10-K: Dream Homes & Development Corp. Reports Increased Net Income for 2024, Focus Shifts to Build-to-Lease and Improved Lot Sales

Dream Homes & Development Corporation reports a net income of $875,966 for 2024, shifting its focus towards build-to-lease properties and improved lots for sale to capitalize on market trends.

Summary

• Dream Homes & Development Corporation reported a net income of $875,966 for the year ended December 31, 2024, a significant improvement compared to a net loss of $97,379 in the previous year.
• Revenue for 2024 was $4,972,827, a decrease from $5,656,452 in 2023, attributed to a strategic shift towards land development and the sale of improved building lots.
• The company is focusing on new trends in the real estate market, including build-to-lease properties and developing/improving building lots for sale to national home builders.
• Two multi-family developments, totaling 79 units, are being converted from build-for-sale to build-for-lease, which is expected to create a significant revenue stream.
• Dream Homes owns or has contracts to purchase properties representing significant future earnings in new construction or forward contracts for improved building pads.
• The company has finalized an infrastructure and construction finance facility for its Berkeley Terrace property, amounting to $4,670,000.
• The company has entered into agreements with national builders to deliver improved building sites for both the Berkeley Terrace and Lacey Pines projects.
• The company is pursuing various options for the development of the Louis Avenue property, including build-to-lease, sale of the approved parcel, or sale of the improved parcel to a national builder.
• The company took title to the Autumn Run property in early September of 2023 and intends to develop it as a land lease rental property.
• The company has signed a contract to obtain approvals, acquire and improve a 96 unit townhome property in Southern Ocean County, which has been pre-sold on an as-improved basis to a national builder.

Sentiment

Score: 7

Explanation: The document presents a generally positive outlook due to the company's increased net income and strategic shift towards more profitable ventures, but acknowledges existing risks and weaknesses in internal controls.

Positives

• The company achieved a significant increase in net income, turning a loss into a profit.
• The strategic shift towards build-to-lease and improved lot sales aligns with current market trends and lender preferences.
• The company has secured funding for key development projects.
• The company has established partnerships with national builders, ensuring a market for improved building sites.
• The company has a diversified portfolio of properties under development or contract.

Negatives

• Revenue decreased in 2024 compared to 2023, although this is attributed to the strategic shift in business model.
• The company acknowledges potential risks associated with the homebuilding industry, including economic conditions, interest rate fluctuations, and material costs.
• The company identifies material weaknesses in its internal controls over financial reporting.
• The company is subject to extensive government regulation which could cause it to incur significant liabilities or restrict our business activities.

Risks

• The company acknowledges the speculative nature of its shares and the high degree of risk involved in investing.
• The company's operations could be materially and adversely affected by outbreaks of epidemic illnesses or other adverse public health developments.
• The company is subject to risks associated with the homebuilding industry, including economic conditions, interest rate fluctuations, and material costs.
• The company identifies potential liabilities due to construction defect, product liability, and warranty claims.
• The company acknowledges the risk of raw material and labor shortages and price fluctuations.
• The company identifies material weaknesses in its internal controls over financial reporting.
• The company is subject to extensive government regulation which could cause it to incur significant liabilities or restrict our business activities.

Future Outlook

The company anticipates significant future earnings from new construction and forward contracts for improved building pads over the next 3-4 years, in addition to revenue from custom homes and elevation/renovation projects.

Management Comments

• Management is very positive about these new developments.
• Management believes that the material weaknesses set forth above did not have an effect on its financial results.
• Management believes that the lack of a functioning audit committee and the lack of a majority of outside directors, coupled with not having individuals on staff or retainer with a thorough knowledge of US GAAP and SEC rules and regulations and lack of effective oversight on the financial close process results in ineffective oversight in the establishment and monitoring of required internal controls and procedures, which could result in a material misstatement in its financial statements in future periods.

Industry Context

The company is adapting to the extreme shortage of rental properties and the increasing preference of lenders and funding sources for build-to-lease and improved lots for sale developments.

Comparison to Industry Standards

• The document does not provide enough information to make a detailed comparison to industry standards.
• Without specific data on profit margins, construction costs, and sales cycles, it is difficult to benchmark Dream Homes & Development Corporation against competitors like Lennar, D.R. Horton, or PulteGroup.
• A more detailed analysis would require comparing the company's financial ratios (e.g., debt-to-equity, return on assets) to industry averages and assessing its operational efficiency relative to peers.

Legal Proceedings

• The Company, through one of its subsidiaries, is involved in several minor lawsuits in which it expects to prevail.

Related Party Transactions

• In January 2024, the Company issued 7,000,000 restricted shares for the forgiveness of loans to General Property Investments LLC., a related party, for $105,000 in forgiveness of debt.
• The Company formerly used the services of Dream Homes Ltd. for its personnel operations.

Stakeholder Impact

• Shareholders may benefit from the company's increased profitability and strategic shift.
• Employees may be affected by changes in the company's operations and focus.
• Customers may experience changes in the types of homes and communities offered by the company.
• Suppliers and creditors may be impacted by the company's financial performance and development plans.

Next Steps

• The company plans to continue developing and selling improved building lots.
• The company intends to hold properties upon completion and lease-up for an indeterminate period of time, realizing rental income.
• The company will continue to pursue opportunities in new home construction, development approvals and sale of improved building lots.
• The company intends to take appropriate action when the Companys financial resources permit to remediate material weaknesses in internal controls.

Key Dates

Keywords

real estate development, build to lease, improved lots, home construction, residential communities, land development, modular construction, renovation, elevation, new homes