CELEBRATION, Fla., Oct. 18,
2023 /PRNewswire/ -- La Rosa Holdings Corp made its
Nasdaq debut in October, completing its $5
million IPO by selling one million shares of LRHC stock.
While an excellent milestone was reached, it's not the only one
LRHC intends to score in 2023 and 2024. In fact, they have quite a
story to tell, which could set up Q4 as more than a period of
milestones reached but position La Rosa for a catalyst-filled
2024.
To learn how and why post-IPO La Rosa Holdings can become a
familiar name in the sector, Hawk Point Media, Llc. reached out to
its CEO, Joe La Rosa, to get a
first-hand account of how and why he thinks his company is on the
precipice of transforming many parts of the real estate sector.
Here's what he said.
Q. Joe, after completing your IPO to the Nasdaq markets on
Tuesday, your company appears well-capitalized to advance a unique
mission in the real estate sector. Please briefly overview what La
Rosa Holdings intends to do post-IPO.
A. Foremost, we are better positioned than ever to accelerate
our mission of transforming a real estate sector that's been doing
things the same way for the past fifty years. And we are more than
positioned to take that challenge; it's a mission in progress
utilizing an innovative platform and a team-centric approach to
real estate transactions that led to us completing $2.9 billion in total transaction volume, opening
offices in six states, an agent headcount of 2,450, and, in 2022,
led to completing 8,300 total transactions. As impressive as they
are, I think those numbers are a precursor of more appreciable news
in the coming weeks and months. That's not only because we have
motivated agents but instead from doing things differently than a
real estate industry stuck on auto-pilot for decades.
Q. Some say your timing to earn your Nasdaq listing comes
during a challenging time. Do you agree?
A. Yes, but to an extent. The residential and commercial real
estate markets are indeed working through a "challenging" period
from a series of interest rate hikes and an imbalance in supply and
demand. However, these challenges won't affect every company the
same way. La Rosa Holdings provides an excellent example of
why doing things differently can create competitive advantages.
Remember, the real estate sector is a $113 trillion sector in the U.S. Markets alone.
So, there's plenty of deals to be made. We believe we can earn
significant deal-making traction this year from our over 35
offices, 2450 agents, and an innovative platform that is designed
to expedite closing deals and rewarding listing and selling agents
not a "percentage of a percentage" as a commission but instead 100%
of commissions, less a $75 monthly
dues and a small one-time transaction fee of up to $495.
Q. That's a big difference. Can you expand on
that?
A. Sure. Traditional real estate transactions include having a
buyer and a seller. Obviously, that part continues. But from that
point forward, La Rosa takes a different approach to how money gets
made. Our agents, which can be affiliates or franchised owners,
earn 100% of a sales commission less the fees mentioned earlier.
For example, assume a home sold for $350,000. On average, a traditional brokerage
model would earn a 3% commission. From that $10,500, the brokerage house may make about 30%,
or $3,150. The other 70% would then
pass to the agent, generating $7,350
as a net commission. Here's the La Rosa advantage.
Our agents get the entire $10,500,
less a current $60 association dues
paid once per month no matter how many deals they close, and a
transaction fee of at most $595, no
matter the sale size. That's a nearly 32% pay increase by utilizing
La Rosa tools. Considering Team La Rosa generated $2.9 billion in transactions last year, that's a
significant amount of money being kept in agents' pockets instead
of the brokers, which we think are not entitled to take that money
from a selling agent.
Q. That may be true, but those brokers have overhead that
needs to get paid, right?
A. Absolutely. But in many cases, broker offices have bloated
expenses because they also want to make as much money as they can
as fast as they can. At La Rosa, we also want to make money, but
not at the expense of our agents. Instead, we have developed a
platform enabling our agents to find, list, and sell properties
faster and with low overhead.
In fact, a La Rosa agent can get all the benefits we offer
without a home office. They can meet clients in the field. That's
happening as we speak from our current 35 affiliate and franchise
offices in California,
Georgia, New York, Puerto
Rico, South Carolina, and
Florida. If they choose that
method, they pay $75 a month for
dues, which enables them to use our platform, and a one-time
transaction fee, currently $495 or
less, no matter the transaction size. Thus, an agent can make tens
of thousands more dollars on a one-million-dollar property sale. Not only that,
in addition to expenses for them capped, La Rosa agents are not
dependent on anyone else but themselves to keep the lights on,
which we believe is a primary reason that agents are signing on to
our team at a faster pace than ever.
Q. You mentioned the "platform" several times. What is
that, exactly?
A. I like to describe the La Rosa platform as facilitating a
win-win-win proposition whereby buyers, sellers, and agents
benefit. Residential clients benefit from the platform simplifying
the buying and selling process and, importantly, enabling them to
leverage our strength in limited inventory markets where
competitive bidding and multiple offers can create considerable
emotional stress.
Agents win from our providing all the tools needed to meet
demanding client expectations, especially the current technologies
required to successfully battle intense competition. We don't just
get listings and post a flyer. We provide our agents a one-stop
shop, providing ancillary services like mortgage insurance and
title services. Moreover, La Rosa agents learn proprietary
technology, receive ongoing training, and can tap into
results-driven coaching from a La Rosa team equally committed to
making its representatives deal-making leaders.
Q. Is that primarily what the IPO capital will go
toward?
A. Yes, the money raised from our IPO will facilitate expanding
our award-winning performances across the country. We at La Rosa
believe agents will be receptive to our opportunities, especially
in a highly competitive marketplace where fewer deals may happen.
In other words, through La Rosa, making fewer deals doesn't
necessarily amount to less earnings. That is unique to Team La Rosa
and a reason why we are attracting agents at the fastest-ever pace.
And if agents are struggling, we provide coaching and market
support. So, while you see our name prominently in six states where
the largest real estate markets thrive, our use of capital will
help expedite expansion into other states via franchise or
affiliate agreements.
Q. You discussed how well agents can do as a Team La Rosa
member. What about La Rosa Holdings itself?
A Great question. We earn revenues from franchising, member
dues, and a 10% commission from commercial transactions. Again,
that 10% is from commercial sales, not residential. The franchisee
pays a one-time upfront fee and monthly dues, currently
$75. We also earn from the mentioned
ancillary services and from late fees, interest, and audits.
Remember that we are already a revenue-generating company. We
generated revenues of over $26.2
million in FY2022, higher by over 8% from the $24.1 million earned in FY2020. Even during the
historic market disruption caused by COVID, we generated FY2021
total revenues of $28.7 million.
Going into Q4 and 2024, Team La Rosa is confident that scoring
higher revenues is not only a target but is already in the
crosshairs.
Q. At $5.00 a share on your
market debut, is La Rosa Holdings appropriately priced?
A. Look, we are excited to be listed and are incredibly proud of
the team that helped us reach this historic company milestone. But
to answer your question more directly, I'd say yes. That's my
biased opinion and not guidance. However, I don't make that
statement on blind faith. Instead, it's a sentiment based on
industry multiples.
For example, RMAX scores a P/E of 10.61 as of October 13, 2023, and a company similar in some
ways to us, eXp World Holdings an aggressive P/E of 285.8 on the
same day. I can further justify my case on a comparatives market
cap basis with companies that are more closely aligned with what we
do. Fathom Holdings, eXp World Holdings, and The Real Brokerage
Inc. increased by 42%, 81%, and 34%, respectively on a comparative
quarterly basis. We think we can share that trajectory once people
get familiar with our transformative business model. Plus, we
intend to keep adding to our portfolio holdings. An example is a
deal made on Tuesday, where we acquired a controlling interest in
one of our franchisees - La Rosa Realty Lake Nona, Inc. in
Orlando, Florida. Lake Nona
generated revenue in excess of $9.8
million and positive net income in 2022. Thus, in addition
to supporting a higher market cap, it's quickly accretive to our
bottom line. Those examples support the case for valuation upside.
And I think once the post-IPO turbulence fades, upside is the
expected path of least resistance.
Q. Finally, you mentioned markets are "challenging."
Can La Rosa succeed in this
environment?
A. We will more than succeed; we will thrive. What's important
to understand is that while interest rates are at 7% and higher in
some cases, that's not out of the "artificial normal" created by
the pandemic. While many are getting sticker shock, from a
historical perspective, current rates align with decades of
precedent. In fact, between April
1971 and September 2023,
30-year fixed-rate mortgages averaged 7.74%.
Therefore, my team and I expect that once people get accustomed
to a more appropriate and historically normal interest rate
environment, the real estate market, residential and commercial,
can see a tremendous rebound. In the meantime, we are doing what we
do best: attracting exceptional talent and letting them accrue the
lion's share, 100%, of commissions. Making everyone's world happy
is our value driver. Based on awards and recognition earned, we are
obviously doing the right things at the right time, which when
combined, position La Rosa Holdings to have an excellent 2024.
Forward-Looking Statements
This press release contains forward-looking statements
regarding the Company's current expectations that are subject to
various risks and uncertainties. Such statements include statements
regarding the Company's ability to grow its business and other
statements that are not historical facts, including statements
which may be accompanied by the words "intends," "may," "will,"
"plans," "expects," "anticipates," "projects," "predicts,"
"estimates," "aims," "believes," "hopes," "potential" or similar
words. . These statements are not guarantees of future
performance and are subject to certain risks, uncertainties and
assumptions that are difficult to predict. Actual results could
differ materially from those described in these forward-looking
statements due to certain factors, including without limitation,
the Company's ability to achieve profitable operations, customer
acceptance of new services, the demand for the Company's services
and the Company's customers' economic condition, the impact of
competitive services and pricing, general economic conditions and
other risk factors detailed in the Company's filings with the
United States Securities and Exchange Commission (the "SEC").. You
are urged to carefully review and consider any cautionary
statements and other disclosures, including the statements made
under the headings "Risk Factors" and elsewhere in documents that
we file from time to time with the SEC. Forward-looking statements
contained in this press release are made only as of the date
of the this press release, and La Rosa does not undertake any
responsibility to update any forward-looking statements in this
release, except as may be required by applicable law. References
and links to websites have been provided as a convenience, and the
information contained on such websites is not incorporated by
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The Private Securities Litigation Reform Act of
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discussions with respect to predictions, expectations, beliefs,
plans, projections, objectives, goals, assumptions or future events
or performance are not statements of historical fact may be forward
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are made that involve a number of risks and uncertainties which
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understands, or that by statements indicating certain actions &
quote; may, could, or might occur. Understand there is no guarantee
past performance will be indicative of future results. Investing in
micro-cap and growth securities is highly speculative and carries
an extremely high degree of risk. It is possible that an investors
investment may be lost or impaired due to the speculative nature of
the companies profiled.
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SOURCE La Rosa Holdings Corp