The Holistically Inspired Code
Happy Cashflow Code Day!
It's the gift that keeps on giving…
With just a few clicks of your mouse, you can generate instant income from the biggest real estate companies in the world…
As we enter the final quarter of 2023, we've been able to block out noise, distractions, and volatility in the overall market…
And keep collecting weekly cash week after week with our cashflow codes!
Even though I don't really experience autumn down here in Florida…
I can still appreciate the gorgeous change of nature's template as we head into October…
This week, we are going to use a cashflow code from an owner of Class-A multi-family properties in highly desirable locations that get the bonus of seeing the leaves changing in the fall…
We've already used this company to snag cash flow two times in these alerts for a total of $190…
And today, we have another opportunity to grab some more.
Today's company prides itself on being “holistically inspired,” which means they are socially and environmentally conscious…
While also providing amenities that tenants crave…
This allows them to have high occupancy rates by attracting tenants who appreciate what they do for the neighborhood…
But most importantly, can afford to live there.
This company's properties are situated right outside NYC and Boston, making them prime, desirable locations for those who want a short commute to these big cities…
But want to spare the expense of living in the center of them.
One of the company's properties in Tuckahoe, NY, a short train ride to NYC
Time to grab some cash flow for the third time from this company by using this specific cashflow code:
VRE240119P00015000
Before we get to all the details, here's what I'm going to cover for you:
- The fundamental story: You'll see why I'm still so excited about this owner of sustainable multi-family buildings. If you're ready to make some money from Class A properties without the hassle… you're going to love this opportunity!
- How the transaction works: You'll see how to generate at least $45 in instant cash flow. You'll see the steps involved… and I'll show you a screencast showing how to place this trade in your account.
- Ongoing support: If you're confused by ANYTHING below, simply submit a question here, and I'll do my best to cover it in our upcoming Q&A podcast that we'll email you on Tuesday around 4:00 pm ET. Remember, this is a learning process. So don't be hasty. Learn each week and write down your questions. Then listen to those podcasts to learn even more about what I'm showing you here.
Let's dive in…
The Perfect Real Estate Inflation Hedge Right Now!
Happy Cashflow Code Day!
‘Smile and dial' became my mantra after I left the trading floor…
That's because I started as a junior broker, making 600 dials a day.
If you ever saw the movie “Boiler Room,” it was like that…
I had two scripts, one to get the person interested and the other to get them excited to open an account with our hot stock pick.
If you've ever watched Shark Tank on ABC, every winning pitch has a story…
That's because emotion creates motion…
When we invest, whether it be with money or time, we are putting faith into something…
And having faith is an investment.
So when someone puts their money and faith where their mouth is…
…I want to know why and follow along with them, too!
People lie, but money doesn't
So, back when I was smiling and dialing, I was still learning about the stock market…
I was 19 years old, and I had to convince middle-aged men 20-30 years older than me that I could make them money…
It was clear that I needed more experience, so I looked for ways to build a strong track record…
I focused on companies with recent large stock purchases from insiders, which is known as insider buying…
Insider buying is when someone in a company buys shares of their own company's stock.
This isn't illegal, but when they buy or sell, they have to disclose it to the public through the SEC…
This is important for one reason: insiders sell shares for many different reasons…
But insiders buy shares for only one reason: they think shares are going higher.
My favorite insider back then was a gentleman named Aubrey McClendon. Aubrey co-founded and was the CEO of Chesapeake Energy…
Every time he bought millions of dollars worth of his stock, the stock price increased and outperformed the following three months…
That's why I loved following along with these timely buys.
He was a co-founder and CEO; no one knew more about the company than him…
He never wavered in his belief in the company, even when the market undervalued it during bear market cycles…
That's what makes bear markets tough to navigate because facts don't matter; what matters is feelings.
The market is dedicated to psychology…
The question of whether to spend or save money is a difficult one that many people face on a daily basis…
Which makes deciding whether to buy or sell something very tough.
That's why, in a bear market, I take notice when real estate insiders are buying up shares of their stock…
And today, we're going to use this cash flow code to generate another instant rent check following these insiders.
VRE240119P00015000
A Phoenix Multi-Family REIT Rising From the Ashes
The company I'm going to show you how to generate instant cash flow from today is Veris Residential, ticker symbol: VRE…
Veris Residential primarily owns, operates, acquires, and develops holistically-inspired, Class-A multi-family properties in the Northeast region of the United States.
But this REIT didn't start out focused on multi-family…
Less than 24 months ago, this REIT was primarily focused on commercial office spaces and some multi-family…
At that time, it was known as Mack-Cali 16.
After rebranding to Veris, under new leadership, the company made a dramatic transition from office spaces to multi-family residences…
During that time, the multi-family portfolio has grown to 83 percent of the company's NOI (Net Operating Income)…
Up from 39 percent as of the end of the Q1 of 2021 with 1,900 multi-family units added, representing growth of over 30 percent…
As of writing this, they have been able to shed all their office properties, and 99% of their NOI comes from multi-family.
Veris investor Deck
What's interesting is that a lot of Wall Street firms still view this as an office REIT…
This got me excited after uncovering this because it's a pure-play multi-family REIT with resilient cash flow…
And it's only a matter of time before this REIT starts getting more attention.
The vast majority of VRE's multi-family properties are located in the Northeast, specifically in the NYC metropolitan area…
This allows them to have a greater presence than any other Northeastern urban REITs…
Veris is the #1 REIT to own that provides multi-family exposure to that area with 7,681 premium units across 23 assets, with locations across New Jersey, Boston, Suburban New York, and Washington, D.C.
This goes against recent migration trends we've discussed in the past, but cities like New York and Chicago will never go away…
We're seeing those migration trends slow as folks head back to those cities…
In fact, my wife and I have decided that we're leaving Miami and going back home to Chicago in a few months…
And while Chicago rents seem to be dampened, New York City rents are hitting new highs.
This is partly due to the new hybrid work model…
Employers require employees to be in the office a few days a week and work.
Veris owns Class-A properties, which I call trophy properties…
The properties have a mean age of 6 years old with an occupancy rate of 97.1% across its multi-family portfolio as of Q2 2022…
These Class-A multi-family properties feature luxury and resort-style amenities situated in zip codes where the tenants can afford their amenity-rich offerings…
For instance, their newest development, Haus25, a 750-unit building located in Jersey City, offers LEED-certified apartments with golf simulators…
This is going after a certain demographic, which is Gen Z, who are making more money seeking luxury, amenities, and ESG…
Finding Cover and Getting Paid in a Whirlwind Market
REITs have outperformed during recessions, but we're getting hit with a double whammy of inflation and decreasing market values…
Economic policies are fueling the current real estate market squeeze.
Interest rates continue to rise, and buyers and sellers are feeling the pain…
Right now, these rate hikes will linger longer than the market has expected…
And this is causing major ripples throughout the real estate market…
76% of Veris's current debt is either fixed or hedged at a weighted average rate of 3.69% with a weighted average maturing of 5 years…
Even during a real estate shakeup, the company is finding deals and acquired the James, a Class-A, 240-unit property located in Park Ridge, for $129.6 million…
As investors, though, we still have the opportunity to profit from this real estate reset and collect our weekly rent check…
Economically, we're in good shape compared to the rest of the world…
But that's like saying, I'm wearing the cleanest, dirtiest shirt out of my hamper.
Despite higher inflation, interest rates, and stock market losses, the luxury real estate market will tend to be strong for the next couple of years…
This is a headwind for Class-A multi-family properties because higher rates make renting more appealing.
According to the 2023 Mid-Year Luxury Trends Report, despite uncertainty, stubborn inflation, interest rate gyrations, and continual struggles with inventory and supply chains worldwide, local and regional conditions have sustained the luxury property market. In fact, things are better than many had expected.
Following the Insiders
Company insiders sell for many reasons, but they buy for only one… they believe shares will go higher.
Several months ago, two company insiders, Nia Mahbod (CEO) and Akiva Katz (Director), backed the truck up and purchased around 1.2 million shares worth $7.23 million.
Previous to this buying activity, no insiders were buying shares…
Even though these purchases are up roughly 50% from their purchase, they haven't sold…
That's exactly what I want to see because these insiders believe there's more potential upside to come…
In other words, they are putting their money where their faith is at.
And today's cashflow code provides us the opportunity to profit alongside these insiders by making a 27% return on capital (using margin) during the next 112 days…
This REIT does carry more risk than others, which is why we're able to collect more of a return…
So, if you'd like to collect a weekly rent check from Veris, this is the cashflow code to do it best.
The Holistically Inspired Cashflow Code
Here's this week's cashflow code we're going to use: VRE240119P00015000
At last glance, this cashflow code is trading between $.40 and $.50 per contract.
So that means for every contract sold I'm going to collect between $40 and $50 of cash flow. If you sell more than one contract, the cash flow you'd generate would go up.
How will this cashflow code generate that cash? Well, this cashflow code identifies the Veris Residential, Inc. (VRE) January 19th, 2024, $15 put option that we're selling for cash. (Module 3 of the quick start series specifically covers options pricing and how to conduct these transactions if you need a refresher.)
Here's a screencast of me finding this cashflow code and entering the transaction in my brokerage account:
Here are the instructions written out…
Action-to-Take: Sell-to-open Veris Residential, Inc. (VRE) January 19th, 2024 $15 put option
Here's what I do while in a brokerage account if you're not just copying and pasting the cashflow code. (Remember, depending on what brokerage platform you're using, it might look different than my video. But these instructions should help.)
Step 1: I type in the ticker symbol VRE
Step 2: I open the options chain for the January 19, 2024 expiration cycle.
Step 3: I locate the $15 “PUT” strike, which is located in the January 19, 2024 expiration cycle
Step 4: I double-checked the ticker symbol, expiration, strike and options contract type or what I call the “cash flow code”: VRE240119P00015000
Step 5: I click on the “BID” price to open the order entry menu. (The bid price will be lower than the ask price.) The order entry MUST say “SELL” & “SINGLE”
Step 6: I select how many contracts to sell-to-open (remember from the quick-start series, this strategy is to “selling-to-open” or “STO… not buying.)
Step 7: I enter my price at $.45 since prices are trading between $.40 and $.50… $.45 is in the middle of the market and will likely get filled at that price, which is why I chose that.
Step 8: Click “Confirm & Send” to review the order. This is where I double-check again to make sure that it matches the exact cashflow code, quantity, buying power effect and that I'm selling-to-open.
Step 9: Then I press “send”
Or, if you're using ThinkorSwim, you can paste the pre-populated order with this code SELL -1 VRE 100 19 JAN 24 15 PUT @.45 LMT
Remember, it's best to use your paper trading account for this starting out. After you've done it successfully in your paper trading account, if you feel confident enough, then you can replicate it in a real money account.
Now, this instant cashflow transaction in a margin account would've meant that the broker would have set aside $163.70 in buying power for every put contract we sold. (I discuss margin accounts in detail in Module 2 of the quick start series.)
You don't have to use margin, but if you do, that's important to understand and ask questions about.
This margin calculation is based on the broker's margin schedule, which is determined by the current expected range. This requirement could increase, which is why you'd want to have a cushion of cash in your account if you use margin on these trades. That helps you make sure you don't get into trouble.
Now, if we wanted to use a cash-secured approach (cash-secured put-selling is also covered with JP in Module 2!) on this transaction, we would've used a cash account.
In that case, the broker would set aside $1,455 for every put sold.
This cash set aside is to make sure that if VRE share prices started dropping below the strike price by expiration, I would be able to take on the risk of buying back the stock instead of keeping my cash flow.
Let's play out a few scenarios…
Ok, so here's how I am going to manage this cash flow position.
Best case: I'm going to be looking to buy-to-close the Veris Residential, Inc. (VRE), $15 put option contract at a 55% profit or at $.20 per contract. The reason is because we want to manage to keep our profits and reduce our market exposure. The stock market moves, and we want to dance with it, not stand still.
Once we lock in our profit, we can redeploy for another opportunity with more cash flow opportunity.
So, best case scenario… generate and keep instant cash flow.
Then rinse and repeat…
Worst case: We don't have to worry about Veris Residential, Inc. (VRE) going bankrupt, so the real risk is short-term market volatility that could push shares below our $14.55 (strike price – premium collected).
If that does happen in the short term, I'll buy-to-close this position and roll it out for more time while collecting more cash flow.
So, in other words, we would just need a little time for the market to go in our favor. This will take a little more buying power, and why we always want to keep 50% of our buying power available.
Next steps…
Ok, so this alert covered A LOT…
Read this multiple times… write down your questions as you go.
And then, submit them on this page in the question box. I’ll answer them in an upcoming Q&A podcast. Those podcasts are sent to you each week, and I’ll do my best to get to everyone’s specific questions.
Josh Belanger
Editor, Weekly Cashflow Triggers
