Critical Housing Market Warning | Stocks that could EXPLODE

New York, LA, Miami even, but then you

look at your second tier cities and

they're starting to come down. What do

you make of that widening gap?

>> Um, number two, we have a housing

shortage in America. Um, and it's

particularly severe in um large coastal

cities right now.

>> Yep. Um,

>> bingo. So, this Ernie guy in Bloomberg

just told us that coastal cities are

where you're seeing the pricing

pressures of real estate to the upside.

And in non-coastal cities, you're

actually seeing the downside of pricing.

Why is that? Give a very basic overview,

but I think it's an investment lesson

for the long term. You have to remember

when it comes to real estate. Real

estate exists to provide housing to

people. That's it. There are two forms

of housing you could have. You could

have housing that you own or you could

have housing that you rent. In order for

you to own housing, somebody must build

the housing. In order for you to rent

housing, because not everybody's going

to own, somebody has to provide that

rental, right? Like, somebody has to

make the investment into the property

and then choose to entrust you with it.

So, they're providing a service. And in

response to providing a service, they

expect to make money. So, this this idea

that like, oh, investors are bad or Wall

Street's taking over is mostly ludicrous

because Wall Street owns about 1% of

homes in America. The vast majority,

over 80% of homes are owned by small mom

and pops who either own their own home

or own their own home and maybe one

rental property. That's the vast

majority of American single family real

estate. But when it comes to real estate

valuations, yeah, you could really, and

we've talked about this before, but you

could really look at Austin, Texas. And

uh you know I want to I'll give you a

little bit of uh enlightenment on what

we did with with house hack in just a

moment but go to the Redfin data center

and pay attention to trends that you're

seeing and then try to understand why

are certain trends happening. So you go

to median sales price you can see

nationwide median sales prices are lower

than where they were in in the early

portion of the year which is normal. You

tend to have a slowdown in prices in Q3

Q4. So, the pros in sort of a noob verse

pro way, the pros know when it comes to

buying real estate, the best time to

usually buy real estate is in the third

or fourth quarter because that's when

you have high inventory that moves lower

and then people get anxious to get their

inventory off the shelf, so to speak.

They discount, they get depressed, they

don't want to, you know, wait until

spring and they sell at lower prices.

This happens every single year in every

market. Whereas at the beginning of the

year, you start with low inventory and

buyers get excited about buying before

the summer so they can move in the

summer and you have the opposite effect.

So I don't like buying in Q1. I like

buying in Q3 and four. But you know

that's something that you learn on this

channel. That's a new verse pro

strategy. But beyond that, you also have

to understand what happened in uh you

know a city like Austin, Texas was

Austin, Texas is very pro- uh like

America pro- build uh and and freedom,

right? With pro- freedom and America go

build, you could actually get excess

supply. So what ended up happening is in

2022 you had this crazy surge of people

escaping California or whatever postco

and they're getting into Texas buying up

the inventory and then it takes two more

years for new houses to actually be

built. And so this boom in prices

actually settles down pretty rapidly to

where what what ends up happening is

your median sales prices have been

roughly in decline. I mean, from peak,

median sales prices in Austin are down

over $100,000. Uh, we're down about 22%

from from peak pricing in Austin. That's

because we can build a lot. And so, what

we just heard on on Bloomberg is that

coastal cities are often where you're

seeing prices still going up as opposed

to areas that are not coastal where it's

easier to build. And there's a relation

between those two. Coastal cities are

usually going to be areas that have the

most stringent and hardest building

permit processes because you're in tight

land. You got low water tables and you

often have topography like earthquakes

that you have to deal with or or like

hillsides or mudslides that you have to

deal with coastal or in Florida you've

got to deal with hurricanes. It's

usually a lot harder. Florida a bit of

an exception because you can go inland

and it's so flat. It's usually a lot

harder to build. And this is what makes

certain parts of like Utah and certain

parts of California so expensive. Look,

for example, at San Diego. This is

almost the opposite of what you saw in

Texas where home prices are actually at

nearly their highest level and they've

been growing year-over-year. If you look

right now year-over-year, you were at a

higher price than every single year

previously on the Red Fin Data Center,

which is the opposite of what you're

seeing at Austin, Texas. So, usually

when people think about real estate,

they think, "Oh, I want to own real

estate where it's easy to build, where I

like," it's the same thing of an HOA,

right? I don't want an HOA. I don't want

a rigid building department. I don't

want, you know, communist uh local

government officials up in my business.

I just want to be left alone. America,

freedom, all that stuff is I

agree. I hate HOAs. I hate big

government. I hate permits. I hate

complicated building and zoning laws. As

a one property owner, I hate all that

stuff. If you just own your own home,

man, I don't want the city showing up to

my home. I put a I put an electric uh EV

charging station on my curb because I

don't have a driveway. And I put it in

licensed electrician, everything. And it

was great for the three months until the

city came over. And they're like, "What

the hell is this?" And I'm like, "I need

to charge my car." Like, "You can't do

this." And I'm like, "This is America."

And they're like, "We're going to yellow

tag your house, sir, if you don't remove

this right now." And I'm like, "You

suck." You know, like I hate that. Like,

I want to put cameras in my house. The

HOA is like, "You have too many cameras.

Like, suck my wiener." Okay. As an

American, I don't want this bull crap in

my life. I don't want HOAs. I don't want

big government. I don't want all that.

But that is different from being an

investor. As an investor with rental

property, I love all of it.

I'd love the HOA babysitting all of the

other people around my rental

properties, making them keep their

properties nicer and babysitting the

tenants, making them keep their yard

clean or landscaping clean or the

property, you know, the neighbors

keeping their properties painted and the

and the tenants keeping trash away or

whatever. The HOA is like a babysitter.

the local government with really extreme

rules and rags makes it harder for other

people to build properties where I own

which means I make more money. So as you

you have to separate like as an American

and yourself, yes, we want freedom, no

HOA, no oversight, none of the bull

crap. As an investor, you have to flip

your mindset. You want low property

taxes. You want high regulation. You

want hard to build. And you want HOAs,

low property taxes, HOAs, hard to build,

a lot of government oversight. You want

all of that. Where can you get stuff

like that? Coastal cities. Coastal

cities give you all of that. And that's

why these areas keep going up in value.

And that's exactly what House Hack loves

investing in because we go into those

areas. I mean, even New York is another

example. We we almost bought a bunch in

Manhattan. Uh there actually uh

Brooklyn. We were uh we were shopping

quite a bit in Brooklyn, but uh it's

another area just like San Diego that's

that's been booming the opposite of of

Texas. Uh and what I've just described

is part of the reason for that. Now,

that is a that is a noob versus pro

mindset. A a noob conflates what is good

for me is good for my investment

properties. A pro says what is

uh bad for me is actually good for my

investment properties. Right? That once

you make that realization, you recognize

where the true value in real estate is.

that the true value in real estate comes

from owning assets in the longer term as

rates come down getting leveraged

appreciation where you can't get margin

called and you sit around and do nothing

that is

delicious and that is what houseack can

do see house we buy uh properties we do

a lot of work we renovate them we take

properties that are vacant or fixer

uppers you can't live in them whatever

They're nasty. I'll actually show you a

property we just bought. Give me a

second. I'll pull it up here. I'll pull

up the uh Matterport for it. Uh and

you'll just see how nasty some of these

properties are. And you could see like

we're not taking homes away from people.

We're providing homes for people to live

in. But I'll show you this this in just

a moment. But what I want you to think

of is as you as use put some numbers uh

in your own life for this uh and and

then think about how you could make

these numbers applicable to yourself.

Okay. So what I'm going to do is uh

there we go. What I'm going to do is

give you house hack numbers. Houseack

has roughly $und00 million in in you

know well let's just we're rounding up a

little bit. We're probably closer to

like 7578 now, depending on what we fund

raise and the buy as we do in the wedge

deals and stuff. But let's say by the

time by this time next year, we're

somewhere about $100 million, let's just

say. And let's say we haven't done any

kind of refinancing or anything yet.

Okay, great. So, you take a $100 million

of real estate, something like this, you

know, totally trashed, right? So, you

take a $100 million of real estate in

cash or whatever, and then what you do

is when rates come down, you refinance

it. if you can refinance it. Now, this

is crazy. There are lenders that'll let

you refinance with just 20% down. I want

you to think about this for your own

purposes, with your own numbers, but the

numbers I'm going to use are house hack

numbers. Okay? If we have $100 million

at the end of next year, let's say, and

then we go refinance with just 20% down

because we have no bank debt. Okay? So,

we could use all of that $100 million as

equity. Well, if our equity position is

100 mil divided by 08, it means uh or

sorry, 100 represents 20%. There we go.

It means we could leverage up to $500

million or a half a billion dollars of

real estate. That means we will have the

ability to buy $400 million more of

homes.

Okay, $400 million more of homes on

wedge deals that we think we can get 20%

upside in. times 20%. Would give me an

additional $80 million of equity upside

because we buy fixers for below market

value and they're worth more than our

total input price and our fixup costs.

They're worth more than that ideally by

roughly 20%. That's the goal, right? So

if we do that, we'd actually be at a

place with $580 million of assets and

$400 million of bank debt in the future.

you know, call it in two or three years

now to show you the le the tenants are

paying the rent or the the mortgage

right now.

What is leveraged appreciation look

like? Well, let's say real estate

appreciates 3% a year on average over

the long term. There are going to be ups

and downs, right? There going to be ups

and downs. There are always ups and

downs. But let's just say real estate

appreciates on average at 3%. Okay, 580

times 3%.

It is $17.4

million

in leverage depreciation house I could

earn doing nothing tax-free.

Think about that for a moment. So we buy

the more of these funky crap holes we

buy and we provide value in by making

them livable and renting out, the more

assets we have that in the future we

could leverage at cheaper rates when

rates plummet. And then when we leverage

at cheaper rates, when the rates plummet

and over the long term you have leverage

depreciation where there's no ability to

get margin called and your tenants are

paying the rent for you or the or the

loan for you, then what's actually

happening is over the long term with 3%

average appreciation, we can grow our

our the basically the net worth of the

company by $17.4 million per year doing

nothing.

That's insane.

Uh 17.4 on your on your equity is

actually closer to 9.6%

of a return uh on on the actual equity

because you know the the rest is debt in

that case. Right now again house doesn't

have any bank debt. But I'm just saying

like this is what gets me excited is the

more of these fixer uppers we can get

control of now the more we have the

ability to do that in the future and

take advantage of that leverage

depreciation. This is how noobs versus

pros look at real estate. And I'm I'm

sharing this with you because I feel

like my goal is to provide value and

perspective on this channel. Uh now,

obviously, you know, if you don't want

to go through all that stuff, you could

also invest in house hack yourself if

you wanted to. We pay a 5% yield uh

through bond conversion and then you get

stock where, you know, if only if the

value of the stock is higher, you get

stock and then you get all the upside in

the stock. You can read more and learn

more about that at house hack.com. Read

the solicitation. Read the private

placement memorandum. It is open to

nonacredited investors. So you do not

have to be an accredited investor. We

buy, fix, build, and manage. You get

100% of the upside and you get 5% per

year and that's paid to you on a monthly

basis. That doesn't like nothing on the

website even talks about that house hack

AI that we're building. That's a totally

different thing. Like that's part of

house hack. you still get that as part

of House Act, but we don't even pitch

that on the website because it's just

sort of like it's something we're

working on in the background. But we

have Blackwell chips running. So, we

could hopefully release our software uh

you know licensing play in the fourth

quarter. I mean, actually like

monetizing it probably more like Q1, Q2,

but we'll do our beta in Q4. So, we're

really excited about that. But I mean

like about this whole like why is why is

why are parts of the country collapsing

in real estate? I shouldn't say

collapsing, but falling and other parts

not. Well, it's a simple game of new

verse pro and when you understand the

game, you as well can make the dollar.

[Laughter]

So hopefully that adds some good

insights. Uh again, go to uh

houseack.com and uh learn more there.

Remember, this is not a solicitation. Uh

let me take a look at Kevin needs bird

dogging to find deals. We There's so

many deals. There's no shortage of

deals.

No shortage of deals. Uh that's that's

the nice thing there. There there

there's a uh when it comes to buying

capital assets, usually it's not a

matter of finding deals. That's the hard

part. It's having access to more

capital. That's your only restraint.

Like if somebody bestowed on us $10

billion and they're like, "Kevin, go buy

real estate." I'm like, "All right, I

guess I got to expand where we're buying

real estate, you know?" So that's pretty

incredible. Uh so buying them

undervalued is smart. Yeah. Exactly.

Yeah. Yeah. And we have we have no bank

debt. Nothing is a guarantee. Of course.

Uh do you buy homes undervalued in these

higher valued areas? Yes. That well

that's the goal. We try to buy in what

we call the wedge. So if I could buy a

home that's a fixer upper like like this

one, you know, that I was just showing

you on screen. If I could buy something

like this for uh you know

I don't know the I can't remember the

exact numbers of this one right now, but

I'll give you an example. Let's just say

you go, we've done this before with

house. You go into a home that's worth

uh $450,000 and you put $50,000 into it

and so you're into it for $500,000. You

know, it's got carpet in the bathroom.

It's gross. Uh and it's in a $600,000

neighborhood. Well, you got a discount,

right? You got the place for a discount,

which is great. You know, now you get

100K upside on that deal, as an example.

So, our goal is 20% of a discount in

terms of what we're buying them for

after the fixup cost. So, it's really

more like a 30 something% chance or

discount.

Uh, so

let's see here.

Double pizza says, "I listed my home

today. What's your address?

Why are you selling it?"

So, what do you think about the strategy

with lowcar cars?

You going to rent out cars? The problem

is cars unlike real estate are

depreciating asset, right?

Uh so why not why not build new? Well,

we do that as well. So we're uh we're

actually in the middle of building uh

more units. Uh we are we're almost done

building our first two and we're about

to start building eight more. We're

doing a spec development and we're

probably going to do another two uh

small homes on top of that. So, we've

got we've got a lot uh of um

you know, stuff going on. I mean, the

way to look at house hack is we buy good

deals. That's the core of the business.

We also have a development side and then

we have the AI side. I look at the

development play and the a sides as as

bonus because I think the what house

hack is selling for right now is

basically just uh you know buy and hold

valuation. That's my opinion. I'm

obviously biased on the CEO and and like

you know you have to have faith in in

what we're doing, right? That's a big

thing too. I mean like

uh

it's when when you make a private

private investment, you have to have a

lot of faith in in uh in the systems

that uh the people who are running the

company have.

So let's see here. Somebody says

Franklin, Texas. Well, what's the

address? How am I supposed to look it

up?

Uh somebody Oh, fourunit properties. I

just sold forplex four. Well, units are

tougher, right? Because units are are

like you're managing children. You have

to remember that. Now, we own units. We

own apartment buildings. Single families

are easy. Multifamily is dealing with

children. Uh you're dealing with

unsophisticated tenants and

pure

That doesn't mean you can't make money

doing it. You get compensated more

because it's such a pain in the ass. But

when you buy a single family, you know,

like this, this isn't that bad. Once

this place gets fixed up, man, dude,

there's just dollars here to be made. I

mean, again, look look at this. This is

disgusting.

People like I I always love the the the

uneducated comment that always ends up

inevitably coming through where

somebody's like, "H, you're taking away

a home from somebody to live in." Like,

"No, we're not, dude. Nobody's living in

this." Uh, and we're at we actually

might build an accessory dwelling unit

back here. So, a small home. And then

that way you could kind of divide the

backyard. This house still gets a nice

backyard and then they get a little

yard, too. So, then you actually create

more housing.

Uh, and it increases the ROI for us. So,

I I love real estate, guy. I'm sorry.

Like, I get giddy about this. Uh, I

actually I went through a house the

other day and I picked up this Glade

plugin that they that they had or it was

like a Glade candle or whatever. And I'm

like, I smell the I smell the

glade p candle or whatever. And I'm

like,

this is what I love when they try to

cover it up with the glade candle. Like

I This is my first day in real estate.

It just it it brings back so many

memories. I I just get serious joy out

of real estate. Uh it is it's my bread

and butter and will be forever and I

will always uh give you pro insights on

this channel when it comes to real

estate. So if you want to know the real

scoop of what's going on, you come here,

like and subscribe.

>> 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.