저자: Kevin · 외국인
요약 보기
관세 완화와 골드만삭스의 경기침체 확률 하향(45%→35%)을 근거로 침체 우려가 줄었다고 봄. 주식은 초과 CAPE 수익률 2.8%로 10년간 연 2~3% 수준 기대, 본인은 약세 쪽(34)에 머묾. 테슬라-Lyft 제휴 긍정적. UnitedHealth는 주가 하락 후에도 재무가 빡빡하고 보험업이 비윤리적이라 회피. 후반부는 House Hack 비상장 투자 홍보.
다듬은 글
United States backed off of what were extremely imprudent and potentially economically very damaging prohibitive tariffs to the point of embargo on China. That was a good thing for the US economy. The Goldman Sachs just flipped on their recession call though people are now worried about the tariff midterm which markets aren't really pricing in right now.
geopolitics are progressing awfully slowly and progressing might be a generous word. We're going to look at the United Health financials and we're actually going to show what House Hack does in this video because maybe we haven't explained that super clearly. So, we're going to do a really cool before and after in this video and I think you'll love it.
But anyway, let's get started with the recession is cancelled. So per Goldman Sachs, the significant reprieve that tariffs have provided are a quote more significant deescalation than widely expected. We'll go ahead and show you this uh on screen here. This is directly from their institutional piece.
Uh in the US, we raised our growth forecast this year to just 1% up from a half% forecast Q4 to Q4. lowered our yearend unemployment rate forecast to four and a half% from 47 and reduced our 12-month recession odds to 35% from 45%. Now, statistically, most of these, you know, research shops have about a 20 to 15% ongoing recession risk every single year.
Really just taking sort of the historical time frames that you'll see a recession, divide it by the number of years, basic. So 35% represents really only a slightly elevated risk uh to reflect tariff developments and meaningful easing in financial conditions over the past month. Now if financial conditions are not only credit spreads which have narrowed but also stock prices which obviously have gone up.
Both of those are an easing of financial conditions. So, the most traditional easing of financial conditions that we think of are bond yields. And bond yields have obviously gone nothing but up. And honestly, with this Moody's downgrade, I I don't really know that risk assets are going to care because every time it's happened in the past, it's just been a buy the dip opportunity.
And this market right now, it's like if there's a switch that's like, do we buy the dip or do we not buy the dip? The switch is on, we buy the dip. Okay. So, the market I don't think is really going to give a fly in hoodies. I think people are calling for this black Monday or whatever. I I don't know.
Could it trigger stop losses if you have a, you know, a big red candle at the beginning of the day on Monday? Maybe. But I I think it's relatively overblown. I'll tell you what I'm more worried about in in just a moment. And frankly, even that isn't that big of a deal, but it could be. So, we'll talk about that in just a moment.
Uh Goldman Sachs thinks that the Fed is going to begin a series of three rate cuts in December. So basically they think the Fed's going to delay their first cut all the way until December and then they'll cut every other meeting by 25 basis points which is pretty poulry and very very slow but honestly if the unemployment rate only rises to 4 and a half by the end of the year which would be like 2 to.3 depending on you know from which time frame you start counting maybe the biggest thing that would really get the Fed to rush to zero would be a rise in unemployment but that hasn't happened yet.
And whether it does happen over the next two or 3 months is anybody's guess. I'm also guessing that there's a high likelihood businesses try to retain employees just a bit longer here to see, hey, are consumers going to come back to spending from that slowdown we saw in April. Uh retail sales got hit obviously dramatically.
Uh and let's see, you know, if if we end up with continued spending, who cares? You don't have to lay people off. So we'll we'll know that by like August or September. Anyway, they say we recently upgraded equities from underweight to neutral in our threemonth asset allocation. That said, we think asymmetry for equity investing is still quite poor partly as mark the market remains vulnerable to a recessionary outcome after the recent relief rally.
In other words, if we do have a recession, markets are pricing in basically no protection. I completely agree with that. Markets have basically pretended like tariffs don't exist anymore. And uh Goldman actually has a pretty good chart showing us uh yeah no tariffs definitely still exist and we're definitely at a higher level than where we were.
Uh but you know when you look at tariffs sort of broadly here we'll put a little line across it. It kind of feels like tariffs don't exist. You know how like when you look at co charts sometimes because there's like the huge spike it makes the like end result look so meaningfully insignificant that it doesn't matter.
You almost have to like zoom away from this. But just look at this for example. Let's take the uh China effective tariff rate on the US and uh you know we we'll sort of draw this green line right about here. There what is that whatever that is. Uh and then uh if we go ahead and draw another line here and then we kind of look at where things sit now we could see uh there's this meaningful gap you know according to Goldman here.
What is that 15ish to maybe 30%. So a doubling in the effective tariff rate based on how uh they are calculating the effective tariff rate. Most see the effective trade weighted. So based on what we actually trade tariff rates at about 15 times larger than what they were before. So that gap you know that's going from like 2% to 30%.
Uh that gap is still meaningful but nobody knows what kind of damage this is going to cause. But I agree with Goldman that, you know, if if the unemployment rate moves that little, yeah, you probably should expect pretty slow movements in in Fed yield, you know, rate positions, basically. Now, that said, they say, hey, you know, maybe this doesn't bode well for the future of stock prices.
I think it's a little too soon to say that. Uh, you know, there are a few charts that I like looking at. Here's a chart called the excess cape yield. Uh and basically what it does is it takes cycllically adjusted earnings. So you know they try to smooth out the seasons and the cycle whatever. Uh and what are our earnings doing and how much is the S&P 500 returning in excess of inflation.
So this is basically an inflationadjusted earning set based on where we sit in cycles and seasons. That's like the easiest way to try to put it. And I know I'm way oversimplifying. Well, that level sits at about 2.8%. And if you look at sort of history, 2.8% is pretty low. It puts us somewhere around that 2018 level, the 2006 and 7 level over here.
Uh, obviously things got a whole lot less desirable in the dot era, but it shows you how significantly negative this chart got in the dot era and we just haven't seen that here, which is actually kind of bullish if you think about it because we frequently compare back to the 2000s and the overvalued nature of the stock market, how you know there's some parallels between 2001 to 2003 and today.
But when you look at the excess cape yield, you know, that actually went negative at a certain point uh in in the dotcom era. uh and this is historically how markets react after uh you know the next 10 years and then they they look at the rate of return that you can expect on stocks every year for the next 10 years when your excess cape yield is between 1 to 5% you might think the S&P 500 historically since 1928 would return somewhere around 1 to 5%.
So given that we're somewhere in the middle of this range, maybe we'll return somewhere in the middle of that 2 and a half% per year over the next 10 years. Basically soft landing style growth, smooth, you know, recovery out of this disaster, but no crazy boom. Uh but we don't have an excess cape yield, so we wouldn't be expecting negative returns.
That's at least based on this one chart. Obviously, if you now factor in things like AI or radically growing growth estimates for some of the largest companies in America and if consumption holds up, then this could be wrong and we could return a whole lot more than this in the stock market. So, it's kind of interesting to look at it that way.
Uh, now personally, people always ask, Kevin, where are you on the bear bull scale? Once we got the uh May 12th deal, I moved from a 29 to a 34. So, I'm still more on the bearish side. And I'd say by August, September, we'll have enough data to feel comfortable that we're not going to have some surge of unemployment and some unemployment driven recession.
That is the worst case scenario for markets. And it's very painful to a lot of people. I hope that doesn't happen. Obviously, if that does happen, like we heard JPAL say yesterday, we're going back to zero. That will cause its own distortions and problems. Uh Bessant uh this morning said that the Moody's downgrade is a lagging indicator.
it's Biden's spending fold, Walmart's going to eat some of the tariffs, kind of doubling down on what we heard yesterday, and that if countries are not negotiating in good faith, then they'll just get assigned a tariff rate, basically. Now, this is interesting because that tariff rate could be above the sort of global 10% reciprocal tariff we have on every country now.
And it remains to be seen what impact that's actually going to have. We're also 45 days already. Can you believe this? We're 45 days into the liberation day pause, which is kind of crazy to think about. H it's maybe closer to 40 days, but we're coming up on 45 days into the liberation day pause. Uh and tariffs are still, you know, 5x on the entire world what they were before liberation, 15x on on China.
Uh and and so keep in mind the 30% on China is in addition to some of the older 2018 tariffs. So, you know, some importers are paying 40 to 57% on uh on tariffs import from China. But some of those tariffs we already knew of beforehand. Uh and right now there are no current plans for more tons with China.
So a lot of people are kind of like all right where does the world settle? And that's the thing. No, nobody really knows. Maybe we just absorb it. Maybe importers just absorb it and wholesalers. Bloomberg says that most of the tariff impact so far has been absorbed by the US side, not by consumers, but on that importer wholesaler level.
and they measure the changes that they're seeing in sort of PPI versus expectations and they're like, "Okay, yeah, we're basically paying all of the tariffs ourselves right now." That's their POV. Who knows? I, you know, I'm sure other countries get hit in lower production as well, but anyway, we'll see.
At the same time, there are also concerns that there are delays in China sort of reactivating approvals for rare earth exports. And China basically dominates this market. There are a couple charts that are worth looking at. This is a chart of China's dominance by different rare earth, which are obviously very important for things like windmills, which Donald Trump hates anyway, or electric vehicles, which Donald Trump doesn't really like either, unless it's a Tesla, whatever.
Also important for certain computing components. But here are various uh and certainly machinery and and otherwise. But here are various uh components or minerals, if you will, that uh that and the blue bar shows you China's dominance. I'm not exactly sure why they made Canada roughly the same blue color as China.
But let's just put it this way, the blue bar that you see is mostly China. And on top of that, if you take a peek at this chart here, China mines 70% of rare earth concentrates. This is basically a way of saying they pick up scoops of dirt and then they look for the rare earths inside of that scoop of dirt.
They process 87% and refine 91%. So basically they dominate. What impacts that'll have, who knows? So basically, we're in a big old wait and see for the economy. The market is like, we don't need to wait and see. Everything is fine. So market everything is fine. Market probably going to look through the Moody's crap.
I mean, Bitcoin's at 105,000. That's one potential leading indicator for you. Uh, which is bullish. And the bond market's going to be pissed about the Moody's downgrade. But then again, the problem is how much is that 102 yield spread going to rise now? Don't know. We'll see. Uh and does that again leave us sensitive to a shock?
Again, who knows? So, absent shock risk, markets happy. And this is where I've been saying, hey, if you're worried about shock risk, the easiest thing to have is a trailing stop. But I will say if we get some form of red candlesticks on Monday morning, you have to be careful with the trailing stops because you could get stopped out and then people go by the dip like crazy.
So there's there's a little bit of risk that the trailing stop on Monday because really we don't know what the reaction is going to be from institutions. Again, historically we get red, but we'll see. Okay, now let's talk Lyft and Tesla. Now, I didn't actually mention that in in the teaser, but we got to talk Lyft and Tesla.
Lyft and Tesla have a partnership where Lyft and Tesla together will offer $1,000 in Tesla credits to you if you take delivery of a Tesla and you complete 100 Lyft trips through July 13th. It's basically a $10 bonus per trip, but it's in, you know, Tesla credits. So you could buy Tesla merch or or you know supercharging uh money you you know credits basically whatever.
What I'd like to do is think about how critical this partnership is though about a week ago when I went to Alcatraz with Jack. Shout out to meet Jack Alcatraz. You can see his Alcatraz tour on YouTube. He threw a sound effect in there. Tell me when you find what the sound effect is. But on the trip over there I talked about how Tesla would be wise to buy Lyft.
And the reason I thought this is not because Tesla can't make an app themselves. I know they can. They do fantastic work with their technology, but it's a $7 billion company that I think Tesla can absorb without any even notice to uh you know the the overall valuation of Tesla. Like you could absorb all of Lyft with stock from Tesla and I don't even think Tesla stock would react.
The benefit that you get is distribution, but maybe you don't have to buy Lyft if Lyft is already in good partnership with Tesla because the competition aspect is what you're most worried about when it comes to robo taxis. Whimo's got a really reputable app. And you might hate Whimos. You might say Elon says Whimos or Whimo expensive to build and that's fine, but they have the app with excellent reviews and excellent reactiveness.
like when people go to San Francisco, they pull out the app. Oh yeah, I'm going to just call a Whimo or people's, you know, reaction to pull out a Lyft or an Uber. That reaction momentum is what is going to be the hardest for Tesla to get. And that's why I say either partnering with Lyft, which they're already doing, is is a wonderful thing for Tesla.
It's actually bullish. Uh if they just buy all of Lyft, they guaranteed have that distribution where people already open up their phone, call Lyft on an app, right? Except now a Tesla robo taxi could show up. That is of course, you know, to the extent that robo taxis are actually close. Who knows? We're coming up to June 1st.
We'll see what Tesla has for us in their Austin partnership. I kind of want to go to Austin and try it out. I think it'd be kind of cool. But I'm sure every other creator on the platform is going to be doing the same thing. Either way, I see this as positive lift Tesla uh that maybe Tesla doesn't even have to buy them.
We've already got a built-in partnership. All right. Now, catalysts for this week coming up. Not much. Leading index on for April, you know, based on April's data, nobody cares. Okay. Any data sets that are coming before May 12th, nobody cares. Chicago Fed activity for April, nobody cares. Initial claims Thursday, nobody cares.
S&P Global Composite, manufacturing, and service PMIs preliminary for May, eh, that comes out Thursday at 6:45. Maybe we'll care a little bit, but I don't think we're going to care that much because most of it is going to be preMay 12th. Make sure to stay for the end of the video, by the way, because I'm going to reveal the multi-million to in the future if we build out the reputation billion dollar opportunities that House Hack is working on.
Stay tuned for the end of the video. And remember, our nonacredited investor round is open at househack.com. You get paid a 5% yield through stock conversion and then you get all the upside in the stock from there. Go check it out at househack.com. Of course, and watch towards the end of the video. All right, now let's talk geopolitics.
Israel is launching an extensive ground operation uh in the Gaza Strip. Apparently, another 135 are dead in the Gaza Strip. All public hospitals in northern Gaza are out of service. And there's really concern over aid flow going into the Gaza Strip, but that has been true since October 7th, 2023. There have been fears of famine, illness, death, closed hospitals since then.
The Egyptian president echoes this. UNICEF echoes this. Everybody's basically echoing this is a problem. Now, obviously the Trump administration and Israel have seemed very close, but Trump is playing a unique balance with this with now headlines that Trump shrugged off BB now who uh at a golf course over the weekend and people are like, "Oh, what's you know what's going on?" Who knows?
But what we do know with certainty is JD Vance shook Zalinsk's hand after the Oval first first meeting since the Oval Office spat. you know, now here at the inauguration of the Pope and remember the last person's hand JD Vance shook. Okay, I don't know. Maybe this is maybe this is all part of the bigger plot.
Okay, I'm kidding. But JD Vance did shake Zilinski's hand. So, let's wait and see. Trump also suggests that he's going to talk to Putin and Zalinski, but we have to be really clear when it comes to Putin. Putin does not seem dead set on wanting a deal. And I think Trump is slowly warming up to that realization.
And I think that's why they're sort of warming up to Zalinski a little bit more than Putin because Putin just isn't bending. The interest in Putin getting this deal done seems to be roughly zero. That is some form of permanent ceasefire. However, there are cracks forming inside of Russia. Russia's military spending is spiraled out of control as you know some are saying.
Some others are saying no, they're just reinventing their industrial economy to be a military industrial economy. Their defense spending has doubled to about 149 billion in 2024. That was from like the 60 billions in 2021. Worth noting, by the way, that Russia right now spends uh somewhere around 32.5% of their entire federal budget on the military.
In the United States, we spend about 13% on the military. So huge difference here in terms of spending. I mean, they're spending almost three times as much as a percentage of their federal budget on the military. Russia's apparently having to pay North Korea in excess of $20 billion for services basically to get, you know, recruits to come fight for Russia.
Uh, and the economy is facing significant worker shortages across various different po, you know, portions of the Russian economy. So, a lot of people like, hey, maybe Putin will finally wake up to the damage he's causing. Others are like, "Nah, this is Ukraine is part of his legacy and he's going to keep fighting until he gets more and more and more." We'll see.
Let's now talk about United Health. United Health stock is down 42% year-to- date, over 44% over the last 12 months. Their Q1 balance sheet, let's just put it this way, it's not that desirable. I was actually surprised that a Dow 30 company does not have that desirable of a balance sheet. Take a look at this.
And I'll hide myself so I don't cover up numbers here. All right. So, on a liquid basis, they have $96 billion in current assets, but they have about $13 billion of bills to pay, which is a lot. They have to pay those bills over the next 12 months. Now, the company does generate about $20 billion of cash flow if you annualize out their Q1 2025 cash flow of about $5 billion, which means they would have just enough money to pay all of their bills.
And so, if you subtract their longerterm debts from their longerterm assets, they've got about a hundred bill sitting around. So, it kind of gives you the the tangible value of this company. So, think about it as they have net equity of a hundred billion and they generate around $20 billion a year in cash flow.
Again, annualizing their Q1. They actually make a lot of money in that sense. So, on their net equity, they're returning like 20% per year, which is phenomenal. Now, you are paying a premium for that business. Right now, you're not paying a hundred for the business. you're actually paying about $264 billion for the business, which means you're paying about 8x their cash flows uh for the company.
Now, sometimes what I like to do is I like to take their cash flow and divide it uh by their market cap. And that's also still pretty good. That's a 7 12% yield. That's not bad on sort of a free cash flow yield if they can keep this sort of annual cash flow going of five bill or sorry, 20 bill, five bill a quarter.
Maybe they can't. And that's where the questions are because if we just annualize out Q1, it doesn't look that bad. Yes, their balance sheet isn't that perfect, but it's not uncommon for insurers to operate a little tight and they've got the free cash flow. If we can annualize Q1, if we have to annualize Q1 of last year, it ain't that good because they're only clearing like 1 to2 billion in free cash flow, it's not as good.
That said, the insurance business is a very low margin business. their optimum optimum I guess it actually is it's not optimum it's optimum but anyway their optimum services business where they provide services for pharmaceuticals and to doctors and others only has an operating margin of somewhere between 5.8 to 7.4% depending on which quarter you're looking at and the actual health care business only has margins of between 4% to 6.2%.
It's a low margin business. They pay out a lot of money. And so it kind of makes sense that they go around and try to find whatever loopholes they can to milk as much money as possible out of the system. But this is where the fraud allegations are coming up because they're doing things that are just wrong.
And this leads people to say, why would you ever want to touch this business? Because a lot of people are looking at this as a buy the dip opportunity, but others are like, I just can't bring myself morally to invest in this business. That's what some say. Now, keep in mind, the CEO did just buy $25 million of stock and the CFO bought $5 million of stock.
A lot of people see that as just signaling, though, because you might not know this, but the CEO's stock package, $61 million. So, so it's kind of like he took a fraction of his entire pay and sort of like reinvested it back into the business to send a signal. And if you look at their income statement, they do pay out a lot of the premiums that they spend, which again contributes to these lower margins.
They pay out about 84 to 85% of the premium dollars that they collect. So imagine you were an insurance company and you were collecting $100. You're paying out about $85 of that in premiums. It's kind of an interesting stat if you're ever thinking about insurance. And then they got a whole crapload of costs on top of that obviously because they have to deal with the government administration and people and and all the claims and underwriting and processing.
It's dealing with the hospitals. It's it's kind of just a crap business. The margins are really really low and their balance sheet is tight. Again, long term they've got money, okay? And they produce cash flows, but it's a tight and dirty ship. Think about it like that. You know, it's not like they're selling iPhones at a 25% margin, right?
where they're bringing so much money down to the bottom line because they're selling you this beautiful app store rapper as well. This is a tight and dirty Now, let's talk about the dirt. The Wall Street Journal did this like Pulitzer Prizewinning expose on them and I'm just going to give you the bottom line on this.
Okay, let's say you're a health insurer and the government tells you, "Hey, you will get paid in lump sums for any Medicare Advantage patient you have that has a new diagnosis." Okay? So imagine you're an insurance company and the government says, "Hey, if you insure those 10 people over there and they have no diagnosis, you get zero.
But if each of them has one diagnosis, we'll give you 2500 bucks per person. If they have two diagnosis, we'll give you 5,000 bucks a person." What incentive do you think that sloppy government assignment creates for United Health? Let's send nurses to every old person's home on Medicare Advantage for free house calls to see if you have any ailments.
And that's exactly what they did. They hired nurses sometimes to go to, you know, conduct six house calls a day and basically hook up patients to random BS, you know, diagnostic equipment to find out if the oxygen flow to your extremities, for example, like your big toe is slightly below average. So, we could diagnose you with some arcane illness that you don't even know you have.
you have no problems with like you it's not like you're falling off your feet or whatever and you don't even realize you have a problem but they're going to register that as a diagnosis so they can collect money from the government meanwhile not actually pay anything for you. So the reports that the Wall Street Journal put out basically said for every house visit United Health made they earned about $2700 in revenue 2735 and they were the worst out of all of the different insurers.
Humanana at 1525, CVS Edna 300 or 232. Anyway, so you could see the desire to conduct a lot of home visits. United Health did the most and make lots of money off them. Now the cat's out of the bag and the federal government has said, "Look, we're not paying for some of these diagnoses anymore. You ripped off a bunch.
You ripped off the system because now people have all these diagnoses that they didn't even know they had. their doctors didn't even know they had and they were never treated for just so you can milk some free money. And so now obviously earnings for United Health are kind of in the toilet. They've withdrawn guidance because they're like crap, we don't know how much of an impact this is going to have.
All the good numbers we had were based on basically fraud. And uh now we got to pick up the pieces. So what pieces are left? Well, again, it's a business that on a free cash flow basis yields about 7 and a half% uh you know on on their market cap. So yeah, the dip is sizable, but again, you're getting into a legally fraught and now a hated business with terribly low margins.
It look a great buy the dip opportunity, you know, for for people who are just going to like put any kind of like morality on the shelf maybe. But look, I stay out of the insurance sector cuz it's complicated enough as is. And looking at this United Health stuff, I'm like, man, I mean, I like I scratched the surface and I'm like, this is a disgusting business.
I'll pick any other business. So, look, if you buy the dip and you make money on it, I'm happy for you, but I can't touch this kind of business with a 10-ft pole. And again, I'm not telling you not to. I'm just saying for me, man, it's not my world. I I'll go stick to houses. Which speaking of which, I'm going to show you a before and after now of House Hack.
A lot of you have been wondering what does House Hack do. In this video, I'm going to show you exactly what House Hack does. This is a fixer upper. It is a single family home. This is not actually the highest and best use for this property, for this lot. Spoiler. If you go back through this little Matterport over here and you go to the backyard, you're going to see a property that actually has a really juiced backyard.
If I can get back there. Uh-oh. Oh, the graphics, the Nvidia graphic card is shutting down cuz it's too much of a fixer. This is what happens when you buy too much of a fixer upper. You can't even get the ray tracing and rendering to function. Anyway, let me just put it this way. Spoiler alert. This right here is magic.
But we'll get back into the uh backyard in just a moment. House hack buys trash properties that are disgusting. Okay, this place needed a whole new roof. It needed all these water leaks fixed. We had to tear all this crap out and redo it all. So, you you fix the roof, you kill the leak, then you tear out all the crap that's nasty.
Get rid of it all. Okay, this takes a lot of work. If anything, if it weren't for that backyard, which you're about to learn about, this is almost too much of a fixer upper from what I like. I like paint, carpet, kitchens, bathrooms. Okay, this is a lot. Somebody built a whole like guest office in the garage.
Uh, a car literally drove through the damn property. This is the garage in the front, and it just, you know, like, oops. I guess there goes the structural support for the uh for the header beam above the garage door. Uh cuz somebody drove into it. Now, obviously that's all been repaired and replaced with structural hardware uh and quality products.
Uh but uh you know, you go into the inside of this building, you've got old 1960s louvered windows, you've got water leaks, you've got holes from old skylights, uh you know, trash coming down the fireplace. So you you'll see the after in just a moment. But my point is when people say like, "Hey, how does House hack make money?" Because House Hack pays to its nonacredited and accredited investors in our round, which we're raising at a buck 40 a share.
Okay? Like I want to IPO this sucker in in a few years and and I I want to take care of everybody. I I can't make guarantees, but I want this to be a big I IPO. I really am so excited about this business. I see it as my little Birkshire Hathaway. And so the reason we can pay out a 5% yield plus the upside in the stock, knock on wood, uh, you know, through conversion is because we fix up places like this.
We gain equity in these properties when we do that. So we buy them for one price, we spend money, and then we gain equity on the deals because obviously a house that's fixed up and remodeled is going to be worth a lot more than this. uh more than even we put into it, right? And then we collect yield from renting these properties out and then we can accelerate that yield by developing the lots.
More on that in just a moment. But I want you to see this kitchen. Okay, look how disgusting this is. And we tore out like I don't even like tearing out kitchen cabinets, but we tore out these kitchen cabinets. I'm like, yeah, no, I'm not I'm not putting anybody through this this trash. Uh you know, old countertops over here, hallway.
I mean, I think you get the idea, okay? It's it's a nasty uh uh property and it needed a lot of love and uh we gave it to it. Uh I mean, this is this is a lot of work. Uh and to and to do it right is is a lot of work. Uh you got to stop the leaks, you got to redo the bathrooms. It's crazy. All right, so you get the idea.
Let's now go to some of the afters and then I'm going to tell you the magic of why we like getting involved especially in properties like this. We don't do this for all of the projects because there's a limit in my opinion to how much exposure you want to um to development projects. You know, some things you just you just kind of want to, you know, not develop and just rent out and other ones are just really desirable development opportunities.
This is the after of the garage. Look, it's a garage again. It's beautiful. This is the after of the uh inside area. Remember where those skylights were? We actually replaced the windows on this one. 2-in faux wood louvered blinds, the the fireplace is beautiful. Again, new light fixtures, new flooring, baseboard, paint, drywall, all new kitchen, cabinets, appliances.
I mean, this is gorgeous. Like, this is this is a house hack property. This is the work that House Hack does. And it's great. High quality product. Look at this. Brand spanking new everything out, new in. And it's a lot of work, but that's our job. That's what we do. So anyway, you get the idea. Okay, that's what house hack does.
Now look at this beautiful yard. Okay, this might take a couple years, but the magic sauce in a property like this, in a location where this is high high value location, okay, it's by the beach. right is uh close enough being pay the beach values is we can actually add five units to this property up to five units TBD based on what our discussions are so far and we have not submitted plans on it yet we're just working on drawing the plans now uh we could actually turn this one this one property from a one unitit single family just fine into a sixunit property.
Yeah, absolutely crazy. Hopefully we can get to the six. Maybe we'll only be able to get to five total. But that in our opinion significantly amplifies not only the value of the property, but the cash flow that we get because when you develop your yields on cash are usually a lot higher. You know, you could be somewhere between 6 and 12 to 10% ROIs on on an ADU development.
Uh but beyond that, the value that you actually create for the lot explodes because now you basically created a commercial six-unit property that still finances under 1 to four real estate because of the way they count ADUs. It's kind of crazy. Who knows? Maybe they'll change that one day in the future.
So you have that buyer liquidity should you turn around and want to go sell this in the future. Uh and uh and house wins. So so that's what we do. It's a lot of work and a lot of people don't understand. uh what we do and and I think it's helpful to see this. So uh anyway, if you're interested in being a part of this and diversifying to this sort of these sort of efforts, go to houseack.com.
You can invest in the nonacredited round. You do not have to be an accredited investor. You get 5% on an annual basis paid to you monthly. Obviously, it's a startup. There's risk with every single investment, but this is the stuff we do. And if you want to be involved in it, go this video. And uh this is just one example, one property that we've worked on here.
Uh and uh and I think it could be a multi-million dollar ROI for the house hack business. And it also creates this reputation of us as a developer which also has multiples on the stock market that I think are very desirable. Uh anyway, more on that in the future. Obviously, again, risk with every investment.
I'm the CEO, so I'm a little biased, but I'm very very excited about this company. Okay, so this is why when people like Kevin, but what about the stock market? Like stock market's cool. I like what I'm building. .
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