Tommy Dobczyk breaks down how a tiny-house business hits a $20 million valuation. Build and pre-sell 46 homes in a year, and you can offer a 50% stake to an investor for $10 million. He also maps out alternatives: 67 homes annually under a revenue model, or 331 units if you're carrying debt.
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Did you see the deals today in The Deal Room? For me to hit $20 million, we need to build 46 tiny houses in a year and we'll have a $20 million valuation, which means if I have 46 houses contracted and bought, purchased, pre-sold, I could probably get a value of $20 million, which then I would offer to an investor 50% in if he would just give us $10 million. Right, right. So, and most of the time that's not a good deal for a millionaire, but this is just the example. I'm not going to disclose what we're going to be offering and how we can do what. But anyway, the 2X revenue approach says that in order to get there, I have to be at $10 million annual revenue. And, and so the market approach says that in order for me to do the market approach, I have to do 67 homes a year. Right. And then when I said, okay, let's do the asset approach where I got to build the asset, like I'm going to build all the houses in order to get me to that value. We went and looked at that and But when you do that, you have to factor in how much debt you're in. And that company, I'm assuming— I had to assume a little bit that they're in pretty significant debt. And I discovered in order for us to do that route, we had to do 331 units because of how much debt they're in. Wow. Right. So if I eliminated their debt and made them a net zero company right now, they wouldn't have to make probably 100. But because of the significant debt, you got to pay all the debt just to get to zero, and then you got to build assets that make you money, right? So just to get them to net zero, we got to spend— We gotta build at least 100, 150 houses. So the last option is not what I'm gonna use to get, to get people in the door, right? So for me, the, the best way to go about this is to try and get the 46 houses sold, come up with a, what is known as an income, uh, approach. We're using a term called EBITDA, and that is earnings before interest, taxes, depreciation. That looks pretty good.
