- 23 would-be buyers of Boxabl homes say they have asked for their deposits back or plan to.
- Many customers say they have been pitched on forking over more money to buy shares in the startup.
- The maker of tiny homes faces a cash crunch if it cannot secure additional investment or financing.
Boxabl, the tiny homebuilding startup, has pointed to its waiting list of 175,000 buyers as evidence of the company's boundless business prospects.
But many of Boxabl's largest depositors who paid $1,000 or more to reserve its signature 361-square foot, foldable unit – known as the Casita – have sought reimbursement from the North Las Vegas-based firm. While most of those customers say they have received their money, some said their refund requests were disputed or ignored. One, a 68-year-old California resident who had put down $3,600 nearly three years ago, was rejected outright.
Business Insider communicated with 35 aspiring purchasers who had made down payments for one or more Casita, which has a list price of $60,000 each. Two-thirds, or 23, of those people said they had asked to be refunded, or were going to ask Boxabl for their money back. BI contacted more than 100 depositors.
Most said they had grown weary after waiting years, were put off by sparse communication from Boxabl, and had lost confidence in the uncertain future timeframe for delivery. None had received a unit or any assurance from the company when they would.
"It always felt like a carrot dangling out of reach," said Dan Pena, a realtor based in Los Angeles who put down a $5,000 deposit for a Casita in 2021. Pena said he planned to install the home on a plot of land he owns near Joshua Tree National Park, but by mid-2022, had lost faith the company would deliver and asked for his money back. Boxabl refunded him, he said.
Chris Armbruster, a mortgage broker based just outside of Fort Worth, Texas, said he too had deposited $5,000 in 2021 for a Casita that he had planned to use as a pool house at his home. He said he received little communication from the firm in the nearly three years that followed and grew concerned when he was unable to reach anyone by phone.
In recent weeks, a Boxabl representative finally reached out to him, but to Armbruster's frustration, it was a salesperson who had called to pitch him on purchasing stock in the company.
"I actually want to get a refund back," he said he told the person.
Boxabl did not respond to multiple requests for comment for this article.
Getting pitches on shares in the company
Several people who had placed deposits for a Casita said they were also bothered by the way Boxabl frequently pitched them on purchasing shares in the company while their orders hung in limbo.
Gary Palmer, who lives with his wife in Riverside, California, put down a $5,000 deposit in late 2021 but said Boxabl "never communicated again at all" with him "other than to send me junk mail about investing in the stock."
He said that after numerous attempts to contact the company, he reached a representative on the phone in January.
"Hey, I want a refund, this has been too long," he said he told her.
She said she would have someone from the company call him back to arrange his reimbursement, but no one ever followed up.
"Everyone understands this is a new company, but if you don't communicate at all, it just looks like a scam," Palmer said.
Palmer said he had originally considered placing down payments for as many as 10 units, which he planned to install on a lot and rent for income. He's now relieved he was cautious.
In its most recent financial disclosure filed with the Securities and Exchange Commission, Boxabl disclosed it refunded nearly $1.5 million in customer deposits between January 2022 and September 2023.
It took in $435,100 in customer deposits in the first nine months of 2023, a marked decline from the $3.3 million it accepted in all of 2022. In total, it held about $4.1 million in customer deposits at the end of September 2023, about $170,000 less than at the start of the year.
The apparent shift in consumer sentiment is one of a number of challenges facing the firm.
Boxabl reported just $160,094 of revenue in the first three quarters of 2023 and has burned through cash at a rate of about $3 million a month. At the end of September, the company said it held $57.3 million, compared with $83.4 million at the end of 2022.
Based on the company's current burn rate and its plans to spend $12 million in additional funds on equipment upgrades to automate its manufacture, it could run out of cash by the end of the year if it is not able to secure additional investment or financing.
In its SEC filing, Boxabl noted that deposits "have not been maintained in a segregated account," suggesting that if the company were to run out of funds, customers could lose their cash.
Factory techniques and innovative design
The company has sought to tackle America's housing crisis by using factory production techniques and an innovative design to cut the costs and ease the logistics of homebuilding.
Its mission, along with savvy marketing, resonated with the public. In addition to the millions of dollars in deposits it received for its units, the company has sold over $150 million worth of its shares, mostly to everyday investors through crowdsourced funding rounds. To entice stock buyers, the company has trumpeted its long waiting list as proof of the overwhelming demand for its product and the billions of dollars in revenue it says it could one day earn.
Boxabl, however, has built only a few hundred homes in seven years of existence – a fraction of the many thousands annually that Galiano Tiramani, Boxabl's 37-year-old cofounder and head of marketing, has suggested its factory methods would allow.
The company has raised criticisms from former employees over its corporate governance and management and recently attracted the attention of SEC investigators.
Boxabl has had flashes of success. It sold 156 units in 2022 that were installed at the US military base in Guantanamo Bay. Boxabl said it recently received approval to sell its homes in Arizona and is close to receiving similar clearances in California and Nevada. It recently announced an Oklahoma City project on land owned by the local Archdiocese that it said would be delivered in the spring of 2024.
Zach Punnett, the developer planning the Oklahoma City project, said he believed Boxabl is focusing on fulfilling orders first with professional builders like himself. Besides the fact that these customers are more lucrative, he said, they also have the know-how and resources to deal with the logistics of installing the units and steering projects through local building codes and regulations.
"You have to put it in the hands of a developer first to get it across the hurdles," Punnett said.
In a February video interview, Tiramani said that the company has units in California, Virginia, Nevada, Arizona, Utah, and Hawaii and suggested that its biggest hurdle was government red tape.
Tiramani strolled past dozens of finished homes sitting outside of the company's factory that were originally built for a project in Arizona. Regulators in the state later sanctioned Boxabl for installing some of the units before it had secured the necessary approvals there, halting that development midway. Boxabl paid a nearly $50,000 fine over the incident, and it remains unclear whether it will deliver the remaining Casitas connected to that order.
"People are complaining, they're saying, where are your houses? why are they sitting in your parking lot? and I'm trying to show them this is why," Tiramani said.
"It's grueling, and it's frankly brutal," he said. "Everyday we feel like we're fighting in a war."
What's coming next
Despite the difficulties that have beset the launch of the Casita, Tiramani suggested he had even more grandiose ambitions during the interview, showing off a new, larger model home that he said he was hoping to mass manufacture for developers who would use it to raise 1,000-unit communities.
Galiano and his 63-year old father, Paolo Tiramani, who serves as Boxabl's chief executive, have profited handsomely from their involvement in the firm. The two have sold millions of dollars worth of their own shares in the private company, paid themselves salaries of nearly a million dollars apiece annually, and have used the company's funds to lease themselves luxury automobiles, including a Tesla Plaid sports car.
There are signs, however, that Boxabl's spigot of cash is running dry. In addition to the decrease in deposits, the company's latest fundraising effort in Canada, through the crowdfunding platform FrontFundr, has managed to attract only $432,318 despite being online for months – far less than the millions of dollars that used to flood in.
Peers in the notoriously cyclical homebuilding business have struggled recently. Veev, for instance, was forced to abruptly close at the end of last year after investors withdrew an expected $200 million investment in the company. It was later sold at a steep discount.
Amid its own dwindling cash supply, Boxabl has recently appeared less willing to grant refunds to some depositors who want out.
Helene, who lives in Atlanta and put down two deposits totaling $1,400 in 2020 and 2021, had her request for a refund denied over email at the end of 2023. In February, after an extended back and forth with Boxabl, a representative called her to finally process her refund. Shaken by the posture the company took with her, she asked that her last name not be used in this article.
Ali Faraji, a 68-year-old California resident who deposited $3,600 with the company in 2021 for three Casitas that he planned to install on a lot he purchased in the coastal California town of Aptos near Santa Cruz, said that after years of waiting, he recently sold that property and scuttled his plans. When he sent an email in January to Boxabl asking for a refund, the company declined his request.
"We truly appreciate you choosing to pre-order a Casita and understand that circumstances can sometimes change," an email from Boxabl to Faraji read. "However, as outlined in our Reservation Program Agreement, the deposit made for the Casita reservation is non-refundable."
Faraji, who moved to California before the pandemic after a divorce, said the company had never before communicated to him that it would not return deposits and that if he had known that at the outset, he wouldn't have put money down. He said that he would complete his purchase of the units if the company was ready to deliver, but that after almost three years, the uncertainty of waiting indefinitely had become untenable for him.
"If you can deliver, do it," Faraji said. "Or give me my deposit back."
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