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SearchCore, Inc. (SRER)
-Other OTC
0.01(5.26%) 1:31PM
In early 2014 we transitioned SearchCore out of the technology sector and into the manufactured home retail industry.
We hired Mr. Brent Nelms, a 32-year manufactured home retail center veteran, to oversee the growth of our retail operation. During our first nine months we secured an inventory flooring credit facility, opened three retail centers located in Tyler, Jacksboro and Rhome, Texas, generated revenue of $402,000, and significantly increased the number of pending home purchase transactions in our pipeline. We also increased the amount of manufactured home inventory at our retail centers in order to accommodate these pending sales.
The retail centers are operated by our wholly owned subsidiary, Wisdom Homes Of America, Inc. We signed our fourth lease in Mount Pleasant, Texas, which will be our largest retail center to date. We also recently acquired fifteen residential lots on which we intend to place manufactured homes and sell to home buyers as a turn-key package. This will expedite the sales process for the manufactured home buyer and increase our revenue.
Additionally, we've created a short term bridge financing facility to assist homebuyers with their home and/or land acquisition.
The purpose of this letter is to provide a clear understanding of the direction in which we are taking SearchCore, Inc.
Our Goal
Our goal is straightforward: we intend to become the largest independent manufactured home retailer in the industry by opening 30 retail stores by 2019. We expect that within nine months of opening, each retail store will sell, on average, 4 manufactured homes per month. The average sales price per home is approximately $70,000. Therefore, each store is anticipated to generate $3.36 million in annual revenue.
Approximately 40% of our retail stores will be located in Texas. Other target states include Louisiana, Oklahoma, New Mexico, Oregon and Washington. After Texas, these states have the largest numbers of manufactured home buyers in the US.
We believe our competitive advantages in gaining significant market share in the regional markets we serve include:
1) Our heavily experienced retail manufactured housing management and sales team
2) Rapid contract-to-close home/lot packages
3) Focus on niche buyers including non-English speaking buyers and sub-prime borrowers
4) Lead generation and marketing economies of scale as a multi-market retail center operator
Growing Manufactured Home Industry
Since 2010, there has been a steady increase in the number of manufactured homes sold annually in the U.S. In 2013, there was approximately $3.6 billion in manufactured home sales as reported by the Manufactured Housing Institute. The growth rate in sales of manufactured homes is approximately 10% per annum, with 60,000 homes sold in 2013 and sales expected to reach 66,000 in 2014.
From 2008 to 2011, there has been a decline in both manufactured home retailers and manufactured home suppliers. This was caused by illiquid market conditions that existed during the Great Recession of 2008. With fewer retailers now serving a growing number of homebuyers, we believe our business plan will allow us to gain a competitive advantage in the manufactured home market. We also believe the ability to offer land transactions as well as short term bridge financing will provide us an additional competitive advantage since none of our competitors offer these ancillary services.
Improving Home Buyer Market
Overall economic conditions are currently favorable, especially in Texas and surrounding states, for the manufactured home industry. Texas' pro-business environment, combined with specific industries within the state, such as the energy sector, are creating new jobs and generating an influx of workers to fill those jobs. In fact, new jobs are being created at a pace faster than the traditional home building industry can manage. This influx of new workers is creating a need for new homes that we are well suited to satisfy. Contrary to the increase in job creation, however, is the stagnation in U.S. household income. For the past few years, annual household income as reported by the U.S. Census has been essentially flat. Our conclusion is that more families will be able to afford a $120,000 manufactured home on a one-half acre of land, than a traditional $500,000 "Stick Built" home.
Manufactured Homes As Good As Stick Built
The line between the traditional manufactured home vs. the traditional stick built home is truly blurred. Today, a manufactured home buyer can purchase a well-designed, four bedroom three bath 2,500 square foot home, with vaulted ceiling, rock fireplaces, wrap around porches, and upgraded kitchen appliances on a one half-acre of land for less than $120,000. When you compare the monthly mortgage payment on $120,000 mortgage and include potential tax deductions, then in many areas around the country it's actually less expensive to own a four bedroom three bath manufactured home on a one half-acre of land than to rent an apartment.
Structurally, a manufactured home is as solid, if not more so, than a stick built. This is because they're built in an enclosed environment, with little waste, in a systematically engineered process. Some of the manufactured home factories offer State-Of-The-Art equipment and technology which results in the building of environmentally friendly houses. And building standards are set high. Manufacturers are required to adhere to stringent HUD guidelines before a house can be shipped from the factory. Industry tests have proven that a new manufactured home can withstand weather related challenges (e.g. hurricanes, tornadoes, etc.) as well as, if not better than, a traditional stick built home.
Land - Just As Important As the Home
The time to close a manufactured home transaction can be significantly reduced by offering potential buyers a selection of company owned lots for sale from our real estate portfolio or providing them with information on other real estate available in the location of their choice. We recently purchased fifteen lots near our Tyler location and have begun marketing the lots to our clients. We also anticipate placing manufactured homes on our lots and selling them as a real estate transaction as opposed to a chattel (or personal property) transactions.
Outstanding Management Team
We have a great management team comprising our operations and our corporate/public company teams. Brent Nelms, a seasoned veteran in the manufacturing home industry, is President of Wisdom Homes Of America, Inc. Brent has successfully overseen the operations of 33 different manufactured home retail centers generating greater than $100 million in annual revenue. In addition, Brent's contacts include a deep talent pool of former manufactured home general managers that are anxious to join us as we grow our retail centers.
To date, we have never missed or been late on our annual or quarterly SEC filing requirements. This is because we have an excellent corporate team, which includes our Chief Financial Officer, Munjit Johal, our corporate attorney, Brian Lebrecht from Clyde Snow & Sessions, our auditors from Tarvaran Askelson & Company, our small public company advisor, Sabas Carrillo from Adnant, LLC and me. We have all worked together on SearchCore since the summer of 2010, and that continuity is a significant benefit for our shareholders and investors. With the addition of Brent to our team, we truly believe we can accomplish our 5-year goal.
Thank you for being a shareholder in SearchCore and for your continued support and strong belief in our products and our team. Should you have any questions please feel free to contact our investor relations advisors at Surety Financial Group by phone at 410-833-0078 or by email at info@suretyfingroup.com.
Sincerely,
Jim Pakulis, CEO
SearchCore, Inc.
Earlier rpt on them:
Searchcore, Inc. (QB) (SRER) |
| $ |
- SearchCore Announces Merriman Capital Research Update 3Q14GlobeNewswire(Mon, Nov 24)
Excerpt: '...On November 24, 2014 Merriman Capital released an investor research update on SearchCore. Merriman Capital's latest update maintains their Speculative Buy rating on SearchCore with a price target of 30 cents based on SearchCore's 3Q14 results of operations coming in as expected, resolving its near term inventory issues with an increasing credit facility, and increasing its pending home transactions from the prior quarter....'
SearchCore (SRER) announces agreements to acquire residential lots in an attempt to provide ... GlobeNewswire Disclaimer (Searchcore, SRER) ...
News (NBT Contributors, start here!) - Tobin Smith - 10/29/2014
Turn the $50 Billion Texas Housing Crisis
Into 1000%+ Profit with Wisdom Homes of America, Inc.
(division of publicly traded Searchcore, Inc SRER)SRER Records 275% Quarter-to-Quarter Growth
With 2015 on Track for 1000%+ MORE GrowthInvestment Bank Merriman Capital Issues
300%+ Higher Short Term Price TargetDear Opportunistic Investor,
Remember the American Dream?
Freedom and opportunity…
…turned working middle-class Americans into single family homeowners…
…as they achieved the American dream: a job that paid a middle class wage and provided a single family home you could afford to raise a family in.
FAST FORWARD TO 2002-2008
The Wizards of Wall Street turned the "American Dream" into a 5000+ square foot house the average hard working American household could somehow BUY but not afford…
And you know the rest.
The Great Recession killed the American Dream for millions of Americans and left in its wake millions of foreclosed McMansions and broken dreams.
Am I saying the American Dream is dead?
HECK NO: I'm here to tell you that the NEW
American Dream in 2014 is ALIVE and WELL…
But For Most Americans THIS Is What it
Looks Like Today:
The New American Dream home is a brand new 1800-2200 square foot 3 bedroom 2.5 bath home stuffed with ALL the fancy amenities we love. It sits on ¼-1/2 acre of land.
The new owners live within an easy commute to an almost endless supply of WELL paying middle class jobs available for virtually everyone willing to work hard.
LOOK at these amenities!
Did I mention this lovely home on ½ Acre land
for $110,000 to $130,000 has a monthly
mortgage payment (insurance & taxes too)
around $1200 a month?$1200 a month? A great new home that hard working American families can be proud of AND afford?
So WHERE is this place and what's the catch?
The "place" is the Shale Energy Belt of America and Ground Zero is Texas and its neighbor states.
If you do NOT live or visit the Shale Energy Belt of America, you might not understand this reality:
The U.S. economic recovery is very ALIVE and VERY well in Texas, Oklahoma, Kansas and basically everywhere you see a LOT of red dots:
The catch: Much of available housing is in/near the big cities and a LOT more expensive. 1200 square foot apartments run $2000 a month. Average home prices $240,000 to $300,0000.
Affordable homes do not list—they sell by word of mouth.
Labor is driving 2-3 hours a DAY to get to jobsites. Families with 2 kids are living in small apartments.
FACT: Affordable housing in much of America's Shale Energy Belt is in crisis: The region needs to build about 50,000 of these affordable manufactured homes a YEAR through next decade.
Why? Because DEMAND for affordable housing near rural energy production sites outstrips SUPPLY for the affordable New American Dream homes by @10-to-1 (source: Texas Housing Board and Manufactured Housing Institute).
Add it all up and this is a $50 BILLION crisis…that is how much new housing needs to be built near the millions of jobs being created in the Shale Energy Belt of the United States (source: HUD and Texas Economics Institute reports).
SearchCore's Golden Opportunity:
Grow from 5 Retail Centers in Texas…
…to 30 Retail Centers Region Wide
and $100,000,000 in Revenues by 2018The SearchCore/Wisdom Homes of America game plan is very simple and very profitable: provide the New American Dream home to meet the virtually endless demand for affordable housing in the fastest growing rural/semi-rural regions of the American Shale Energy Belt.
Wisdom Homes grosses $20,000 to $30,000 net PROFIT on each sale of EVERY home (more with sale of home and land).
This is a numbers game pure and simple: the more stores, the more sales. The more sales the more expansion capital to open…more stores!
This is the Wisdom homes mantra: sell 4.7 houses per month per location, with a gross profit of $62,500. Very achievable.
Eagle Ford Shale pumped close to $90 billion into Texas economy last year
Oil and natural gas production in Eagle Ford Shale generated an estimated $87 billion in total economic output for Texas and supported nearly 155,000 full-time jobs in 2013.
That's according to a new study released Tuesday by the University of Texas at San Antonio Institute for Economic Development. The shale region, which encompasses a 21-county, and generated more than $4.4 billion in tax revenue to local and state governments in 2013.
Based on these updated figures, UTSA projects that the shale region will support more than 196,000 jobs and generate $137 billion in total economic output for Texas by 2023. Economists are taking into account the economic impact of new manufacturing projects associated with the rise of natural gas production as well as the construction of additional oil-and-gas processing, refining and port facilities.
30 regional stores @ $3.3 million a year in sales adds up to just about $100,000,000 in annual sales—pretty simple math.
Specifically, the Wisdom Homes management team game plan is to build SRER into:
#1 The largest independent manufactured home retailer in the U.S.
#2 With 30 Retail Stores in the Shale Energy Belt regions over the next 48 months
#3 Achieve projected annual revenue in excess of $100 million by end of 2018
Ambitious goals for sure…so
How do I KNOW SRER has the potential to grow so fast?
THE PRODUCT: Manufactured Housing Quality 2015. The line has been blurred between manufactured homes and traditional "stick built" homes for years—I bet you didn't know that!
The last 10 years have produced significant improvements in quality (built in controlled environment), size (up to 3,500 sq. ft.), with stick built like features (vaulted ceilings, rock fireplaces, upgraded appliances, marble counters).
To say the least, today's luxury manufactured home product in NO WAY resemble what most people perceive to be small, virtually windowless and very cramped single wide "mobile homes."
Why the almost limitless demand?
THE AFFORDABILTY: According to Manufactured Housing Institute research, the average retail manufactured house is $46 per square foot versus a traditional stick built home at $95 per square foot.
…Hotter than an
Asphalt Highway in
the Middle of July
#1 Hottest Housing Market in US—Fort Worth Texas
- Median home price : $181,300
- Forecast gain through Sept. 2014: 8.9%
- A more employers move into the metro area,
- A surge in buyer demand -- and home prices.
- Amazon is building a distribution warehouse in that will employ 1,000 workers. Wal-Mart and Motorola are also planning new facilities there, according to the Fort Worth Chamber of Commerce.
- CoreLogic Case-Shiller forecasts that home prices will climb 8.9% in the Fort Worth metro area for the 12 months through September.
Dallas Magazine saysThe Hottest Dallas Housing Market Ever
- In the 12 months ending in August 2014, a total of 90,921 permits were issued, 7.8 percent more than in the previous year.
- During the 12 months ending in August 2014, a total of 64,042 permits were issued, 16 percent more than in the previous year.
- In August 2014, there were 27,999 sales of existing single-family homes, 1.2 percent less than in August 2013
Why LESS single family home sales?
VERY little inventory of available affordable housing for the under $75,000 income household.
HOUSTON, Texas--Jobs are being created faster in Houston, Texas than in any other U.S. city, according to a new report. The revelation comes as no surprise to many--the city's booming gas and oil industry has allowed inhabitants to prosper and land jobs that pay well.
Three Texas cities made the list of top five cities for job growth: Houston, first place; Dallas, second place; and Austin, fifth place.
Bill Evans, 2014 President of the Austin Board of REALTORS®, explained, "September's 10% increase in home sales, despite ongoing issues in housing affordability, is a testament to the strong population and job growth that the Austin area and its economy continue to enjoy. However, these records in home prices also show that area homes continue to become more and more unaffordable for Austin homebuyers.
An 1,800 square foot 3 bedroom, 2 bath manufactured home on a one half acre parcel of land in the much of the Southwest sells for approximately $130,000. Including the interest deductibility on the mortgage, the monthly cost of OWNING a manufactured house can be up to 25% LESS than RENTING a comparably sized apartment or single family home.
THE SIZE OF THE MARKET: According to the Manufactured Housing Institute research, the market for manufactured homes is very competitive for young people since 59% of MH owners are under the age of 50.
84% of manufactured home buyers make $50,000 or less per year. Average 2013 US household income was $52,250 per US census bureau. Facts are most US households CAN afford a modern amenity laden manufactured home.
Today in the Southwest, many households CANNOT afford or cannot find a new traditional stick built home—THAT is the affordable housing crisis Wisdom Homes is doing its best to help solve.
EXPERIENCED LEADERSHIP - Combined total of over 50 years of retail manufactured home center management experience.
Brent Nelms, Wisdom Homes President, has been in the manufactured housing industry for over 30 years, and helped oversee 30 retail locations generating $100 million in annual revenue.
He leads a deep bench of dozens of highly experienced manufactured housing sales people and installation experts who have decades of retail manufactured home center development, operation, marketing and sales in Texas and the Southwest/Midwest.
Jim Pakulis, CEO, has three decades of experience working with entrepreneurial companies in a variety of emerging and high-growth sectors including Internet, finance, real estate and health care. He has extensive experience in all aspects of corporate management with both public and private enterprises, including strategy development and execution, operations, mergers and acquisitions, real estate transactions, finance/accounting, legal and human resources.
LACK OF COMPETITION: the Great Recession wiped out hundreds of manufactured housing retailers in 2008-2010 as the traditional source of inventory dried up to zero with the failure of banks and financial services firms serving the $6 billion a year industry.
The industry is now dominated by giant Clayton Homes (acquired by Berkshire Hathaway in 2004 for $1.7 billion) with 890 manufactured home retail centers and 30 factories, and Cavco, which several years ago acquired Fleetwood and Palm Harbor with 47 store owned retail centers and 15 factories throughout .
But virtually ALL the exploding demand for affordable housing within Texas and the Shale Energy Belt comes from
The INCREDIBLE NUMBERS of Jobs
Being Created Right Now!
Along with jobs at well pads and production facilities, the energy boom will vastly increase employment throughout the shale economy. Energy services. Professional Services. Manufacturing. Retail services. Consumer services. Healthcare.
By 2020, new jobs that can be attributed to higher oil and gas production in the Shale Energy Belt will reach 3.3 million, according to the same IHS report.
Where are all these new families going to live?
FACT: with average oil and gas well generating 62 new jobs and $4 million in economic activity (source: Texas Railroad commission), SRER's growth strategy is very simple: EVERY new well drilled creates demand for about 25 NEW places to live within a 30 minute drive of the well.
NOW you understand why the demand for affordable housing market in Texas is…
OK—So just how much profit can be made
Riding the Affordable "Shalesville" Housing Wave
with SearchCore (SRER)?Today SRER stock trades around 10 cents and a $4 million valuation. In other words, peanuts.
Understand they completely transformed the company starting in early 2014 to gear up for this opportunity.
SRER only started selling their first homes in August 2014. Sales tripled in Q3…forecast to triple in Q4 as another new store comes on line. They have up to 5 new stores planned to open over the next 12-months.
I'll let the investment analysts at Merriman Capital research make the short term call on what they conclude is fair valuation for SRER stock through 2015.
"Our 30 cent price target is based a 3-times sales multiple to our FY15 revenue estimate of $6.2 million, which we then discounted by 30% to account for time value, adoption and execution risk. When we assign this figure to our FY15 diluted share count of 47.0 million, we arrive at our 30 cent price target.
We are modeling geometric year-over-year growth and thus believe our 3x multiple is conservative as many companies that exhibit this type of top line growth trade between 5-10x sales."
Look…I'll take a 300% profit any day.
But I'll be holding my shares in SRER for a while longer…for a much BIGGER payday.
I would not consider selling my shares until Wisdom Homes reaches at least $40 to $50 million in annual sales and are big enough to be a very nice acquisition for the national players in the THEN $6 billion US manufactured housing industry.
With 50,000,000 shares outstanding and $50,000,000 in sales at the Merriman 3X valuation, SRER (which will change its name to Wisdom Homes of America, Inc. soon), that is
$150,000,000 Value/50,000,000 shares or $3 a share…a 30-bagger.
Discount this outcome 30% and it's a 20-bagger…2000% profit from here.
Three times sales at $12 million in sales is a $36 million value…a 10-bagger from here.
Look: I'm not a fortune teller and nothing in business works in perfect line.
But at today's microscopic valuation and such a big runway of sales growth ahead, I am more than willing to bet on the Wisdom Homes of America team and the continuation of the Shale Energy Revolution for many, many years.
Final Point: For Risk Tolerant Investors with More than a One-Year Horizon This Should be a No-Brainer Decision…
…For Risk Tolerant Investors Who Live in the Shale Energy Regions of America and SEE The Shortage of Affordable Single Family Housing Every Day of their lives, This Opportunity IS a World Class No-Brainer.
Final Point: The opportunity to ride the affordable housing wave in the Shale Energy Belt of the United States with SRER is without a doubt one of those few times in an investor's life when they truly have the opportunity to catch lightening in a bottle…
…to become a ground floor investor with a proven management team riding a wave of sales and demand growth STRAIGHT to the moon.
For all the reasons stated above, I think there is a strong case for SearchCore/Wisdom Homes of America (SRER) having the very real potential to be one of those life-changing investments in your portfolio.
That is IF you don't wait too long and build you positions NOW at this current value.
Yours for Life-Changing Wealth,
Tobin Smith, C.E.O., NBT Equities ResearchPS: My transformational growth recommendations like SRER are up 51% so far in 2014 (Sept 30) — Get the full story on Next Big Thing Investor Pro here...
SRER is most definitely a
"TAKE ACTION" OPPORTUNITY!Here's what to do now:
Call your broker and discuss how large a position of SearchCore (SRER) you can comfortably own. Refer your broker to this report. All the information you've read here is publicly available... easy for your broker to verify. Tell him about me... my credentials. When your broker has done his homework for you I predict he will agree that SearchCore Inc. (SRER) is an opportunity that you must act on now for your aggressive risk capital. Or... If you take care of your own account, go online now and verify what I have shown you here today... and download our Special Report. When you are done... I am confident that you will buy a block of SearchCore, Inc. (SRER) at a price that could allow you to multiply your money by as much as 10X ...or higher…as news of this amazing growth company makes its way to Wall Street
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