as we

prove it if the AI really takes off sure

5 to 10% is reasonable to blow it up but

what we plan to do is any profit from AI

which the margins uh we think will be

insanely good.

Uh, we'll just dump into buying more

real estate. So, basically, think about

it like this. You know, se Howac is

basically a $75 million asset company.

Uh, and you know, obviously we've got

some bond debt in there, but we have no

bank debt, right? No bank debt. We take

this, we we take our IP

and launch uh, you know, an AI SAS biz

for real estate.

and uh any profits from this back into

real estate mostly, you know, I I call

it like 90% back into real estate. So,

we get to take like take this high cash

flow uh high margin AI SAS and throw it

into a high capital intense real estate

investment. But that also then creates

tax benefits, right? which also

generates uh sick tax benefits. Uh both

R&D expensing for AI and uh real estate

accelerated depreciation which is huge

for real estate uh you know for well

frankly for investors in house.

So you know if we pull this off

obviously the buck 40 per share uh that

house hack was uh valued off uh valued

as you know basically just as a real

estate holding company in aug 2024 will

look and that was the low end

uh which was uh towards the lower end uh

of the range of 1.4 four to 2x book

uh is going to look tiny,

but this is a risk, right? Like, but we

don't know if we can pull it off. So,

we're going to try, but that's like for

us, this is a pretty incredible Q2

update because it really it it shows

that we've got some really amazing

things going on here. Uh, you know,

again, we're like EBA profitable. We're

cutting even more GNA expenses. Now,

we're putting more into R&D, though. So,

we are putting some more expense uh into

R&D, which is reasonable. Uh we think

this Q4 limited beta, you know, people

will tell us right away if if they like

this. Like, you'll tell us. So, if

you're, you know, course member, you'll

be like, "Oh, yeah, this is awesome."

You know, or not. And and if it's not,

we'll try to make it better and we think

it's awesome. And uh and then if we can

make it better and it works, great. we

think there's huge potential profit in

and we'll just throw all the money back

into real estate. Well, 90% of it. Uh

that's the goal, right? I maybe

shouldn't use percentages because

obviously these numbers can change. This

is just sort of like a live like non

there's no like script here. I'm just

like verbally trying to share

information uh with with investors. Uh

we also um we we had a really expensive

uh like

I think the easiest way to just put this

is is we had someone in house uh that

did legal work that was very expensive.

We don't need them. We we just don't

have the need for them. So we are saving

a crapload of money um by not having

that. Uh, so and and we'll be

contracting or or working, you know,

with with interns because we we just

always want to value sort of like the

value we're getting for what we're

paying. And I think we were paying way

too much. Uh, so this is good. Like this

is always where Yeah. As the CEO, my job

is to go through and make sure like

we're not wasting money and we're

cutting expenses everywhere we can. Like

this sounds crazy, but I'm like, "All

right, House Hack is not getting enough

benefits from this MX Platinum. we are

going to be downgrading this before our

renewal. These fees are too much. And so

like but I think that's really important

for a business to stay in business is

you look at all of the little expenses.

But then I mean this Wall Street Journal

article is is like right on. It's

basically this idea that there's there's

money to be made on real estate and this

is what house does but there's no

shortage of money to be made and that's

why we think this this AI is really

exciting. So, uh, you know, somebody in

the chat's here saying, "Any update on

how Sahil funding?" So, you know, as far

as as far as lending, all right, this is

this is kind of like way down down the

road kind of stuff in my opinion. Uh, so

I'd say Q4 buy homes and beta AI, Q1

wide release AI.

um 2026

maybe we'll look into

uh some you know broker dealer and uh

MLO heliloc lending ideas but uh these

will be delayed until AI uh proves

itself because if AI takes off I'm not

touching uh these ideas because like why

would I like we're just going to throw

more money at AI rather than do that,

right? Like this is this is like down

the road kind of stuff. Doesn't matter

right now. It's like buy homes and beta

the AI. Okay, a very very simple

business. Okay, we buy homes with our

AI. We have bought homes with our AI. We

think other people will benefit from it.

So, we want to potentially license it.

We'll see how it goes. Uh and again, you

know, potentially

uh TBD,

uh September 17th close, uh fund raise,

TBD, TBD, TBD, maybe, I don't know. Uh

again, if you, you know, want to invest

or you want to increase your investment

into Houseack, a lot of people have been

emailing us for that. Remember, you

could just go to house hack.com and you

could click invest.

Uh and then if you're an accredited

investor, great. Just hit yes. If you

have questions, you can email us at

irir@houseockack.com.

If you're not accredited, hit no and

then you can invest. Uh you could read

the offering circular, you know,

whatever. You could read about what we

do. These are actual properties, by the

way. Like these are actual house hack

renovations. That is an actual building

house hack owns. Like the the thing

that's unique about us is we're like in

my opinion of course like like I don't

see us as some like flash in the pan

like AI startup or some you know BS or

whatever that's here today gone

tomorrow. Like we actually have about

$75 million in assets and and very

little bond debt with no bank debt. Like

this is great. So like we have such

solid foundations in my opinion. Like

you'd really have to try to screw it up,

you know? So, uh, yeah. What's how house

extra cash doing right now? Money

markets right now, baby. Or short-term

treasuries like 3 to six months, right?

But that's because we're just we're

getting ready to go shopping in Q4. I

don't like buying in Q1 and Q2. I I

don't want to be part of the spring

rush. So, I I don't do that, right? Uh

so

uh Kevin I think you said this but

starting the testing of the software

with course members, real estate

investors and agents to get early

feedback to build from it. That pool can

give valuable feedback. That's exactly

what we're going to do. Totally right.

Uh

so yeah, we've already spent a lot like

building out our AI. So that's why like

some people are like, "Oh, is is that

enough that you're spending on AI?" We

don't need to spend more than this. We

don't need to spend more than this. It's

like we already have a really good AI

product. We don't because we're not

building something off the ground. Uh so

it's it's actually pretty impressive I

think what we're what we're able to do.

Uh do you only do single family? Oh, I

mean I I just showed you we had this is

a this is an apartment beautiful

apartment building. We've got a few

beautiful apartment buildings but uh

this winter we will only be buying

single families. Yeah. Uh somebody says

jet fuel expenses. Nope. Houseach has

paid $0 for any aircraft expenses and

that remains to be true and will remain

to be true for as long as I can tell. Uh

so let's see here. Okay, so I answered

that. I like your plans, Kev. So glad to

be a first round investor. Oh, thank you

for saying that. Is this the house hack

master plan? Well, I mean like this is

the same plan that we've had from day

one, right? Like if you go back to 2022,

it was buy houses and by the way, we've

got some cool AI. Maybe one day we'll

license it in the future. Like we've

literally done everything we said we

would do

I is is what we have done. Like in 22 we

promised we're going to go buy homes in

Q3, Q4 of 2023. It's exactly what we

did. We said we had in-house AI. Maybe

we'll license the future. It's exactly

what we're doing right now. Uh, you

know, last year we're like, hey, we'll

go buy again Q3, Q4 of 2025. That's

exactly what we're doing. Uh, we said we

would buy a bunch of homes, stabilize

them, and that's exactly what we've

done. The tenants are current. Uh,

tenants are timely. Like, we have a

stable portfolio. Uh, we're I think

we're in an awesome spot. Like, we don't

need to blow uh money, and that's not

what we're going to do. Would Houseach

use Robin Hood's token feature before

going public?

No. Uh, I mean I I don't have

anticipations of that right now. Uh, it

I Yeah, I I I don't I mean I don't know.

I like how am I supposed to answer that

right now? We're we're not in a place to

even think about that. Uh, so

section 8's great, you know, as long as

the tenant the underlying tenant uh uh

is is is properly qualified. Does

Houseack invest in commercial real

estate? Well, I I want to say no, but

technically we do rent to one restaurant

uh because it's built into our apartment

building. Uh but beyond that, no. So,

yeah. Yeah, good question though. Good

question. So,

yeah, there you go. So, I I appreciate

you listening in on uh on a little house

hack update here. Again, if you ever

have questions, I think the one of the

best ways to ask questions, frankly, is

just come to these live streams that we

do uh on sort of a daily basis, you

know, pretty much live almost every

single day. You're always welcome to ask

questions. It's not like you have to pay

to ask a question, right? So, just ask

questions. Usually, I love answering the

house questions. Uh so

um

you know then um if you want to

email us you could also do that. It's IR

like investor relations at houseack.com.

So we think it's pretty straightforward.

Uh as always though you know like you

have to say it but it's obvious every

investment has risk. You know read the

offering circular or the ppm depending

on if you're accredited or nonacredited.

And uh there you go. There you have 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 Praath there, financial analyst

and YouTuber. Meet Kevin. Always great

to get your take.