My Real Estate Startup vs Grant Cardone | HouseHack

question here is how is house hack

different from Grant Cardone all right

massively different first of all Grant

cardone's business is coward on capital

is a syndication and syndications what

they do is they're really a partnership

so you identify a property General

generally and there have been some

allegations of this and I've seen some

numbers around this but I don't want to

confirm that this is the case but there

have been some ideas that uh maybe uh

Cardone will buy a let's say 20 million

dollar apartment building and then sell

it to his own company for 23 million

dollars and sort of pocket the

difference and you can kind of scale

that numbers I don't know uh now it's

that's okay to do if you're improving

the condition of the property but if

you're really doing nothing other than

putting your brand on it

probably not the best argument for

suggesting the property's value just

increased because you just put your name

on it but anyway that aside those are

just some allegations we don't know if

those are those are absolutely true if

that happens all the time we don't know

but the point is let's say then you have

this 23 million dollar building and then

you buy it as a partnership you buy it

as a partnership then you get

distributions so you get depreciation

you have to deal with the tax uh that

you have to get your K1 and your

distribution letter you have to deal

with uh the fact that you're a partner

essentially so you it complicates your

taxes a little bit but the big thing

that you want to remember with a

syndication is you're usually a partner

a limited partner and you're looking at

uh probably somewhere between uh well

the traditional institutional model is

what's called

um a 2 and 20. so like you'll see like

two percent asset under management fee

and then you'll see a 20 take from the

manager so that could be like the

Cardone in this example on any kind of

appreciation that occurs on the property

or extra cash flow above a certain point

in the case of Cardone I believe the

fees are about one percent for the asset

but he takes somewhere between 30 to 35

percent of the appreciation and the cash

flow above a certain point the fees are

very very high in my opinion for the

personal investor and what this really

is is it's a way to invest in real

estate without you having to do anything

right that's really what that is that's

not necessarily bad I personally think

syndications are extremely expensive but

hey maybe if you could find somebody who

can promise you a really good deal or or

whatever you actually think it's a good

deal fantastic

house hack is not you investing in real

estate is completely different and so

I'm not even competing in the

syndication space so in my opinion these

are so different it's not like one

versus the other even though you're

asking that question I think that's

because people are like oh you both

promote stuff on YouTube like okay

that's fine uh but but the similarities

really stop there because househack my

real estate startup uh is a company that

really wants to create uh and we've got

a path for this and all the details on

our slide deck and everything will be

coming out for our reg a fundraise

probably between April to June I'm

hoping for May maybe even April if we

can get it out we're already raising

money from accredited investors to learn

more at househack.com non-accredited

coming up but uh really the goal is how

can we make house hack the Vanguard of

real estate in other words rather than

making money off of people's fees we're

trying to eliminate or map massively

reduce fees that exist in real estate

and there are ways we can do that by

arbitraging uh basically fixer-uppers

what I call Wedge deals

and actually adding value to them

stabilizing them and then figuring out

from there how can we take portfolios

whether they're multi-family or single

family and give people an opportunity to

invest in them at basically potentially

low to no fees that's essentially

becoming the Vanguard of real estate or

the Robin Hood if you will of real

estate right commission free trading

right that kind of idea so house hack is

a company that is you're investing in so

you're investing in stock in a company

it's not it's not ownership in real

estate it's ownership in a company and

the company is creating a platform for

making investing in real estate low fee

and extremely accessible that's what

househack is now house hack will own

real estate bare minimum we think we

would be like in Invitation Homes where

we could just buy real estate and huddle

it that was sort of the original uh idea

as like the bare minimum that's that's

already easy enough in my opinion knock

on wood hashtag no guarantees but but we

think we can actually take that idea and

expand it even more and instead of being

a company that potentially trades for

two times book we think we could be a

company that trades for you know 10 20

times book depending on what kind of

platform we could create uh so we're

really excited about that but but as you

can see from my definition we're not a

syndication it's it's a company it's a

totally separate it's totally different

it's more it's much more similar to if

Vanguard were public you investing in

Vanguard than it is you investing in a

partnership on some real estate building

where a promoter puts their name on it

and takes you know a 30 fee or whatever

uh very very different from that so

hopefully that gives a little bit of

clarity because uh while I'm not

providing all the details yet uh because

we're working those through to make sure

we have a very very clear set of

messaging for you and and not only uh uh

SEC

reviewed but attorney approved marketing

and pamphlets and and you know

projections we haven't released

projections before and and this time we

will so all of the people who are

accredited who have been investing uh

we've been very clear like there are no

projections we we don't we don't know

we're so early we don't know now those

people who've been investing early they

get a benefit they've been getting

basically free call options not really

call options you could read the PPM to

understand what they are but basically

like warrants which are like call

options on a company for free for

investing earlier uh and we're raising

money at a one-to-one valuation so

there's there's you know in my opinion

you're at a position where there's zero

dilution day one with the exception of

sort of minor little fees or whatever uh

for for filing fees or whatever uh but

uh well the beauty about that is my

opinion is look you know the basic idea

is that if a company sells for one times

book there's really no value that you're

even putting on the company you're just

basically raising cash which is

phenomenal it's a great way to get in as

an investor and we're going to maintain

that one-to-one ratio for uh for for the

reg a there's no company dilution like

usually people put in you know 10 bucks

into a company that represents nine

dollars for the company and the idea and

one dollar for the actual cash the

company gets that's called dilution

right that's like you raise 20 million

dollars at a 200 million dollar

valuation you know ninety percent of

that just went to sort of brand and the

idea in this case 100 goes to cash with

house hack which we think is wonderful

uh and and it's the biggest thank you

that we could give to our the people who

watch us on YouTube so for us us we look

at not only the valuation we were

raising at but also with the future what

the future could be is is really

phenomenal I mean again no guarantees

but a one-to-one valuation worst case

scenario should have we think at least

double to be like a worst case scenario

with sort of like Invitation Homes or

whatever where you buy and huddle real

estate because they sell for you know

depending on where the market is

somewhere around two times a book but if

you actually create a a platform a

technology you create sort of that

Vanguard of real estate it can be

substantially higher than that what that

is we don't know because it hasn't been

done before you know and then and then

people are like oh how is this different

from from like Zillow or open door I

mean in my opinion massively different

as well I'll just very briefly explain

that we're not flipping homes on the

market we're not reselling homes with

agents we're not you know we're buying

homes with agents and wholesalers anyone

who wants to sell us send us deals is

fine the United States has become very

very small by the way after flying

around as much as we have been we're

going to Florida this week to explore

Florida real estate we're going to have

a very Diversified portfolio of real

estate that we're going to use as sort

of the basis for the platform we're

creating but we're not trying to flip

homes uh in the way that Zillow or

opened or do where I mean just watch

some of my videos from househack where

we walk through Open Door listings and

you just have this complete

embarrassment of a property listing we

don't want to put properties on the

market we don't want to deal with that

we want to buy properties rent them out

stabilize them and then use that as a

basis for how can we create the Vanguard

of real estate now we have a path for

that obviously no guarantees but we are

creating something that hasn't been

created before so we're very excited

about that

yeah obviously there's there's risk with

any kind of uh investment but yeah I

want to make that clear because I think

the most common questions I get are when

can non-accredited investors invest and

we're thinking between April and uh June

hopefully April that's the goal but it

just depends on when the SEC review goes

through uh and uh and then by that point

we'll have uh we'll have a lot more

information as well but that gives you

at least some differences somebody here

asked what happened to the AI software

yeah so look in my opinion AI is like a

buzzword that that people use every

company should be using AI so we don't

develop the actual AI right that's what

Google does like we use Google as the

basis for our Ai and then we use

Google's basis it's kind of like using

the API from chat GPT which we could use

as well and using that as the basis for

building your own tools on that and so

we have that right for example we have a

deal finder we call it the wedge finder

which is built on the the AI that Google

has created and then we train their

models to create our own essentially AI

uh based on our training so think about

it kind of like you buy an Optimus robot

from Tesla uh and then you train it to

do exactly what you want you know maybe

you just want it to sit in your office

and kind of move its hand up and down I

don't know then it gets really good at

doing that like what whatever you train

the AI to do is is your thing so that's

what we do right and we actually think I

mean obviously every company should be

thinking about this but AI can be

fantastic for preventive profit Property

Management deal finding uh valuation I

don't think it's anywhere close to yet

on valuation but potentially could be

somewhat useful so there's a lot of work

and perfecting to do for AI but that'll

all happen over the next decade you know

that's not something that you have to

like pull out of your butt today and say

oh my God we got the best AI in the

world anybody who says that today is

like no no you're lying AI ain't that

great yet you can't do AI yet without

without real uh human involvement

anywhere near at this point uh in in my

opinion so I'm very excited about that

uh very very excited so uh but speaking

about uh dilution uh I will be posting

in full the boxable video today I'm just

gonna post the full interview uh and

maybe in the future I'll do sort of a

more cut up version of it but I'm just

gonna post the entire thing it's like an

hour and a half long but I want you to

pay a specific attention to though is

remember how we've talked about dilution

already in in this segment here

something to to consider is is the

valuation at boxable and then you have

to determine yourself if you think

that's worth it you know this is not me

trying to like compare to boxable I I

have nothing to do with boxable I'm not

invested in not boxable I'm not

affiliate a boxable I I was solely doing

some quick valuation math uh and off the

top of my head if I remember correctly

it was something like if you invested a

million dollars into boxable uh today

that would be worth roughly 330 dollars

of cash

so in other words you would be paying

999 777 in dilution which is basically

just brand value for boxable uh because

I was thinking about it I'm like well

what if I invested a million dollars

right now into boxable like how much

cash does that get me right and yeah

okay look straight up like to be blunt

in comparison it shows you if you put a

million dollars into house hack it

literally equals a million dollars of

cash right yes yes I will compare like I

will selflessly compare shamelessly

compare myself and say if you put a

million dollars in a house hack it

equals a million dollars of cash you pay

zero for my ideas or the brand or

whatever right

a little bit for like these or like a

little expenses obviously that have

already been incurred duh uh but but

there's no there's no like brand value

that is included in that whereas here a

million dollars in a boxable equals

330 of cash and that's because they're

trying they're raising money at like

over three billion dollars of value it's

like

whoa okay so you really have to believe

in the idea uh so so anyway that that's

sort of my thought uh my thesis so

anyway I'll post that video uh you know

later today uh you know maybe even this

morning I'll just post it so so stay

tuned for that and uh and you'll see how

do you make money on house hack yeah

fair question uh somebody writes I used

to work at boxable you're not too far

off

I won't add any commentary to that so

how do you make money on house time yeah

that's actually probably uh the thing

we're most excited about and I'm not

prepared to reveal that right now

because it would be somewhat

anti-competitive but uh we think there

are uh massive opportunities for the

next 20 years to milk massive amounts of

cash flow while at the same time

becoming the Vanguard of real estate now

even me saying that that sounds too good

to be true but let's just say

with the vision that we have I'm betting

my entire net worth on it everything I

have my car my house my plane uh my net

worth my stocks

everything I own I am betting uh on

househack because I will keep uh you

know throwing everything I have at house

hack because I believe in it so much I I

think the idea that we have at bare

minimum is is a phenomenal uh competitor

to invitationals that's like the bare

minimum in my baby that's the that's the

safety net that's like that's like oh

our Ambitions didn't work out we're

falling to the level of Social Security

right like I shouldn't say social

security I should say like Medicare

because it's like crap we went to

Poverty that's sort of the Bay Rental

but but with the big visions that I have

I think the investment that I'm making

going all in uh risking everything that

I have for for house hack is is because

I believe the idea we have will be a

multi-billion dollar idea so I'm I

couldn't be more excited I mean you

would let me put it this way let me put

it this way you'd have to be an idiot to

spend 13 million dollars on a plane

yourself and sign on that debt yourself

and pay for flights yourself for a

company that is I pay all of the flights

for house hack right now every dime of

flights is paid for by Kevin so I can

fly around and make sure we have the

best start for house hack you'd ever be

an idiot to do that unless of course you

thought that was going to become a

multi-billion dollar company in the

future so that's what I believe now

people say I'm crazy but then you know

we'll see uh yeah you can invest

internationally into house hack will

house hack come to North Korea

um you know Korea hack might be a couple

decades before we get there uh but uh we

were

we were joking uh about like well

actually not really joking but we were

kind of like how can we invest in Canada

now that Canada has um

sort of banned foreign investors we're

kind of like is it time for househack.a

anyway sorry bad joke anyway uh so that

gives you a little bit of an update I

appreciate the question I think it's a

good question so uh

uh there we go

somebody says paid for by Kevin's Media

Company not actually Kevin I mean that's

really one nearly one in the same right

I mean if you think about it it's my

media business right now is tax is a

pass-through entity so the money that I

make from uh you know what I think are

really good programs by the way like

it's not like like the stuff in the

programs the stuff that I actually do

right my stocks and psychology money

group am I real estate course but do it

yourself Property Management courses

those courses are things that I actually

do and actually use to make money like

that's that's the that's the basis of

house hack right like you want to know

the strategies house going to employ

zero to million of course it's like a

perfect way to see that but but yeah

look the money that I make

goes into right now an S corporate

structure in the future micro C Corp

Media stuff but it's basically a

pass-through entity so I uh received

that money and then I pay expenses right

uh but uh you know what I don't know how

much that really matters I mean you

could make the argument uh that uh the

you know yeah uh the media business

covers it uh you know which which we

probably should just make that argument

I could just clarify that now that yeah

the media business pays that uh which

again is the S Corp but that just means

I get less pass-through money from my

media business right so I don't know how

much of a difference that really makes

uh whether whether it's mediabiz or Kev

because again like I am the media Biz

right uh so like pretty much everything

I do is is the media I don't I don't

know if that matters so uh you know it's

yeah I mean of course obviously it's a

write-off for the media Biz right

because I make Instagram content or

YouTube content yeah I mean obviously

there's a there's the argument that hey

well you know the media business can

operate because I'm able to be back in

the studio regularly right I think

there's a there's a very clear argument

there that the media business is only

able to keep going because I'm able to

fly around the way we are so but I don't

know that that really matters that much

uh anyway so uh but hey look I I'm all

for transparency so we'll just make it

very clear

uh house hack does not pay plane what we

call it's the my S Corp is called the

pathrath organization doing business as

me Kevin that pays for the plane takes

the tax write-off for doing so creates

brand value or whatever you want to call

it advertising value for for the channel

uh or for Instagram or whatever and

maybe the programs on building your

wealth and enables me to make this

content and then whatever I get left

over is is what I have left over now

remember I personally signed on the debt

and you could look this up uh you know

like my wife and my names are on it so

we're on the hook for it but anyway I

always want to be very clear about that

uh yeah so we've been audited already uh

that's very normal when you're trying to

uh file for with the SEC you have to

have audited financials so DB McKinnon

already did our first audit uh but the

first audit only goes through I think

it's September 30th so we are completing

our next audit within the next week and

that's what we're going to send to the

SEC so that way the SEC gets a full

audit I'm not sure if it goes I think it

goes through the either the end of

January or the end of December but

either way yes obviously when you do a

reggae you have audited financials uh so

yes they will be audited by uh by a big

four auditing company

so uh all right let's move on thank you

for those questions very very good

questions very fair very reasonable I'll

always answer them