The Renter Nation Code
Happy Cashflow Code Day!
It's another day to grab some cash flow from the biggest real estate companies in the world in just minutes…
And with a few clicks of your mouse!
Today's company is a multifamily giant we've used before to grab $105 of instant cash flow…
And today, we're going to get some more.
Through acquisition and development, this company manages a huge portfolio of luxury properties across the United States…
And when I say huge, I'm talking about close to 59,000 apartments in 171 communities.
Now here's the thing…
With mortgage rates still hovering near multi-decade highs…
And housing inventory still tight as a drum…
Top-quality apartments are highly desired…
As the United States shifts from ownership to a ‘Renter Nation.'
The company we're using for today's cashflow code is 25 years old and has a huge advantage in the leasing market by offering outstanding properties in sought-after locations.
What makes them stand out is a full understanding of the two key components for keeping their tenants happy:
First, they make sure all the development, upgrades, and essentials are done with exquisite attention to detail…
This makes their communities some of the most sought-after in their respective areas…
And the amenities shine through…
Just take a look at one of their property's rooftops…
Beautiful rooftop amenities at one of the company's class-A properties
It's no wonder they have a 97% occupancy rate!
And here's the second piece of the puzzle…
Fortune magazine ranked them the 8th best company to work for…
This means they treat their employees well and keep them happy…
This breeds continuity and longevity in management and smoothens out the usual hiccups which occur when there's constant churn at key positions.
Now it's time to grab some more cash flow by using this company's specific cashflow code:
CPT231117P00095000
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 company. Ready to grab some cash flow from one of Renter Nation's biggest landlords? Trust me. You're going to love this opportunity!
- How the transaction works: You'll see how to generate at least $100 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 jump in…
Inflation Rears Its Head Again
On Thursday, we got the July CPI data, which showed inflation starting to creep back up…
Legacy media and talking heads are trying to run a cover, saying it's not a big deal…
But there's one thing I've learned from working on Wall Street…
People lie, but money doesn't!
Last week the 10-year treasury hit 4.18% and has backed off a tad…
As I look at the 10 and 30-year treasuries, rates are going higher from here…
That indicates to me that high inflation and rates are going to linger longer than expected.
If that's correct, that's going to continue to affect average Americans and put a lot more pressure on the housing market…
But it's not going to stop Wall Street from buying more single-family rentals, which has been going on since 2010…
Analysts are projecting that by 2030, the institutions may hold some 7.6 million homes, or more than 40% of all single-family rentals on the market, according to the 2022 forecast by MetLife Investment Management.
That will keep most Gen-Z Americans out of the housing market…
This reminds me of what my billionaire real estate mentor told me last year, “The U.S. will become a renter nation.”
Tap Into the Cash Flow Spigot of the Renter Nation
I have a great story behind today's cashflow code…
It's the genesis of this amazing service you're a member of today.
This strategy is so powerful even billionaire real estate investors love it!
In March of 2022, I sat down with my real estate mentor, billionaire Grant Cardone at the 10X Headquarters in Aventura, Florida…
He thought I was full of it because I was about to show him my strategy on how to generate instant mailbox money from a real estate property that he didn't own with a few clicks of a mouse.
In fact, you can see the property outside his window, across the street…
So, I opened up my laptop, logged into my ThinkorSwim account, and walked him through the steps, just as I show you every week.
With my guidance, he placed three orders and generated $1,500 of instant cashflow in my account that I pulled out of my pocket and handed him.
Just like you, he was skeptical, but I explained to him my strategy of selling promises backed by hard real estate assets, creating worry-free mailbox money, and why it's the easiest and best.
Grant was so giddy after showing him my strategy because he had collected instant cash flow from his competitor on properties he'll never be able to buy…
That's because the REIT I'm sharing with you this week never sells its assets.
By using the power of REITs to gain exposure, not only will you be able to tap into the power of this amazing and resilient asset class… but you'll earn safe, reliable weekly rent checks, too.
And that's my goal: Help you generate weekly rent checks with a few clicks of that mouse that beats the market and be able to sleep well at night…
Today, we're going grab a new rent check from this REIT King using this code:
CPT231117P00095000
Inflation Buster Rent Checks
The real estate company I'm going to show you how to generate instant cash flow from today is Camden Property Trust, stock ticker symbol CPT.
Camden Property Trust is a 25-year-old REIT that develops, repositions, acquires, and manages multifamily apartment communities…
More importantly, they are in the best markets, and for the first time in 10 years, Camden's overall portfolio earned an A with a stable outlook…
Most of the portfolio is located in the Sunbelt and various states in the East…
Courtesy Camden IR deck
Their assets are spread across the U.S., and they have over 172 communities of multifamily housing with 58,000 units…
The demand for their properties is very strong, demonstrated by a high occupancy rate (97%)…
As housing affordability continues to be an issue, demand for apartments will only increase…
The average rent is $2,000 per month, and an average monthly revenue of over $2,200.
More importantly, Camden is positioned for a bigger trend…
Young adults are more likely to rent instead of buy…
Research continues to show that young adults marry and have children later in their lives, delaying homeownership decisions to a later stage.
Currently, the homeownership rate is significantly lower for young adults (39%) compared to the overall homeownership rate (65%).
This is exactly who Camden is catering to because their resident median age is 31 years) with a high annual income (~$118k) and a rent coverage ratio in terms of income of 20%.
This is great because without rent, this REIT doesn't have cash flows, and without cash flows, Camden can't pay sustainable dividends.
One of the key aspects when evaluating a REIT, especially one that owns a multifamily, is its debt maturity…
This is especially critical right now with higher interest rates.
This is one of the reasons it's down 40% over the last year…
But Camden's debt maturity schedule is very well spread over the next several years, and the weighted average maturity of debt is 6.4 years…
It is not surprising to see strong credit ratings of A3 from Moody's, A- from Fitch, and A- from Standard & Poor's.
And it's a major beneficiary of this demand, interest, and growth with a trophy portfolio of multifamily residential developments in the area…
Approximately 92% of its properties are A+ to B+ rated…
Despite all the fundamentals, one main question any REIT investor must ask every day is, is the dividend safe?
Yes, Camden's dividend is very safe at this point…
There is a substantial cushion between their cash flow and the dividend payout.
That means there is value in making a promise to buy shares at a deep discount because buyers will come in and hold prices above our promise strike…
The bottom line is: Since CPT is top-notch, trading at a 40% discount from last year, it's hard to imagine that buyers will continue to overlook this value…
Especially with the continued trend of the U.S. becoming a renter nation…
Most people would only think about buying CPT stock… collecting a 3.70% annual dividend…
But we're savvy investors, and I'm teaching you how to look at opportunity differently, generate a higher return on capital and reduce overall market risk.
So let's collect our weekly rent check using this cashflow code.
The Renter Nation Cashflow Code
Here's this week's cashflow code we're going to use: CPT231117P00095000
At last glance, this cashflow code is trading between $.50 and $1.80 per contract.
NOTE: This spread is very wide, but that doesn't mean if we bid $1.00, it won't get filled. Always use limit orders to make sure the price you want (or a more favorable one) is the only price you'll accept. Please watch the video below for more!
So that means for every contract sold, I'm going to collect between $50 and $180 of cash flow per contract. 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 Digital Realty Trust (DLR) October 20, 2023, $95 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 Camden Property Trust (CPT) November 17th, 2023, $95 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 CPT
Step 2: I open the options chain for the November 17, 2023 expiration cycle.
Step 3: I locate the $95 “PUT” strike, which is located in the November 17, 2023 expiration cycle
Step 4: I double-checked the ticker symbol, expiration, strike and options contract type or what I call the “cashflow code”: CPT231117P00095000
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 $1.00 since prices are trading between $.50 and $1.80… $1.00 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 CPT 100 17 NOV 23 95 PUT @1.00 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 $950.50 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 $9,400 for every put sold.
This cash set aside is to make sure that if CPT 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 Camden Property Trust (CPT) November 17, 2023, $95 put option contract at a 50% profit or at $0.50 per contract. The reason is that 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, the best-case scenario… generate and keep instant cash flow.
Then rinse and repeat…
Worst case: We don't have to worry about Camden Property Trust (CPT) going bankrupt, so the real risk is short-term market volatility that could push shares below our $94 (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
