Hubilu Venture Corporation: 2024 10-K Deep Dive

In this comprehensive review of Hubilu Venture Corporation’s (OTC Pink: HBUV) 2024 10-K, we dissect the company’s business model, recent performance, financial health, and key risk factors to help investors decide whether HBUV is a viable opportunity.

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Table of Contents

1. Business Description
2. Industry and Strategy
3. Portfolio and Acquisitions
4. Consulting Operations
5. 2024 Financial Highlights
6. Balance Sheet and Liquidity
7. Cash Flow Analysis
8. Debt Profile
9. Risk Factors
10. Governance and Control
11. Conclusion and Investment Score

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1. Business Description

Hubilu Venture Corporation is a publicly traded real estate consulting and acquisitions firm headquartered in Beverly Hills, California. Founded in 2015, the company operates in two complementary segments:

• Real Estate Acquisitions: Owns and manages single-family and small multi-family rental properties, primarily in the Los Angeles market.
• Real Estate Consulting: Provides research, analysis, and acquisition advisory services to investors and developers on a fee basis.

Hubilu is not a brokerage; it focuses on analytical services and direct acquisitions. The company is controlled by CEO and Chairman David Behrend, who owns approximately 95.3% of the common stock.

2. Industry and Strategy

Industry Context

• Residential Rental Demand: Los Angeles faces chronic housing shortages, with average rents rising from ~$750 (2005) to ~$2,100 (2024). Off-campus student housing and corporate rentals remain high-growth niches.
• Higher Financing Costs: Elevated interest rates have tempered new builds, creating buying opportunities at attractive yields.

Hubilu’s Dual Strategy

1. Property Acquisitions

• Target undervalued or cosmetically distressed homes for rental or redevelopment.
• Focus on areas near USC, Metro stations, and corporate hubs.
• Acquire 5 new properties in the next 12 months to boost cash flow.

1. Consulting Services

• Offer flat-fee or hourly advisory on market due diligence, financial modeling, lease structure, branding, and more.
• Leverage web-based tools to reduce client costs and accelerate decision making.

1. Diversification

• Expand into high-cash-flow businesses (PropTech, CleanTech, Healthcare, e-commerce) through selective acquisitions, starting with a minority stake in Gula Entities.

3. Portfolio and Acquisitions

2024 Property Additions

During FY 2024, Hubilu closed 6 new acquisitions through its Mopane Investments subsidiary:

Address	Acquisition Date	Purchase Price	Financing Structure
1100 W. 48th St, LA	10/23/2024	$650,000	60/40 first/second lien notes
1659 Roosevelt Ave, LA	08/30/2024	$760,000	60/40 first/second lien notes
802 E. 25th St, LA	08/20/2024	$650,000	80/20 first/second lien notes
1460 N. Eastern Ave, LA	06/27/2024	$670,000	55/45 first/second lien notes
1457 W. 35th St, LA	06/20/2024	$710,000	85/15 first/second lien notes
4700 S. Budlong Ave, LA	05/07/2024	$649,000	75/25 first/second lien notes

On November 20, 2024, the 4700 Budlong Avenue loan was refinanced at a lower interest rate (7.125%) and extended to 2054. Similar refinancings occurred at 3910 Walton and other properties to lock in long-term financing.

Portfolio Snapshot

• Total Properties: 30
• Geographic Focus: Los Angeles, CA
• Holding Structure: 9 single-purpose LLCs

4. Consulting Operations

Hubilu’s consulting services kicked off in June 2015. Key offerings include:

• Market trend analysis
• Corporate entity structuring
• Financial & lease modeling
• Branding & PR strategy for leases
• Tenant mix & operating strategy
• JV partner introductions
• Investment and relocation analysis

Fee Model: Flat fees and hourly rates. Consulting revenues are still ramping, with property rental revenues forming the core.

5. 2024 Financial Highlights

Metric	2024	2023	% Change
Rental Revenue	$2,232,412	$1,885,985	+18%
Operating Expenses	$1,109,297	$1,142,038	–3%
Net Operating Income	$1,123,115	$743,947	+51%
Other Expenses	$1,309,352	$1,019,279	+28%
Net Loss	$(186,237)	$(275,332)	–32%

Details

• Revenue Growth (+18%): Driven by six acquisitions in 2024.
• General & Admin (+142%): One-time setup costs and increased headcount.
• Repairs & Maintenance (–67%): High catch-up costs in 2023.
• Depreciation (+9%): New assets added.
• Finance Costs (+22%): Higher interest and refinancing costs.
• Net Loss Improved: Reduced from $275k to $186k, reflecting better operating leverage.

Net Loss for FY 2024: $186,237

6. Balance Sheet and Liquidity

Metric	Dec 31, 2024	Dec 31, 2023
Cash	$9,799	$24,564
Total Assets	$20.94M	$16.56M
Current Liabilities	$2.60M	$1.78M
Working Capital (Deficit)	$(2.58M)	$(1.74M)
Total Debt (Net)	$20.21M	$15.60M
Preferred Dividends Payable	$205,483	$179,463
Accumulated Deficit	$(2.31M)	$(2.12M)

Key Points:

• High Leverage: $20.2M net debt vs. $20.9M in assets.
• Working Capital Deficit: Minimal cash cushion of $9,799 signals near-term liquidity risk.
• Preferred Series 1: 520,400 shares with cumulative 5% paid-in-kind dividends.

7. Cash Flow Analysis

Flow Category	2024	2023
Net Cash from Ops	$188,394	$110,233
Net Cash to Invest	$(606,796)	$0
Net Cash from Finance	$403,637	$(177,737)
Net Change in Cash	$(14,765)	$(67,504)

• Operations (+71%): Better occupancy and new acquisitions.
• Investing: $606k for new properties and strategic stakes.
• Financing: $403k from new mortgages; refinancings reshape payment profiles.

8. Debt Profile

Total Mortgage Debt: $20.54M in 33 separate notes (first & second liens), with rates ranging from 4.625%–10.99%, maturities from 2029–2054.

Impairment on Non-core Investment: $80,940 loss taken on minority stake in Gula Entities.

Peak Debt Service:

• 2025: $1.74M of scheduled principal payments, plus interest

9. Risk Factors

Most Material Risks

1. Going Concern: Negative working capital, accumulated deficit, cash < $10K.
2. Concentrated Revenue: A single tenant once generated ~64% of revenues; that client departed Nov 2024.
3. High Leverage: 20× debt to equity, with principal balloon payments ahead.
4. Control: 95.3% ownership by CEO limits minority voice and corporate governance.
5. Penny Stock Status: Illiquid trading, subject to OTC‐Pink and penny-stock regulations.
6. Limited Internal Controls: Material weaknesses in segregation of duties and tax accounting.

Additional Considerations

• Market Dependence: Heavy LA concentration; downturns or rent controls could impair cash flow.
• Capital Needs: Future growth and remediation of control issues require additional capital, likely with dilution.

10. Governance and Control

• Board: One director (Behrend); no independent audit or compensation committees.
• Controls: Material weaknesses in internal control over financial reporting.
• Code of Ethics: Adopted, but implementation constrained by resources.
• Related Party: $474k due to CEO’s entity; multiple related-party notes.

11. Conclusion and Investment Score

Hubilu Venture Corporation presents a classic microcap real estate play:

• Pros:
• Improving operating results in 2024.
• Well‐located LA portfolio with 30 assets.
• Aggressive growth strategy with refinancings locking long-term rates.
• Cons:
• Severe liquidity constraints and going-concern risk.
• Heavy debt load and balloon maturities.
• Near‐term reliance on new capital or asset sales.
• Significant governance and concentration risks.

Net Loss: $186,237 (2024)

Investment Score: 3.2 / 10

**Hubilu has momentum in operations but is heavily leveraged and undercapitalized. Until the balance sheet is fortified or governance strengthened, HBUV remains a high‐risk speculation.**

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Legal Disclaimer: This analysis is for educational purposes only and does not constitute investment advice. Always conduct your own due diligence.