The Opportunity...
"Residential real estate — the world’s largest asset class"
The Opportunity...
"Residential real estate — the world’s largest asset class"
Consider this: a buyer with a $2,000/month mortgage budget can afford a 30-year fixed loan of $500,000 at 2.5% interest but only a $313,000 loan at 6%. That's 39% LESS!
Why Now?
"Mortgage applications fall to fresh 22-year low." - FOX Business
Why Now?
"Mortgage applications fall to fresh 22-year low." - FOX Business
"Lennar, the Second Largest Home Builder, Shares Insights on Worsening Conditions"
"Fear has crept into the housing market, replacing the can't lose optimism" - Bloomberg
We expected this to come...
Kevin sold nearly all his properties starting in January 2022 as he prepared to buy the dip. He was one of the earliest to ring the alarm bells, get out, and raise money to invest himself in this SAME opportunity and at the same valuation: $1:$1.
While mortgage rates created the catalyst, this may snowball into bigger and bigger issues for the housing market as inventory rises, fear sets in, and prices continue to fall.
Headlines From Major Publications May Increase Selling Pressure
This means we may have the added benefit of an employment opportunity as it may be easier to hire high-quality contractors.
"From a business cycle standpoint, this difficult correction should put the housing market back into better balance." - Jerome Powell, Chair of the Federal Reserve
Why Us?
After selling over $150,000,000 in real estate and transacting over 200 individual deals - many of which with renovations and rentals often featuring our in-house construction team, we’re ready to scale our own formula.
This same formula will dress our short, medium, and long-term rentals in our “uniform,” which simplifies the design, ordering, and building processes with internally created standardized templates.
We've even built our own proprietary artificial intelligence software to help us identify deals fast. In the future, we may license this software in a SaaS model.
License tests Kevin has passed:
Real Estate Agent; Real Estate Broker; California General B Contractor License; NASAA Series 65, Investment Advisor Representative; FAA Drone Pilot; and Mortgage Loan Originator (Lender.)
[Note: Presently, Kevin only has active licenses in real estate and in his series 65]
MEET HOUSEHACK™
HouseHack will generate cash flow by buying wedge deals, renting them out, and selling them to institutions while HouseHack maintains property management rights. We also mitigate our risk with the worst case being that we hold the properties ourselves.
HOUSEHACK™ WILL:
1. Buy under-market wedge deals identified through our connections, our already-built AI wedge finder, and our research.
2. Fix up properties using our market-tested "uniform."
3. Rent out properties to qualified short-, medium-, and long-term tenants.
4. Package properties and sell them to institutions for fair market value.
In the future, we plan to expand the development of industry-disrupting software suites to help us more efficiently scale.
Market Opportunity...
The market has highly-valued companies, with what we believe, are little actual competitive advantages. Most of these firms just buy market-value real estate and rent them out. Your classic: landlord who does little. This isn't fair to investors OR tenants.
Yelp and other review sites are littered with negative reviews by their tenants who have been subject to poor management.
Starwood Waypoint filed eviction notices on more than 30 percent of tenants, while Invitation Homes filed notices on nearly 15 percent, according to Reuters. In contrast, Kevin Paffrath has NEVER had an eviction. Tenants are our most-important asset; prioritizing their happiness leads to less turnover, lower costs, and fewer re-renovation expenses.
$10 Billion Market Cap | NYSE: AMH
(as of 1/1/2023)
$18 Billion Market Cap | NYSE: INVH
(as of 1/1/2023)
We believe there is an open opportunity to gain market share with a superior deal-making, deal-finding, renovation, and management experience.
Leveraging AI, software, short-term rentals, and medium-term rentals - we have massive potential: brought to you in this seed-round opportunity with a $1:$1 valuation.
Our Model: Large-Scale BRRRRR
Buy, Renovate, Rent, Refinance, Reposition, Repeat
Purchase properties with wedge potential (mostly single and multifamily)
Outfit them with the “Meet Kevin Uniform” that has been shown to increase rental returns. This is the systematic approach we will use to renovate and increase rental values at scale. This is the same approach Kevin Paffrath has repeatedly optimized for his own properties.
Rent out properties for consistent, long-term revenues and retain management in-house. Our goal is to maximize the revenue of each property by ensuring the most profitable rental model is applied. Flex and short-term rentals will likely be furnished, and easily transitioned between the two models to take advantage of seasonal demand changes. Refinance when appropriate.
Package properties and sell them to institutions as a portfolio/tranche for fair market value. Our goal is to recapture our original investment, ideally in full, while gaining cash flow and selling the deal for a profit without the large selling costs that flippers pay.
A registered investment advisor with $2b+ AUM and $400m+ in annual inflows has privately expressed potential interest in investing in tranches of our portfolio.
This model mitigates our risk with the worst case being that we hold the properties and gain all the cashflow.
Reinvest cash flow into acquiring more real estate and continuing to develop our in-house software, which will first be used for training and perfecting our internal models. Once our internal software has been refined with us as our own customer, we may launch the next phase of our company: SaaS. Other future expansion goals include exploring a banking charter to reduce borrowing costs and risk.
Potential SaaS Upside
As we execute our core 5-stage model, we expect to develop our own software slowly and steadily. These tools will be used to support our current operations and may later be leveraged into Software as a Service (SaaS) offerings for recurring cash flow. To be clear, HouseHack is NOT intended to be a negative cash flowing, tech startup. 2023-2024 will likely be solely focused on buying wedge deals, stabilizing them, and selling them to institutions.
Competitors in Software :
1. Vacasa
$551M market cap (as of 1/1/23) - A vacation rental management company that provides property management services. We plan to have our own branded short and medium-term rental platform in the future (likely 2025+).
2. Yardi and Appfolio
Over $3.7B valuation in total (as of 1/1/23) - Property management software for long-term tenants, which we expect to build in the future (likely 2025+).
3. OpenDoor
$735M public valuation (as of 1/1/23) - Simplifying the buying and selling process through software. We believe we can provide a better value for sellers than Opendoor day one, since we are not flippers.
Our real-estate-first approach will allow us to build next-level projects, first for our own use to maximize efficiency, and then as potential SaaS offerings. This not only benefits ROI but also allows us to be more competitive on day 1 with our WedgeFinder software already in use.
Why You?
Through HouseHack™, investors will be diversifying their portfolio with Real Estate exposure without the headaches and risk of:
We're not a syndication or a REIT -
we're a Real Estate Company that you can own shares in.
Instead of investing in a syndication, which is often designed to make the promoter rich (the face of the business) or allow them to front run your deals (buy them alone and sell them to the syndication for more), HouseHack™ is designed to give ALL the benefits of a promoter to the investor. The investor is the partner, not the product as is in a syndication.
Also, many syndications and REITs are incentivized to deploy cash, even at ABOVE market prices, and wait. It's a use-it-or-lose-it approach (REITs have legal requirements to deploy or return cash. Syndications either deploy cash or close a fund offering unfilled). HouseHack™ is different. We do not have pressure to deploy cash at inopportune times - we can wait for what we believe to be the right market signals to invest. We are incentivized to buy BELOW market value, build equity, build cashflow, and reduce risk. We'll do so by scaling all 3: short, medium, and long-term rentals with single-family and multi-family properties. And, in the future, license suites of real estate software.
Highly Investor-Benefited Valuation Structure
To give the most value to our investors and our community, the HouseHack™ seed round won't have an inflated valuation or any initial dilution. Have you heard of WeWork? Their founder, via his new company, Flow, reportedly raised over $350 MILLION at a valuation OVER $1 BILLION. That means investors reportedly paid at least $2.85 for each $1 invested into the startup. Here, you're able to invest $1 for $1. The shares Kevin Paffrath buys will cost the same as the shares you buy $1 = $1. That means, if we raise $100 million and of that Kevin invests $10 million, the company will be valued at $100m, and Kevin will own 10%. Why are we doing this? The more we can raise today, the more likely we can beat OpenDoor, Redfin, RoofStock, and others at scale.
Investors will not be paying any typical "premium valuation" for our expertise, team, resources, or the potential of this opportunity.
Shares Kevin purchases himself are at the same valuation as all other investors in the seed round. This means he is paying just as much to buy shares as you would as an investor.
To align shareholder interests and maximize growth, Kevin Paffrath will not take an initial salary or bonuses. Kevin and early employees/board members are expected to receive stock options ONLY at IPO/upon IPO-like sale event.
There is no traditional "dilution" usually found in seed rounds. Instead, key-people like our founder, Kevin, are only compensated after an IPO or IPO-like sale event.
Highly Investor-Benefited Valuation Structure
To give the most value to our investors and our community, the HouseHack™ seed round won't have an inflated valuation or any initial dilution. Have you heard of WeWork? Their founder, via Flow, just reportedly raised over $350 MILLION at a valuation OVER $1 BILLION. That means investors reportedly paid at least $2.85 for each $1 invested into the Flow startup. Here, you're able to invest $1 for $1. The shares Kevin Paffrath buys will cost the same as the shares you buy $1 = $1. That means, if we raise $100 million and of that Kevin invests $10 million, the company will be valued at $100m and Kevin will own 10%. Why? The more we can raise today, the more we can beat OpenDoor, Redfin, RoofStock, and others at scale.
Investors will not be paying any typical "premium valuation" for our expertise, team, resources, or the potential of this opportunity.
Shares Kevin purchases himself are at the same valuation as all other investors in the seed round. This means he is paying just as much to buy shares as you would as an investor.
To align shareholder interests and maximize growth, Kevin Paffrath will not take an initial salary or bonuses. Kevin and early employees/board members are expected to receive stock options ONLY at IPO/upon IPO-like sale event.
There is no traditional "dilution" usually found in seed rounds. Instead, key-people like our founder, Kevin, are only compensated after an IPO or IPO-like sale event.
Course Members Get Call-Style Options FREE!
If you're a course member of Kevin Paffrath's you'll receive FREE warrants (similar to stock options.) These warrants will allow you to, in the future, invest more at the SEED-ROUND valuation ($1=$1).
This is an optional increase in the future of your investment at the same valuation if we have a "Second-Seed" call. You are NOT obligated to utilize these options and they will expire 60 days after the second-seed round begins.
Course Members Receive 10% Free Bonus Warrants
For example, if you invest $100,000, you'd have the option to invest an additional $10,000 (10%) at the same $1 per share valuation in the second-seed round if you're a course member.
Kevin Has Committed To Personally Invest $1,000,000 At $1 Per Share.
Kevin's investment will be at the same valuation you're receiving! That's why we call these shares "Founder Shares." Kevin's shares, however, will be different in that they will have voting rights.
Ready To Join,
Meet Kevin And The HouseHack™ Team?
Invest now while our Seed Round is open.
This may be the only time we raise funds before our IPO.
A Better Model
We know the model. Now it's time to grow. With scale, we can likely have significantly better margins than a small-time investor.
Only around 20% of single-family home buyers are investors. This means most buyers are homebuyers unlikely aware of how to "wedge" real estate, significantly reducing our competition and hopefully increasing our returns.
With our wedge-deal-to-rental model, we plan to be more competitive for sellers, while also being more profitable. That's because we won't have 5-10% in selling fees to deal with. That's another $25,000-$50,000 of margin on a $500,000 property. This structure can make deal sourcing easier. We also expect to support the agent and wholesaling community with potential commission bonuses to build critical front-line relationships.
With an active reach of millions on social media, we have the advantage of being able to tap into our own built-in community to buy homes by building partnerships with agents, lenders, and contractors - as well as finding tenants and future investors.
If deemed profitable for the company and its investors, we may offer stock in HouseHack™ to tenants or agents who work with us. This could increase agent-deal-finding loyalty, reduce our acquisition costs substantially, and increase our profit per deal. Think about that: a landlord who helps tenants build wealth. This is the type of goodwill and forward-thinking America needs. As a bonus, this could also increase tenant satisfaction and longevity while minimizing property damage and screening risk.
We’ll have the option of using section 1031 tax-deferred, like-kind exchanges to defer taxes and increase shareholder value. Though deferred, some consider this tax-free (delayed) equity appreciation. We can also, at scale, implement IRS section 179, which allows accelerated depreciation through cost segregation. If none of the above sounds familiar, just know that we will prioritize using every tax-advantage strategy we can to benefit shareholders.
A Better Model
We know the model. Now it's time to grow. With scale, we can likely have significantly better margins than a small-time investor.
Only around 20% of single-family home buyers are investors. This means most buyers are homebuyers unlikely aware of how to "wedge" real estate, significantly reducing our competition and hopefully increasing our returns.
With our wedge-deal-to-rental model, we plan to be more competitive for sellers, while also being more profitable. That's because we won't have 5-10% in selling fees to deal with. That's another $25,000-$50,000 of margin on a $500,000 property. This structure can make deal sourcing easier. We also expect to support the agent and wholesaling community with potential commission bonuses to build critical front-line relationships.
With an active reach of millions on social media, we have the advantage of being able to tap into our own built-in community to buy homes by building partnerships with agents, lenders, and contractors - as well as finding tenants and future investors.
If deemed profitable for the company and its investors, we may offer stock in HouseHack™ to tenants or agents who work with us. This could increase agent-deal-finding loyalty, reduce our acquisition costs substantially, and increase our profit per deal. Think about that: a landlord who helps tenants build wealth. This is the type of goodwill and forward-thinking America needs. As a bonus, this could also increase tenant satisfaction and longevity while minimizing property damage and screening risk.
We’ll have the option of using section 1031 tax-deferred, like-kind exchanges to defer taxes and increase shareholder value. Though deferred, some consider this tax-free (delayed) equity appreciation. We can also, at scale, implement IRS section 179, which allows accelerated depreciation through cost segregation. If none of the above sounds familiar, just know that we will prioritize using every tax-advantage strategy we can to benefit shareholders.
3 Big Reasons to Invest
Add real estate exposure to your portfolio the "Meet Kevin way," but with the benefit of scale for even more diversification. You can get exposure to many different types of properties, short-, medium-, and long-term tenants, and different locations while using our expertise to get these under market value when possible.
Growth Potential With Seed Round Valuation
You'll own HouseHack™ (the business) by investing in our Seed Round. If we can reach even 5% of the market cap of top leaders there is an incredible growth opportunity. The companies we've talked about on this page represent nearly $50b in valuation. We may likely be starting at under 0.1% of that.
The valuation and structure for our Seed Round are made to reward our community. At this time, there is no typical dilution built-in to inflate the valuation for the company resources, the opportunity, or our expertise. What is raised will be roughly the valuation we sell shares for ($1=$1.)
3 Big Reasons to Invest
Add real estate exposure to your portfolio the "Meet Kevin way," but with the benefit of scale for even more diversification. You can get exposure to many different types of properties, short-, medium-, and long-term tenants, and different locations while using our expertise to get these under market value when possible.
Growth Potential With Seed Round Valuation
You'll own HouseHack™ (the business) by investing in our Seed Round. If we can reach even 5% of the market cap of top leaders there is an incredible growth opportunity. The companies we've talked about on this page represent nearly $50b in valuation. We may likely be starting at under 0.1% of that.
The valuation and structure for our Seed Round are made to reward our community. At this time, there is no typical dilution built-in to inflate the valuation for the company resources, the opportunity, or our expertise. What is raised will be roughly the valuation we sell shares for ($1=$1.)
Investors With Benefits
We want our HouseHack™ investor community to be tight-knit. We may have ongoing investor benefits which may include private events and experiences with Kevin Paffrath and the HouseHack™ team.
If you're interested in investing in HouseHack™, click on the Apply To Invest button. You'll have a few documents to approve and sign. After funding your investment, you'll obtain your stock issuance details electronically.
Potential Built-In Liquidity*
*For those who need to sell their shares before we go public, we may offer the ability to buy back your shares or may offer them for sale to our community of 2 million followers. However, we cannot guarantee this will happen as our goal is to buy real estate, not buy back shares - for now at least.
Summary
We’ve already proven the wedge-deal-to-rental model can be successful and now we’ll have the cost savings of economies of scale.
Our social community, business model, and in-house proprietary AI give us extra resources our competition may not have.
From deal analysis and acquisition to construction and leasing, our in-house team is highly experienced and has a track record of execution.
Multi-trillion dollar market with only a minority of investors.
With rising rates and sharply cooling demand, we'll be incredibly well positioned with the negotiating power of cash.
Let's Go!
"This is by far my biggest and boldest venture yet. This is the legacy that we'll be leaving for our children and our children's children.
I want my community to benefit from this new chapter, and by being an investor, you will likely reap the rewards of my dedication to HouseHack™.
I hope you consider joining me by applying below."
Let's Go!
"This is by far my biggest and boldest venture yet. This is the legacy that we'll be leaving for our children and our children's children.
I want my community to benefit from this new chapter, and by being an investor, you will likely reap the rewards of my dedication to HouseHack™.
I hope you consider joining me by applying below."
FAQs
Check with your custodian, who may want a copy of our PPM, slide deck, etc. As long as your accredited, you should be able to. If you're investing using your Roth IRA, you could potentially grow the value of your HouseHack equity tax-free.
If you can get a letter verifying your status as an accredited investor at Househack.investready.com, we should be able to accept your investment. If you wire international funds, your currency will be converted immediately and you will be given the shares for the net US Dollars received. So in short, yes, as long as you're accredited and can get a letter from Investready.com, we should be able to enable you to invest with us - subject to any potential bans of such investments by your country (we have not encountered one yet).
Generally, you are an accredited investor if any of these are true:
- Annual income greater than $200k (each year for the past 2 years.)
- Joint income greater than $300k (each year for the past 2 years.)
- Net worth greater than $1M individually or jointly with a spouse (AFTER DEBT and excluding a primary residence, but may include retirement holdings like 401k, IRA, etc.) A credit report may be required to evaluate your outstanding debt.
- Hold a valid Series 7, 65, or 82 license, which you may be able to receive before we close the round. Other requirements may be needed.
The best way to get accredited and the fastest way to get your investment accepted is by going to sites like verifyinvestor.com or investready.com.
After you've invested, we will process your investment. Note: It will take a few business days AFTER receiving a wire to send you a confirmation. Wires must be cleared before memo's and full details populate. Once they're cleared, we have to process them - and we'll do our best to do so quickly. When the round closes, you'll receive an electronic stock certificate that proves the shares you own of HouseHack™
The opportunity to invest will not be open-ended. We will not be taking on an unlimited amount of investment. We'll only take on funds we believe we can deploy for returns within a reasonable amount of time. Therefore, the fundraising period may end soon and without notice.
We're not sure. The next time you can invest might be in the event we have an IPO.
Meet Kevin Paffrath created HouseHack to buy a lot of single-family homes and multi-family apartments. HouseHack wants to focus on fixer-uppers or properties we can increase the value of, day 1. While the market falls, we expect to setup in approximately 3-5 different markets throughout the country (diversified locations). Then, when the time is right, we'll start buying. We'll find those properties with our Wedge Finder AI, through agent connections, referrals, and otherwise. We plan to buy properties cash then add value / renovate them as needed by coordinating subcontractors directly. We'll manage the properties in-house. In the future, we'll refinance them and buy more. We'll take cashflow and reinvest that into opportunities (no dividends for now). In the future, we may license our internal software and sell that software as a service. We may also expand into banking and FinTech. Our CEO and founder is expected to receive no pay, salary, or bonus until IPO.
How Might HouseHack™ Compare?
*This is a generalization and is our opinion of the comparisons.
©2023 HouseHack™. All rights reserved. Privacy Policy.
DISCLAIMER: INVESTMENTS IN HOUSEHACK™ ARE SPECULATIVE, ILLIQUID, AND INVOLVE A HIGH DEGREE OF RISK, INCLUDING THE POSSIBLE LOSS OF YOUR ENTIRE INVESTMENT.
Affiliated Business Disclosure:
Kevin Paffrath is our founder and CEO. We are a Wyoming c-corporation.
Kevin Paffrath himself is a licensed real estate agent via 01893132. Kevin Paffrath, #DRE 01893132.
Kevin Paffrath is in the process of registering Plato's Philosophy, a California Limited Liability Company, as a Registered Investment Advisor (Series 65 license).
Via this firm, Kevin Paffrath in coordination with Tidal have filed 3 exchange-traded funds. This firm may also in the future sell educational content. Any educational content created by Kevin Paffrath may reference HouseHack or use HouseHack properties as an example without compensation to HouseHack.
HouseHack™ does not benefit from you joining Kevin Paffrath's courses to receive a 10% warrant bonus other than providing HouseHack™ more cash for investments at a $1:$1 valuation. There is no commission for HouseHack for referring course members and no course memberships are being "gifted" to investors.
All of the texts, emails, video, or materials you may receive are for informational purposes only. The information contained in them is not a solicitation to invest in any security. If you have any questions about the information, please standby for our investor relations contact information, private placement memorandum, and subscription agreement..
