WARNING: The Real Estate Collapse is BANKRUPTING OpenDoor.

holy crap when you see the home flippers

get burned you know the peak of the real

estate cycle is behind us in this video

we've got to talk about massive breaking

news about Open Door and how this

affects the real estate cycle remember

folks when I got into the business as a

real estate investor and realtor which

I've been now for over 10 years I got

started back in 2010 2011. I first

learned about the real estate cycle and

being able to identify oh wow this feels

like we're near the bottom of the market

that was back in 2011. it felt like the

worst time to get started in real estate

but it ended up being the best well let

me tell you folks the beginning of 2022

was probably and will probably in

hindsight proved to have been the best

time to sell and not get into real

estate instead now is the time to sit on

the sidelines and wait and prepare now

let's get into some of the craziness

that's happening just note I'm also

becoming a license since financial

advisor though I can't give you

Financial advice I've got a large real

estate startup called House hack and I

sell a course on going from zero to

millionaire in real estate it's linked

down below there's a coupon that expires

at the end of the month you can even

learn about property management being a

real estate agent you name it some

incredible content down there okay folks

I've been warning about a real estate

collapse since January and so I

personally sold 85 of my properties to

prepare to buy the dip and there's

something you need to know about home

flipping which is what Open Door does

it's hard every single day you have a

vacant property you just take out your

wallet you take hundreds of dollars and

throw them up in the air and you hope to

get more money back when you actually

Venda end up going to sell the property

but that only works when the market

folks is doing this when the Market's

going up it doesn't really matter how

long your freaking flapping flip takes

in fact I had a property in Santa

Barbara that I waited two years for

Hermits for on a remodel that I should

have never gotten in I bought the place

for like nine hundred seventy thousand

dollars I sold it for about two hundred

thousand dollars more and I did nothing

to it and that was in an appreciating

Market I did that because I didn't have

to do anything but also it took forever

to get permits again that works in an

appreciating market now imagine the

inverse though imagine the Market's

falling and you're waiting for permits

and you're like oh my gosh I'm gonna go

bankrupt here right like every single

day not only is it costing you money for

insurance and property taxes and Loans

to hold the property but the Market's

now falling out from under you then you

really risk bankruptcy so personally I'm

a low risk kind of person I think flips

are the worst thing in the world that

you could consider doing going into a

down Market in an up Market they're

still risky but at least you have some

wind at your back so

I want you to think about open door

because open door just reported

something well not directly open door

but a data analytics firm reported

something that's kind of scary for uh

good old uh well open door and it kind

of reminds us of what happened to Zillow

so Zillow in 2021 ended up shutting down

their home flipping business now they

fortunately for them did so after losing

nearly a billion dollars in November of

2021 which was roughly the peak of the

stock market and before the peak of the

real estate market they got out and they

were able to sell their portfolio now

open door decided to stay in the

business they even partnered with Zillow

to get leads well unfortunately Open

Door is just straight up either stupid

or they just don't pay attention to the

macro Market which gave us so much

writing on the wall that the real estate

market was about to get screwed and so

what did they do instead of actually

buying less Homes at the beginning of

the year when I started screaming this

is about to collapse like here are the

indicators like it's getting started get

the F out don't buy right now while I'm

saying that on the YouTube channel what

are they doing they're buying and they

even give an explanation as to why they

were buying but first some of the data

according to yipit data via Bloomberg

Open Door is suffering bad so much so

that in August they lost money on 42

percent of the homes they were selling

and it gets worse when you zoom in in

Los Angeles open door lost 55 percent

of uh well lost money on 55 of their

sales that means on more than half of

the homes they sold they lost money in

Phoenix they lost money on 76 of homes

they sold that means if you go on Zillow

right now and you see an open door for

sale sign there is a three out of four

chance in Phoenix Arizona that they lost

money

both Los Angeles and Phoenix and the

nation overall of course had substantial

appreciation over the last 10 years but

that doesn't mean you buy in January to

April at the top of the market but Open

Door had an excuse for this they said

well we didn't want to cancel contracts

on our customers for a brand choice

because we wanted to make sure people

didn't feel like we were you know making

them an offer and then not following

through with it um well you have that

right when you're a buyer okay but

anyway

Open Door ended up doing some stupid

stuff according to Bloomberg open door

and then this particular uh anecdote

here this person whose name is Troy

Ready it's one heck of a last name okay

ready ready for what Troy the crash uh

ready to buy those real estate courses

down below ready to join house Sac I

don't know anyway Troy Ready apparently

says he almost fell out of his chair

when Open Door offered him 1.4 million

dollars and closed the deal at the end

of March Open Door Lord then put the

house back on the market two weeks later

asking just under 1.6 million dollars

but then cut the price every two weeks

before selling the property for 1.3

million dollars in August that looks

like a hundred thousand dollar loss but

with all the fees it's probably more

like a 2 to 250 000 loss this is pretty

ugly and it wouldn't surprise me if Open

Door ends up being one of those

companies that just has to end up trying

to raise money on the open market uh or

issue more debt it's a company that just

ain't that good of a deal to be holding

on to in the midst of a potential real

estate catastrophe now I'll show you

exactly why but first this is their

stock okay even back in January this

stock had already fallen to about ten

dollars from its peak of 25

posts back era in November which was

Euphoria error era but even if you had

shorted this back in January you would

have been up over 6 50 percent on your

money just shorting open door and

honestly there's a good chance this is

going to get worse especially as the

real estate market continues to

deteriorate and the reason I say that

has to do with actual fundamentals take

a look at this folks this is the open

door income statement it tells you how

much money they're bringing in and how

much money is going out so using the

data from May uh June and April so April

May June which still had contracts deals

that were closing from the peak of the

market okay so these numbers you see

here are representative of the peak of

the market profits coming in from

escrows closing escrows that occurred

maybe in February and March and April

closing in this quarter here the best

and Peak amount of income to expenses

this company had looked something like

this gross profit 486 million dollars

total operating expenses

454 million dollars

interest expense 89 million dollars

loss net loss 54 million dollars so

basically at the peak of the real estate

market

they succeeded by losing 54 million

dollars okay now now the Market's

turning and this is their balance sheet

this tells us how much money they

actually have

they have 2.2 billion dollars in cash

which I expect is absolutely going to

get decimated by Massive losses if this

company and I can't guarantee this okay

but if this company loses 500 million

dollars in this next quarter here then

they will probably be able to survive

for about four quarters or about a year

but this real estate crisis is going to

be over for a year they're gonna be

losing lots of money so everything about

Open Door survival is going to come down

to how much money they lose

now you might say oh but they have this

real estate inventory here of 6.6

billion dollars sure but if that's all

upside down it does you no good why

doesn't you do you no good because if

you add together their debt you're going

to add together the current portion of

their long-term debt which is 3.3

billion dollars plus their long-term

debt which is about 3.2 billion dollars

this works out to about 6.5 billion

dollars in debt long-term and short-term

debt for assets for Real Estate that's

worth about 6.6 last quarter well if

that gets a haircut to the tune of 20

now all of a sudden you're looking at

maybe having assets worth 5.4 billion

dollars and uh what about the banks uh

you know maybe taking a haircut on their

loans yeah right nope they want their

full 6.5 billion dollars so in other

words now not only are you going to get

burned on a month-over-month basis in

operating negative cash flows but your

dad is absolutely absolutely gonna eat

you up now look I can't Advocate sitting

here and saying oh you should you know

short a stock or or whatever I I don't

know if this stock is going to go to the

moon tomorrow or it's gonna drop like a

rock I'm not here to predict that

because the short-term Market is just

insane but what I will tell you is this

is a horrible business to be in in or at

or near the top of the real estate cycle

now some folks are like wait a minute

Kevin aren't you starting a real estate

company that can take deals from

companies like open door and how does

that make you different yes I am but the

most important thing is that house hack

is planning to bottom feed and that's

why we're sitting on cash doing nothing

with totally minimal expenses until it's

time to buy so first of all we're

different because we're not idiots

buying at the top of the market I've

been screaming since January don't buy

sell and I rarely say sell in fact I

think most individuals should know ever

sell I sold because I'm starting a

startup and I needed capital for that so

I broke the piggy bank of my real estate

to have capital for my startup but we're

also not flippers we're the Buy and Hold

type it's not like we're trying to day

trade real estate here where you have to

suffer construction woes for three

months and holding costs and escrow

dramas real estate is hard it's a

headache it's a people business and if

you can't handle working with people and

you can't handle the drama of

understanding what's going on in the

market and real estate you're going to

get burned now you can learn everything

that I know about how to buy good deals

how to actually insulate Yourself by

buying wedge deals and make sure that

you have the greatest chance of success

in building your wealth but also

becoming a millionaire by checking out

the zero to millionaire real estate

course linked down below take a look at

that use the coupon code before

September 30th and folks we'll see you

in the next video if you're an

accredited investor and you're

interested in investing in house hack

which will be a long-term rental company

who be be able to buy these flips for

better deals than what Open Door is

buying go to househack.com to learn more

and read the prospectus because this

video is not a solicitation so go to the

website to read the prospectus thanks so

much goodbye