Options are known for providing leverage, risk management, and flexible positioning to brokerage accounts. Little known to many, they also allow investors to mirror the income and capital appreciation returns of real estate.
Multi-family real estate is a top-tier investment for one who knows how to shop for a property, secure financing, and then manage it. It provides both capital appreciation and monthly cash flow.
The stock market is usually seen as capital appreciation only. Buy it now, sell it later for more. Bonds are where you go for income. Get $50 in income for every $1000 you lend out.
Some of the best wealth managers, behind closed doors, follow a different strategy to bust that myth and provide multi-family real estate-like returns. I’ll detail it below.
- Shop for dividend-paying S&P 500 stocks. Analyze their balance sheet, their cash flows, and their income sheet to gauge their health. Shop through these with a 50-year outlook and ask these questions: Which of these will be thriving in 50 years? Who is positioned to adapt and provide value? Are my children going to be customers of any of these businesses? What about their children? Those who stay in the game are champions.
- Start selling puts (a promise to buy) underneath the stocks you want to buy. I’d do a delta of .35 or higher ( around 85% or less chance of profit on Robinhood ). This will allow you to get paid to buy a stock you want to own anyway.
- Repeat step 2 each month until the stock gets put to you. Now you own a business of your choosing at a more favorable price. Now start selling calls above the price you purchased it for. Go for a delta of around .15 (85% chance of profit or higher on robinhood).
- If a stock ever runs up on you and you get called to sell, just turn around and start selling puts with that money to get back in at a more favorable price.
- Enjoy the dividend payouts each quarter as well from these stocks you own.
Right now, I can promise to buy Disney for $88 and get paid $100. It’s at $91 on the market. Either it will go up and I will keep the money or it will go down and I will buy a stock I wanted anyways for less than I would’ve and also keep the $100.
If I currently owned Disney, for $91, I could promise to sell 100 shares for $97 and get paid $58. Either the stock goes down and I keep my $58, or it goes up and I have to sell for $97 in which case I keep the profits plus the $58.
On a large scale, with hundreds of millions under management, I’ve seen money managers average about 6% per year in capital appreciation plus 9% in income. This totals about 15%. Not bad considering there are no tenants, no property management, no financing, no illiquidity, and no large quantity of capital required.
Text, call, dm, or email if you want to chat about it.
- Tanner
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