Roaming Returns

013 - REITs Invest In Real Estate Without The Headaches Of Physical Ownership Or Tenants

October 03, 2023 Tim & Carmela Episode 13
Roaming Returns
013 - REITs Invest In Real Estate Without The Headaches Of Physical Ownership Or Tenants
Show Notes Transcript

There's a way to invest in real estate without getting loans, doing any repairs, or hassling tenants for rent payments. The stock market allows you to buy companies that do it all for you while you sit on the sidelines and collect income. 

REITs pay big dividends and might even have higher ROI than physical real estate. That's why we consider them to be an essential asset for your income generating portfolio. 

Make sure you tune in to the end for Tim's assessment of a good portfolio allocation. 

Here are the good REIT tickers we mention in this episode.  

  • PSA public storage 4.5%
  • STAG 4.3%
  • WPC* W.P. Carey 7.8%
  • AMT American Tower 4.0%
  • UNIT infrastructure for communication 13.1%
  • SPG* Simon Property Group restaurants, theater, utilities Stores 7%
  • O realty income 6.2%
  • EXR extra storage space 2%
  • FPI Farmland partners 2.34%
  • CCI crown castle 6.8%
  • EPR entertainment 7.9%
  • IRM Data storage 4.3%
  • UICI Largest landlord on Vegas strip 5.6%
  • PLD warehouse/industrial 3.1%
  • ADC 5.3%
  • ABR* 11.3%

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Welcome to Roaming Returns, a podcast about generating a passive income through investing so that you don't have to wait till retirement to live your passions. 

In today's episode, Tim and Carmela talk about ways that you could actually make money in real estate without having to own physical real estate. So you can sit on your butt and let other people do all the dirty work for you. Say goodbye to property taxes and fixing broken toilets. Welcome back, guys.
Oh, we're back. We're live. Hello.
There's gonna be another episode for types we covered
which were awesome. We covered bonds. And we've mentioned in passing funds close into funds and mutual funds and index funds but we'll get into this. Later on. I
did another one. You would know we'll do a wrap up when we actually cover
everything. Well, today is the fun and exciting world of REITs REITs REITs.
I absolutely love every Rei T
apostrophe S REIT. So now I'm pretty sure everybody has at some point in their life heard. One of the best ways to develop passive income is through real estate. As somebody who has had a rental property and sold it. I can tell you that there is money to be made there but it's a it's tedious and cumbersome and annoying. And blah,
and unless you know you absolutely love renovating and renting and the headaches that come with having tenants. Most people will buy something, do some of that stuff themselves and then decide they absolutely hate it, which is the situation that we're in right now.
When I have a rental property, I had a tenant that wasn't the best and he like destroyed it so like when he moved out he said it's move in ready we went over and looked at it and it was not moving ready. It was destroyed like the floor the pulled up needed painted like windows there was rotten in the windows and everything. He was everywhere. saying
oh terrible.
So to me, that's not the way I want to do real estate. Luckily, there is a way to do real estate through the stock market and that's Rei T's Wallstrom Yes,
I love it because there's no headaches, no tenant management, no materials, no having to worry about holding costs, no having to like get loans from the banks. I don't know as you say,
Oh we are not from the south. Well though like one of the like, they say because you have a pretty good ROI with rental properties which is true if you can find good tenants and but you can also get a comparable ROI by holding an REI t. Well, I need your investment account for like five years we'll get to pretty much a similar return.
I actually think it's probably more of a better return because when you have a rental property you have to pay your property taxes you have to pay your school taxes you have to renovate over time you have to fix repairs, you have to you know taxes go up and all that other happy horse crap reads I actually think they probably give you more ROI and way less headache in the long run.
Yeah, but like they were created pretty much the same time that the BDC is where if you listen to that podcast back in the 80s, Congress said, Okay, well, we want how do I say this without being assaulted? We want the layman the lower class the peasants to be able to invest in real estate. So here's a way I just just make it happen. So they did they have to pay 90% of their net profits in forms of distributions, which is dividends. 90%. Guys, you heard that right. So sometimes what they'll do is they'll pay out like I suppose they to pay up 90% They'll give special dividends or they'll actually do share buybacks but generally most of the time it's going to be dividend distributions. 90% too high number that's why BDCs and Rei T apostrophe S's have such lucrative yields
lucrative eyebrows right now.
Call it College where she took a video of me that she's gonna put on Tik Tok. Where I'm bouncing on my ball apparently I don't know I had
to take the chair away from because it was making too much noise because we just got like a free hand me down from helping somebody move and it squeaks like a mofo so now he's sitting on an exercise ball yoga
ball. I'm doing some yoga. I'm doing some core calisthenics whilst doing a podcast. I'm multitasking. Yeah. Okay. So back to REI T POS vs. Doing what makes a good one, like when you're doing your cursory research for a REIT. What makes a good one? Well, the first thing that you want to see is that they have a dividend obviously because they're paying 90% of their net and form of distributions. They don't have a dividend that shit or shite, if you will, if you're from over over the pond. So they have they're paying a dividend then you want to have then you want to go back. Most of most of the brokerage accounts have a way you can actually do a research of the history you want to look back at the history and make sure the dividend is growing. It can be stay it can be the same for like a year or two but you want to see that it actually is growing like even if it's a penny or two pennies or three pennies or whatever it is as long as it's growing throughout the time that it's been on the market. That's something you want to look for. Although
you might find some blips because COVID did do some stupid stuff to stuff
what I do with that there was like go back from like all just 20 2019 and 2020 didn't happen like pretty much for everybody. No one No one remembers those years. So like I'll do research up to 2090 and then I'll start in 2021 or 2022 and see see if they're at the same level they were prior to 2019 and if they've raised their dividends since then, so there's ways around that if you just omit those two years. It's the same kind of research. Another aspect that makes it good Rei T is you want to make sure they have a high occupancy rate like most Rei T's they are renting out their properties and you want to make sure they have the property rented which is the occupancy rate and you want that to be at least 97 I shoot for 98 or
99. They make no money if they're not right now and
the way they record it is they are every quarter they'll say here's our occupancy rate. So you want to make sure that that's been consistent at least 97 And hopefully it's going back up to like 9899 now after COVID The third aspect that makes a good Rei T apostrophe S is a diversified portfolio what that means is they have if they do say single family, single family homes, they have a lot of single family homes or if they do industrial complexes, they have a lot of industrial complexes. A really simple way to determine if they have a big portfolio. It's just their market cap. If it's like if it has a B next to it, it has have a high or diversified portfolio B stands for
billion. If you don't know that already. If it has an M
next to it, then you have to do more research. That is literally the market cap would be 10 point 7 billion that means they have 10 point 7 billion in equity. So that means then you can look and see if their occupancy rate is high and then good. If not, then omit them. The next one will be geographic diversification. This is important because you can't just have all say you do apartments but all your apartments are in New York City. Well, if there's a problem in New York City, your whole portfolio shot to shit.
I think a good example of that would be like Florida, if you everything you own the Florida and the hurricane comes in and like wipes out the entire area that you have everything invested in. You pretty much are belly up and if the insurance is not paying out like it's paying out
but like it that's it's the same as with your portfolio, like you don't want to have all your all your eggs in one basket,
as they say, Yeah, because that way, one of the bad eggs doesn't trounce your whole thing.
So if they have it spread over like the United States, that's good. There's some that I like all mentioned that actually have their portfolio over like Europe and South America and America and North America, I guess to not be egocentric. Next to our and their acronyms. I mean, if you know what they are, you're better than me. I never even heard these. I'd look them up but you want them to have high in Oh, I net operating income. That means after all their taxes and everything come out that their operating income is high. And you want to see that it's growing like it's not going to be like as high as their gross Yeah, gonna grow before fees. And you want to see to make sure they have a high a f f, which is just to funds from operations, which basically is their rents and everything they're collecting those if you go into their financials they actually have those labeled in Rei T's they're specific to them. They're not in any other investment. So if you ever see those, you know, you're looking at a rate even if it doesn't say REIT in the title, ticker title. Okay, good. Gotcha. Great. Okay, there's three main REITs there's one is an equity REIT, that is where they own the properties. Think of the landlord, you own the house, you collect the rent from the house and then you as part of the deal, you provide a maintenance and upkeep to the house while the tenants there and when the tenant moves out, you then fix it up and then you make it available so the next tenant movement that's where the equity REIT is they own the properties that collect the rent and they perform all the maintenance and upkeep of the properties they own,
which is generally what I would assume most people think of when they think of like people that own real estate. They think they're the old owners, the landlord's
operations, majority of them the second one is a mortgage, mortgage. That is they own the debt, the mortgage, not the property, they generate their revenue through the interest from the debt. So think of when you write your check out to your mortgage company. Your mortgage company doesn't actually own your house. You technically do, but they own the debt to it, and they get their purse, they get their interest through your mortgage payment. You always see the interest breakdown on your mortgage payment and if you default on your mortgage and they repossess repossess your house, they actually can then sell the house to recover their losses. That's what a mortgage REIT does. So you
can actually take up the position of the banks by getting mortgage rates, right. Yep, sounds freaking awesome.
Third, one's a hybrid where they combine one, one and the other. So there's like a lot of them will do that on properties, but then with their extra income, they'll actually buy debt so there are main characteristic of REITs that are not really present or prevalent, if you will. I'm using all sorts of college words today prevalent with other investment vehicles. They have steady, steady high dividends, like their dividends. We're talking three, four or five times what the average is, like across the board like oh, well we have a list of them at the end and you'll see like some of like the of the lowest paying rates are still like triple what you would get just investing in like a regular index fund. They do have high returns but that is misleading because they don't actually have growth and capital appreciation. Which makes sense if you're paying out 90% of your profits to your shareholders, you're not going to have a lot left over to actually invest in growth. If you can't invest in growth in your in your stock price. isn't really gonna go up because you're not offering anything new. So you're not going to have the capital appreciation, where you get your returns from is from a steady sideways trade with high dividends. So if you buy something for 20 bucks, it's going to be between like 19 and 21. Pretty much the entire entirety of you owning it, but you're gonna be getting 1011 12% and dividends so the rates
you actually want it to go sideways. Yeah, I didn't know that. What about so the ones that go up or go over awesome.
Jordan majority the time they go sideways and then when they go sideways, you're basically just looking for the best yields you can get for the lowest beta.
So to me these REITs kind of sound like the, the bullet shares.
They're more volatile than both shares, but the concept
of they stay within a band and then you get high dividends.
Another aspect that's characteristic of a REIT is liquidity. Like I'm not sure if you've actually owned a rental property when you go to sell it. It's all dependent on you finding a party that's interested in buying it so there is a liquidity crunch unless you're like in New York City or Chicago, where there's high demand for housing all the time. With a REIT. The liquidity is you can buy shares any day the markets open and you can sell shares any day the markets open so there's no liquidity crashed whatsoever. Whereas
like for us, we're going to be flipping this condo once we get this renovation finished. we're contemplating waiting till spring because things tend to fly off the shelves and spring and wintertime is not such a great time to sell. So
tam is going to make a lot of podcasts over the winter and a Snuggie like lugging a onesie and
your heating blanket and Mikey Mike. Yes. All right. Thank you have a Snuggie I will have to make a Snuggie
out of one of my blankets. I'll
be rockin his sloth onesie.
They also let's see what else was next on my list. Oh low volatility like I just said they're more volatile, but that's compared to bullet shares like compared to stocks in general the volatility of REITs is it's a beta of probably point three to point six, like the market does what it does, but REITs kind of do what they do. The only reason that they're actually down from 2022 to now is because of interest rates. But the overall underlying valuations and fundamentals of them are all pretty solid. So you they're all on sales what I'm getting that's called way of saying all the REITs are on sale right now because of interest rates.
And if you don't know what the beta is, you'll have to go back and check that episode out. But in a general sense, the market is a beta of one anything below that has less fluctuation. And we just said these are
point 3.3 2.6 And what I mean by volatility is like they're not going to like if you've been in stocks that say go up like 4% one day and then they go down 3% The next day and they go up 2% That's not our real goal. Like it'd be like point one point 2.1 Like it literally doesn't move at all, which is good to you. And you want that that actually goes across the board of all your high income investments. You don't want something that is erratic with share price you want it to be consistent, sideways, grind it out, but you're making 10% Every year type of thing. Yeah, cuz
I think we have beat this like a dead horse but we're just gonna keep on beating the horse. This is not about growth per se. It's about the consistent income because our
objective is to find like investments that will grow but that even like Hercules capital, for example, it's grown a lot, but it's taken years and it's been like a slow trudge tropes, trudge trudged slow trudge upward to trudge as a church treasurer. I don't know.
Trudging through mud. Yeah. I think it is trench. You don't hear that used very often. They are another grind. I think another
aspect of REITs is high debt. They all have high debt. That's just the nature of the beast what you want to you don't mind the high debt in REITs as much as you do in other investments, so long as they're not leveraged. By leveraged meaning they're borrowing 75% of what they're making pay dividends, that's bad. They're all going to have high debt because they take out loans to buy properties or to buy mortgages and they're all that's just a nature of the beast is they're all going to have high debt. Now some don't have as high debt as others. I'm not really too focused about the debt unless the debt is actually growing and the revenues going down, or the debt is taking so much of their payments that their earnings don't cover their dividends.
So like they're they're doing like a credit card situation where they've taken on too much debt and they're getting eaten alive by the interest
rate would be like if you pay like you said your heating bill with a credit card and then you pay that credit card with another credit card. Technically you're in. Okay, but you're creating more debt by doing that. That's kind of what they do. And diversification is the last aspect that gets the perfect way. Like if you've owned rental properties, you know, the best way to do is to have one say like in we're on the East Coast and we'll say like Rehoboth Beach and Myrtle Beach in New York City. You want to have a diversification of different areas. Will they do that for you? They literally will have like an office complex in Houston and then they'll have like a shopping mall and not go to Omaha or some shit, I don't know. But like they actually take care of that so you don't have to worry about it.
The other thing with the diversification I would think would be the fact that they're not all going to have tenants in them at the same time. If you have like a gap or an overlay with
one aspect, right, she brought up the word tenant. And one aspect I would actually look at is they generally list who their tenants are. And by that I mean like some people will actually have an industrial REIT that are all warehouses, but their tenants are like Amazon and Google and shit like that says that Oh, that's really cool. Whereas like so like the not really so if I was looking at two reasons, one pay say 8% One paid 6% but one had people I never heard of as our tenants and the other one had like Amazons and apples
all things equal. You picked Apple and Amazon one for sure. So you
know they're they're not going to look and there's like federal government wants, you know, they're not going to default. Well, generally, no, they're not why
now that we're talking about this, I think I mentioned it in the last episode, we were talking about it. My dad's one client literally owns the PennDOT building. The Department of Transportation leases from him to actually do all like the department's revenue and all that stuff. He's
loot he's loaded loaded. He wouldn't know by the way he haggles with his bills, but he's inherited.
But that's like a perfect concept where dependent buildings not going to move.
So the state's always going to pay their bill and he'd be stupid
like because they actually asked the buyer for them and he was like, nope, and they just were like, Okay, then. Now
there's now we're gonna go into the sectors of REITs. There's, like, a lot. I just listened to the main ones, one
sectors. I'm not sure if everybody really knows what a sector is, but it's what is the easiest way to talk about sector just this one
area like it would be like a sector to me is a quiet like a quadrant like you have a residential quadrant you have industrial quadrant you have a commercial quadrant. We have the gamey ones which are like casinos and Dave and Busters but not David busters. But like like that, like entertainment, like bowling
alleys. Possibly. I guess they have those like places where you can sit and actually play video games. There's one over by the Audi. I don't know what the heck they do. They're like a video game. Wow. Or how about those adult skill games. I love that they're not allowed to call them actual like a slot.
Machines are not called slot machines anymore. Apparently that's bad in Pennsylvania. So they're called games of skill.
I think it's so that little places can actually have slot machines within their establishments without actually being deemed a casino. It's like a weird little loophole. It's kind of hilarious every time I drive by one tipsy adults go game
skill games. I'm all for the slot machine problem. Okay, so then we have Office rates. That's self explanatory.
What's so appealing about slot machines? Like seriously, what is it you literally pull thing?
Lights and the sounds and the thrill of victory and the agony of defeat I don't know. Does that sarcastic? Yes. I don't know. It's just fun.
But you don't even do it in a fun way you do. It is like a strategy type thing and it just like I don't even see how there's enjoyment to it.
Well, because the whole concept of going to places is you know, you're going to lose. So if you can develop a strategy where you don't lose and you win more often than you lose, well, then that's fine. You're taking it to the man
coming from the person who plays the stupid video games that aren't playing football that are managing the sports teams of football, yes, coaching or whatever strategic. So I just like I watch him doing this stuff. And I'm just like, What the hell's wrong with you? I'm working on my mental prowess. That's probably why he's so good at this whole stock game.
I mean, we have industrial warehouse. That's self explanatory. We have retail and that encompasses malls, grocery stores, like a good like you can find like say Trader Joe's or Whole Foods or those are really good stores to look for in the retail area. lodging and resorts is self explanatory hotels, like like Estee Lauder beach towels, and they have those thinking
like the hackaton to help down in Mexico Cancun area where they have these actual like resorts. All inclusive.
We have residential, which includes apartments and houses and all that fun stuff. The one that I never even knew about was Timberlands. Apparently there's timberland Rei T's where they buy up forest land and they lease it out. I guess they make money off people. Cutting down trees. I don't know how that works.
When I was typing this up. I was literally picturing the shoes.
It would hurt about timberland for a while the eye health care which is hospitals and assisted living and you have stealth self storage which still storage still storage infrastructure which includes the cell towers and the fiber cables. And all that we did touch on that last one you have data centers which protect your data and like accumulate your data. Those are probably a hotspot for a lot of people. I don't care if I can like my home.
I actually think that would be a good one from the tech perspective because like I've even been looking into so we're looking into downsizing obviously to get on the road. And when I met him he had a crap ton of DVDs. Seasons of like the Big Bang Theory and what the hell else did you
All sorts of crap. And I'm just like, Why do you have this like digital is the way to go. And he didn't know anything about like music. I
know. He's old. We don't know these things. I know.
I got him an mp3 player. And he was like, This is amazing. Yeah, so right now I'm looking for something to store like I'm trying to digitize pretty much everything in our life. To make it just more compact and everything and I'm all for it. Yeah, I can see how data centers would totally be a thing on them
there. They have a specialty category, which is stuff you wouldn't actually think of like movie theaters and billboards. billboards are a huge one.
We actually have a billboard

So now I want to touch on like you have the once you did once you know all the different sectors, you can actually start doing the strategic thinking like okay, looking around where you're at, what do people use? And around us a lot of people use self storage, and a lot of people drive by billboards, and a lot of people shop so I would look at REI T's that actually do billboards, and I would do shopping malls to their shopping malls everywhere.
They've kind of changed the dynamic of them. So I think that might be having a comeback, but I can see the public was at the gaming this fun zones where they were looking at
them and then you just think Okay, five years now worse things are gonna be well you know, the population aging so the health care hospitals is delivering was, you know, the the populations Keeping Up with the Joneses. So self storage and residential, you know that people are traveling, we're trying to do more 5g with technology. So you know, infrastructure and data centers like you can like you can kind of try to predict the different areas which life alternative and invest accordingly. I did touch on that last time. We did have like forethought, you can't just like stay status quo. You actually have to like come up with a plan like okay, well, I really see that healthcare is going to be a huge one in the next 10 years. So if we did stock up on a couple system living rates, and I do see that infrastructure is going to be a huge one because everybody's doing so cell phone this or tablet that so like I like the cell towers and the fiber optic cables and stuff like that. Well, you
would think that more at home jobs is going to be heavier on the infrastructure and cable and data and Wi Fi but
one that I wouldn't invest in would be specialty like the movie theaters billboards because billboards are antiquated and dinosaurs and movie theaters are being replaced by streaming. I do you agree with that? So and Timberlands was all out. I mean, so and so you can kind of pick and choose what you're gonna invest in like if so say you have a core moral belief that you don't like shopping malls, well, then you wouldn't invest in a retail REIT invest in something else. Now we need you to grab a pen and paper because we're gonna go through a shit ton of awesome ones. And
it'll also be in the show notes for those of you who are driver
Okay, so we have PSC p is a, it's a public storage one. It only used 4.5. But again, it's a play on the Self Storage like I do believe self storage is a huge aspect if you look at the numbers like
they're saying is that 96% of people have a storage unit. I was like, I think
it's an ad somewhere to either high 70s low 80s either the high 70s low 80s percent of people have self storage, you know, a family does, and it's only gonna go up because people keep buying shit. Like this is the simplest way to put it. Like they buy shit they don't use and then they fill their garage up with shit they don't use and they're like, Whoa, I need to park my car in the garage and then they get a storage unit to move the ship from the garage to the storage unit and then they fill the garage up and they just repeat the cycle. No, I
buy another one or a bigger one. Yeah, so
stack sta G is a decent one. It's one that always comes up in the readings. It only yields 4.3 The others you can do better than that WPC, which is basically the same thing as stag pay 7.8% and it has a longer track record and it's pretty it's pretty tight.
What sectors that
what uh, those are hybrid. They're like there are residential and industrial both those so I like industrial AMT, which is American Tower is 4.0 but it's a sell point one but then I mentioned why I misspoke last time I said CCC i and CC I pasted pay 7% it does the exact same thing and they own more cell towers than AMT. So if you believe in the 60 movement, then I would invest in CCI Simon property group's SPG they have a little bit of everything they have theaters and utilities and industrial. They're pretty good when I think they actually pay monthly at some percent. Then the unit is infrastructure for communication. It's another one that plays on the cell towers but this the difference between unit and CCI is unit is mainly for I think how they phrase it is the essential communication. I'm not sure whether that essential communication and normal communication is but that one pays 13.1% So that one sounds so what I would do because I don't know really know about that. One is if I was going to do the cell tower thing I would put 75% and CCI put 25% unit and that way I'd be making, I don't know a percent. The one that always comes up, no matter what is oh, it's real. It's Realty income. It pays dividends every month. It's raised their dividend for like 50 years. It's a dividend dividend aristocrat that pays 6.2% which is unheard of majority. The right 3%
I never heard this when I see all the dividend aristocrat crap.
Yeah, it was a dividend aristocrat that's been paying well ever since Coke
and Pepsi and
then we have x e XR, which is another self storage again, no one pays 2% So I mean you can do better than that. And then F p i farmland partners only pays 2% But like if you do your crystal ball progress prognosis provocation. Let's have a look down is a word or a calling. To do that with your crystal ball. You see that an area where people need is food and when people need food they need land to grow the food on and if they land to grow the food on you want one of these farmland one, I would actually do FPI I would probably do glad, which pays like 6% does kind of the same thing.
I don't know if I agree about the farmland thing. Like every documentary I keep seeing is how they're trying to downsize like the agriculture thing and they're trying to go to like the food printing and all that stuff. But there's going to be a whole spin off sector where people don't believe in the like GM mode. And the you know, synthetic type stuff will
always be necessary, but still 2.34% Yes. That's cheeks as Tim was a EPR we actually ended EPR it's movie theaters but I'm getting out of that whenever I get my money back. It pays a percent. You i see i is fucking it's the largest landlord on the Vegas Strip. I couldn't read your writing. Like some of you believe in the Senate stock. This is one you want to have because they basically own all the buildings in Las Vegas. It pays 5.6% And it's I think projected to grow 13 to 16% year after year over a year for the next five years.
We are going into a recession that will be the one I put my money in. Remember how we talked about sin stocks gone up but everybody's like in the doldrums
then you have P LD which is a warehouse one it's called Polaris or some nonsense. It's only a 3% but it's one of the better like it's probably one of the best way our house aligns with price appreciation, dividend growth, etc blah, blah, blah. ADC pays 5.3% and the other one we're in is AVR pays 11.3%. It does mortgage backed debt securities and it does single five single family homes. And it's like it's I think it's a dividend King. I'm not sure whatever 10 years is I don't know that it's grew as yet grows their dividend every year like that one there we get a special dividend probably every second quarter or something like that. And then the last one, the one I left off on purpose is called Iron Mountain. It's a data storage one that only use 4.3%. The reason that I left that out is that like I don't have many regrets when it comes to investing. Yeah, but this one I do. I got this in her mom's retirement account at like 16 hours and I had it for I want to say six months and then went from 16 up to like in the upper 30s or lower 40s I forget exactly. Oh, is this
the one you were just looking through the notebooks from back when we first started and you were like analyzing things that were like I'm so mad at myself. Yeah,
I was like I can't go up anymore. The damn things doubled in like less than a year. Well actually it topped out at like close to $90 to weight seriously. She could have had a 500% gain. And I saw I tapped out at like 120% and you're dead at that. At that time. It was yielding like close to 11% so she could have had all that yield. Okay,
so a really good example the one you were asking me this morning about if you pull out of it because we're up would you say 20% Zero
point from not anymore now it's 14 or 15% It went down a lot.
Oh my god, I hate your Oracle. Did my sag oh maybe you should trust your gut. I was like But you could go half and half
anyway I got into it. It's a dance. It's basically an energy play for coal called AR LP. It's not an RA it literally is all about coal. And I was like 7% dropped a lot today.
From what we talked this morning. Wow. What the hell was going on with your brain?
But like I was like, we were up like 23% I was like, Ah, it's a little high. I probably want to get out of that.
And you know what was funny? I was trying to give you logistical points and my like my gut, my spidey sense was telling me to just trust your gut. Your gut is ridiculous where you're at
and so I stayed in it but it'll still go up but like it's just the but like coal and coal. Come on.
We're going into winter Winter's coming.
I know but it's like a utility once I think it will be alright and that in the long run Jack, Jack's
when we pulled out to like the three year view and that looks kind of interesting. Like to me it looks like it's setting up a cup and cup and handle which means it hit a peak, it did a bowl and now it's like hitting back up at that high peak. Again, it's not quite there. So I think we might have a little bit of a pullback before it might actually break through that resistance point. I could be wrong. It
makes 14% Anyway back on or not at the time it yields 11% And so she could have 500 plus percent gain plus at least 10% growth and it's been three years.
We'll see that's the point I'm talking about right now. I was telling him what that one we were just talking about that maybe he should take half out in December since we were talking in the other episode about how things are gonna go down in January. Because we were dead on balls for September
oh my god right if you listen to the podcast in August HOLY SHIT likes having documentation that I do because I forget about it. I said the markets probably gonna go down three to 5% in September and it sure fucking up didn't go down and went like 5.3% in September.
There's the Oracle magic for you guys.
But everyone everything that I read like this, you know, because August was such a shit show that September. September is not going to be fixed September is going to be just as bad. I mean, it wasn't as bad as August but it still went down. So if you didn't sell and you just kept increasing dividends like maybe hopefully you got into some of the monthly ones that I recommend it because you get paid every month and you're getting paid every month at a lower price and a lower price and a lower price. Like good health care read right now it'd be MPW I mean I know I keep bringing it up, but due to a bottomed out to $5.03 and now it's on its way back up.
We had an extra $20,000 Tim would at least put right at 5000.
Yeah, but what I see for October is it's going to be about 3% up and then November probably two to 3% up and then December is probably going to be sideways so you'll probably be able to gain five to 6% the rest of the year. They're all like forecasting that it's gonna go up like 50% or it's gonna go down like 30% and like they're all over the freaking place when it comes to their their predictions but I believe it's going to be gradual up gradual up sideways, and then January is just gonna be a shitshow again,
yeah, January usually is down and again if you want to hear that go to that last episode we just did, where we talked about the state of the market right now and what to do with your investment. I
think everything will be fine though. I think it's going to be like the market will be up in 2023 and I do believe it'll be up in 2024 but it's going to be that whole like it's going to peak in probably second or third week of December and then it'll start going down. When it starts going down. They won't actually crest the bottom in December it will be in January. So when January 1 rolls around, it's going to be kind of elevated because it was elevated in October in November, and then it's gonna crash down in January that February is going to be sideways and then it'll gradually go up the rest of the year. So we'll actually finish above where it was when it started in January, but January was still on the low end of December if that makes any sense to
anybody. I'm gonna have to re listen to that a couple times because I got one of my head
will go You guys gonna go up in October and November in December is gonna be sideways and like the like the last couple weeks of summer is gonna start going down. January 1 is gonna roll around then it's gonna crash but as price January 1 is going to be elevated because it was elevated in October in November. So when it crashes in January like I was going to buy which if you're not going to buy the first week of October, I would put my money in bullish shares and I wait till probably the third or fourth week of January when everything crashes down to buy because once it hits the low in January I do believe it's gonna go sideways for the rest of the winter and then gradually, gradually pick up in spring but it'll be a up year in 2024 but that's just me. What do I know? Well see that was the REITs. The REITs are in there. You cannot have an income investing portfolio without rates without real estate. And you can't have an income investing portfolio without BDCs. Those are two like linchpins of the word linchpins of the portfolio, we're gonna need it, I wouldn't have more than I'd say 7% of my total portfolio in any stock. But I if I was going to I probably have no more than 20% in REITs and no more than 20% of VCs because you actually we wouldn't have some invalid bullet shares for like in case something goes on sale like it's been the last couple of months like everything I said that it's more of like holy shit, everything's on sale. And then you want to have some energy because energy is always you want to have like five to 7% and energy, oil or coal or renewable energy like we have another example we'll bring up here in a second where I was looking at his reason that we had this conversation this morning, then I would have stopped or no 10% in some way, Hercules it's not really a BDC but it technically is but like Hercules is like
one of the best I mean, that's an interest rate plans,
one of the best ones and then I would have a bunch of dividend stocks like I really liked the the egg stock is literally just trading sideways. We've just elected it and dividends calm and I really like I do still like camping world even though it should stay off and cut its dividend I think that one is going to be like a five year play. That one you will make a lot of money if you just stay the course of that one because they've they've the reason that they cut their dividends they had no money. They had no money because they use all the money to buy they bought up like every fucking hour. We were
sitting here we're like what kind of stuff oh kind of stuff. Oh, it's over.
Like every RV dealership you can think of and then it was
like oh just bought another one and then he said no that I said he's like it just bought another one. I was like God do where are they getting this money? They're in debt up to their
eyeballs. Literally own I think probably 90% of all the used RV dealerships in America.
In case you guys haven't been paying attention to the fan life movement holy
bunch of you got a bunch of older people that are about to retire or are you are retired or they're on the verge of retiring or like one of the things that they had a list of like what retirees were gonna do when they retire and like I think it was like damn, you're sick likely 60% Of all the people that surveys and travel and when they travel they either do Airbnb ease which would be a decent like possible growth stock if you like Airbnb or RVs and and
to be honest when we're out driving around I see more and more people with RV sitting in their driveways. Yeah, well even if they're not actually RVing they're still buying,
like the one I do for weed. Once they get their data and control they're gonna raise the dividend back to where it was before when it was like 9% and it's a growth stock. It's like dirt cheap right now compared to where she was like it's valued at like $32 is trading at like 20 So you get like, I don't know what that is like took a heck of 33% gain or something like that. But I still believe it's questionable like icommand That's another one that's trading at 20 bucks shouldn't be Icahn should be trading at like 40 to 50. So you get like a you can double your money there with 16 or 17% yield now on so like that's what I'm getting at is you don't want to you want to have a chunkier portfolio and BDC is a chunk in Rei T's chunk and financial stuff like
percorsi do an actual episode we talk about her Rise
Nation, and then you wonder then you just want to have a lot of a lot of random other things like we have a bunch of ETFs like we have those. Those Max the max ones and we have a golden silver one which I wrote about and I forget which newsletter was in but I wrote down the deal of the gold one, the silver one and the oil one. Do you want to have select 10% and energy outside of if you do the ETF on the oil covered calls. And then you want to have like minerals like we just got into like I found a really cool mineral. It's an LP It's technically an LP but it's more like an REI t they own the land and like they just charge every every everything you pull out of the land, they get a percentage of it's called KBR. They
don't actually do any of their own like mining and stuff themselves. They just own the land and use
10% and it's KBR it's awesome. Like
how farmers will have other farmers come in and do stuff to their plots.
They literally just own the land they go out and buy land specifically because it's in an environment that's rich in oil or gold or silver or whatever and then they do say okay, if you want to come in here and mine you got to pay me for it. And then if you make any if you make any money from what you mine, you have to get a portion. I
can see why you'd like that. That's like Tim's mo right there. Yeah, so I don't want to do any of the dirty work he's like do it for me peasants. But
the reason that we reason we had that discussion this morning about ARP, that's the cool one. If you want to get into it, it yields 14% Awesome. What is it a our LP is because yesterday any P which is a I think it's alternative energy. I'm not sure what the technical term is, but like they basically invest in solar wind and they have battery banks for charging your ratio is called Alternative Energy toy cars. They just cut their dividend forecasts in half and like their stock went down 80% In two days, and I was like, well, that's a really good stock, and it yields 10% When it normally only yields like 3% then I pulled out and I looked at the chart, I was like oh and then I looked at the financial asset Ooh, double double do. And then we looked at the debt and
we need to do an analysis of that one triple triple mu so that was like red flags all over the place once we actually looked into it. So that's
why I was debating whether or not to take my profits in the ARP.
And I looked at another tip you'd be an idiot, but that's already it.
So I hope you guys learned something from it. If
anything, you got the portfolio allocation at the end of this.
Oh my gosh. So you have like all sorts of things to research now like orienteers are awesome, or like a central I love them. And
I love them so much like seriously, I don't I'm renovating a kitchen right now and like, I
don't like owning rental properties and I'd rather have someone else do the work. For me and just pay me money.
Yeah, terms. It's a bad one downstairs. Yeah.
It's her condo I sold my house already.
And he's a he's a piss poor partner when it comes to this kind of shit. Whatever.
Oh, good. That's now I think we we will talk about LPS I think an LPS limited partnership and LPs are limited partner. And we'll talk about those in another episode of next week. If not the next one, then one of the it'll be sooner.
We'll talk about MLPs at some point relatively soon because that's the one that everybody cringes with the whole tax.
The problem with LPS is they have the K. The majority of them had the K tax form which is a nightmare to do your own taxes. And it's a nightmare. If you have an accountant that does it. But then your accountant does it. Who cares?
And if you guys have any suggestions, please let us know. We have our contact stuff in the show notes.
Apparently look me up on TikTok where I ounce on the ball. What's up y'all? Apparently I'm allowed to be personable on tick tock but not on podcast. You mean your quirkiness, quirkiness, personable people see me and say wow, that guy's weird.
You're not a robot yet Tim's like twitchy.
No I’mfun. That's right. See you next time.