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Almost 20 years ago, the investment education company I was working for brought on Robert Kiyosaki’s real estate investing training as part of the suite of coaching products the company could sell and fulfill. As a result, I got a chance to buy his CashFlow 101 game at an employee discount. One of our sons now plays in the real-life version of CashFlow by renting out rooms in his home and managing investment properties as a side hustle.

In playing the game, the way to get out of the rat race in the game is to take as many small deals and big deal opportunity cards as possible as early as possible and avoid the job loss spot on the rat race if at all possible. The small deals involved stock opportunities, and single-family homes, and sometimes a duplex. The big deals involved larger four-plex, apartment buildings, and commercial buildings as well as business opportunities.

Crowdfunding has made it possible for more people to play real life big deal real estate opportunities. And creativity afforded startups to enter the race-to-unicorn status in real estate as well.

My son covers his house payment through roommates’ rent. The local real estate market is red hot for sellers, but hard for renters and first-time home buyers. Our wages haven’t risen to match the California real estate market prices that we’re experiencing, so creativity wins the day.

The Crowdfunding Solution

Prior to the JOBS Act, the only ways you could really play in the real estate market was by buying a physical property and renting it out (or fix and flip), opening your home up as a bed and breakfast business venture, or investing in REITs (real estate investment trusts).

Real estate crowdfunding is like a timeshare you never use – you buy into a property and become a shareholder, and you could earn a portion of the profits that could be generated from the investment, whether that potential profit is in the form of rental income, or from the sale of the building.

Some startups in the real estate space focused on modernizing the bed and breakfast business concept. Some startups are specialized as simply crowdfunded commercial real estate. There’s a modernized version of the timeshare concept on vacation and/or second homes and there’s some helping people get into their own homes, or just find a place to rent.

Here are a few highlights.

Airbnb (NASDAQ: ABNB)

Airbnb started out as an air mattress on the floor when co-founders and housemates Brian Chesky and Joe Gebbia, who both worked in design, found themselves struggling to come up with their rent. When hotels in the Bay area filled up for an industrial design conference they were also attending, they put down three air mattresses and offered a bed and some breakfast to any conference attendees who needed a place to stay, changing $80 a night per person. They created a website called airbedandbreakfast.com.  

During the 2008 election, the designers created two limited edition custom-made cereal box designs “Obama-O’s” and “Cap’n McCain’s”; sold them for $40 each and raised $30,000 to put toward company operations. It wasn’t long before venture capitalists jumped on board, with Paul Graham leading the way with the first $20,000, having the company join his startup accelerator, “Y Combinator.” [source: Key Cafe Blog]

From those humble origins, the company grew and achieved a partnership with the International Olympic Committee at the end of 2019, before they went public in December of 2020, with a valuation at IPO of $47 Billion. The initial share price was $68.00 and now stands at $170.

Pacaso

Mom and Dad bought a timeshare condo for Lava Hot Springs, Idaho – their window was October – when that part of Idaho is cold, windy, and not very scenic. But it was cheaper than the peak weeks between Memorial Day and Labor Day, and Dad considered the crops would not be lingering in the fields by then.

But Pacaso isn’t your mom or dad’s vacation timeshare! Here’s how Pacaso is different: Pacaso finds a property where a buyer pays a ⅛ share and Pacaso pays the rest, eventually selling the remaining 7 shares, after vetting the other people who will co-own the property.

Properties are located in gorgeous markets like Park City, Utah at $685k a share, or Vail, Colorado at $1.49 million a share, and various destination spots like Newport Beach, Palm Springs, or Malibu California for prices ranging from $274k and up, and other places like Hilton Head, SC, and West Palm Beach, Florida. [source: Pacaso] The company is also looking to expand to Europe after a recent round of funding. [source: The Real Deal]

Pacaso makes money by charging owners a 12% service fee at the time of purchase, plus a $100 per month management fee. Pacaso borrowed this business model from the commercial real estate business model. Pacaso owners can sell their share at any time after 12 months of ownership.

Pacaso’s current growth curve is steep, going from a $1 billion valuation a year after launching [source: Geekwire] That valuation was in March 2021. In September 2021, according to Securebooks, the company opened a Series C round of funding taking total funding to $1.5 billion. Investors include SoftBank Vision Fund 2, Fifth Wall, Gaingels, Greycroft, Global Founders Capital, 75 & Sunny Ventures, and Crosscut.

Rentberry

The process of finding tenants or finding a longer-term home rental has been tedious and frustrating for both homeowners and tenants. And technology had failed to create a significant disruption that provided a new and better way to rent. Rentberry aims to change that.

Rentberry is considered the disruptor in the long-term home rental space. There are a lot of moving parts in the real estate rental industry. From promoting properties to collecting payments in a way that provides convenience, security, and efficiency, and all the points in between… including incorporating crypto into their business model with their own crypto token, crowdfunding with crypto, and allowing rent payments with crypto! [source: Coin Central]

StartEngine gives 3 main reasons to look at this company: They’ve already raised over $13 million in a $7 billion market opportunity. They have 1 million monthly active users and over 50 partnerships, with investors receiving extra perks like up to 20% bonus equity and 30% rent discounts.

Divvy Homes

“Divvy Homes is in the business of financial equality.” Their business model focuses on the mortgage aspect to facilitate that goal.

Divvy uses a blog to tell the success stories of their business model. Potential buyers apply to the Divvy program to rent-to-own. Once the applicant is approved, they receive a budget to use to go home shopping. They work with an agent to find their dream home; they can choose from any home on the market that qualifies, based on the budget. Divvy then purchases the home, covering all fees, closing costs, taxes, and insurance, and the applicant pays a down-payment of 1-2%. A rental contract is drafted that helps the tenant save and gradually build up ownership of the home. “Most of our customers are able to become mortgage-eligible in less than three years.”

At any point, the buyer can choose to buy back the home with the money they’ve saved, or move out and cash out the savings.

Divvy makes money from monthly rent payments and property appreciation over time. About ¼ of the payment goes toward the renter’s savings and preset a price that considers anticipated appreciation. Any increase in value above that set price becomes an opportunity for the rent-to-own tenant.

Divvy’s market includes Atlanta, Cincinnati, Cleveland, Dallas, Denver, Ft Lauderdale, Houston, Jacksonville, Memphis, Miami, Minneapolis, Orlando, Phoenix, San Antonio, St. Louis, and Tampa.

Divvy was in the news this month (October 12, 2021)  after announcing a $735 million in debt financing that came just two months after raising $200 million in August from Series D. [source: Yahoo]

Divvy is currently valued at $1.2 billion  [source: Crunchbase]

Bottom Line:

Real estate is a basic pillar of financial freedom. Startups are bringing innovation to the way we invest in, or buy and sell, or rent real estate, or vacation, and travel. These innovations are affording more people to participate earlier in a more secure fashion than when subprime mortgages attempted to solve a housing crisis for low-income and declared income earners.

Author: RagingBull

RagingBull is the foremost trading education website where traders of all skill and experience levels can learn to trade or to become a better trader. Students can learn from experienced stock and options traders, and be alerted to the real money trades these traders make. Become a better trader with RagingBull.com's courses and programs.

Markets have been in a bullish frenzy since you started receiving SPY Daily. We’ve seen maybe a few hours of manageable dips in the SPDR S&P 500 ETF (SPY).

The result of those dips?

This is why recent Market Navigator Trades of The Day have been designed to buy dips as they happen.

Today’s edition of SPY Daily will teach you how I led Market Navigator members into yesterday’s red opening bell and my trading plan ahead of today’s opening bell.

One of the hardest lessons I learned early in my trading career is the concept of “looking the other way.”

As a rookie, if markets opened red, I used to push my chips into the short side of things, which was an expensive mistake.

If markets opened green, I’d almost immediately go long; also an expensive mistake.

Today I typically buy into markets (buy SPY Calls) if they open red. Inversely, oftentimes I short green opening bells (buy SPY Puts).

Institutions – investment funds – big-money market players tend to buy dips and sell into strength to turn a positive ROI.

As an active trader with the same goal, I can participate in this action by trading the same exact style within the most powerful fund in the entire world, the SPDR S&P 500 ETF (SPY).

This is precisely how I positioned yesterday’s Market Navigator trade of the day when the SPY while SPY was trading in the red.

BTFD volume kicked in about ten minutes into the session. By 11 AM ET, SPY was green on the day.

See how taking the short side of the open just because SPY opened red would have been a bad idea?

A key takeaway here is that this isn’t the first time I’ve seen this trend present itself, and I doubt it’ll be the last time either, which is why I want you to teach this to you today versus learning the costly was as I did back in the days of trading in my college dormitory.

As for catalysts that could potentially shake things up, I don’t see any high-impact events on today’s economic calendar that may move markets around at fast paces.

Therefore, let’s get straight to SPY’s daily chart, which is today’s chart of the day.

SPY Daily Chart

SPY is hovering around an all-time high with strong support as 454.05. This means the path of least resistance for the most influential ETF on the planet could be up.

Therefore, as long as SPY trades above 454.05, I’ll be considering trading SPY to the upside.

Market Navigator members will be provided with my plans for the exact option contracts, my entries, and my exits.

Today, you have the green light to discuss the details of this trading education with a member of my VIP concierge team…

But I need you to call about this opportunity: 410-775-8565

 

Think simple,

Davis Martin

Author: RagingBull

RagingBull is the foremost trading education website where traders of all skill and experience levels can learn to trade or to become a better trader. Students can learn from experienced stock and options traders, and be alerted to the real money trades these traders make. Become a better trader with RagingBull.com's courses and programs.

Over the years, I’ve found that whether I’m teaching members, acting on the Market Navigator trade of the day, or teaching you through SPY Daily editions, there are always new lessons to learn in the market…

Today I’d like to teach you how I navigated Monday’s trade of the day and how I plan to proceed through the day ahead.

Before we get to today’s economic calendar and chart of the day, let’s think back to Monday’s edition of SPY Daily…

On Monday I referenced SPY’s 50-day simple moving average line as a critical support level for the day ahead, as SPY was trading right above it.

As you may recall, I was looking for a move to the upside to buy SPY Calls.

Monday’s chart of the day was the chart below, and the 50-day simple moving average line is the red line below.

Monday’s SPY Daily Chart

A lesson I want to cover with you today is the concept of reward-to-risk

You see, after having taught and traded options on the SPDR S&P 500 ETF (SPY) for five years and counting, while I love trading SPY to the upside and the downside, I’ve learned that sometimes, it’s best to sit on my hands with one particular direction.

In Monday’s case, had I wanted to buy SPY puts with SPY trading right above its 50-day simple moving average line, there was about $0.50 of downside room for reward, whereas there was potentially unlimited room to the upside for risk.

Inversely, given I wanted to buy SPY Calls, there was that $0.50 of downside risk with potentially unlimited upside reward.

I like to see a minimum ratio of 2:1 reward-to-risk, and in Monday’s case, this rule proved to be effective as I bought SPY Calls shortly after the opening bell.

Monday’s SPY 5-minute Chart

This is why I sat on my hands to the downside, and favored the upside.

Keep in mind, I trade SPY options, meaning my goal is to leverage a $3/share move on SPY by trading SPY Calls and Puts that trade at about $1 on any given day… not the $400+ one share of SPY would cost.

I’ll detail more of my recent trades during tonight’s 7 PM ET live session with you.

Ahead of today’s bell, an economic calendar can point out the Beige Book event at 2 PM ET.

The Federal Reserve’s Beige Book reports current economic conditions in each of the 12 Federal districts in the U.S. It gives a picture of economic trends and challenges in the U.S.

It is released eight times a year, two weeks before each Federal Open Market Committee meeting. The report is used by the FOMC in its decision on short-term interest rates.

An optimistic outlook is typically interpreted as bullish for the U.S. dollar, while a pessimistic outlook is typically interpreted as bearish for the U.S. dollar.

Ahead of the bell, SPY’s 60-minute chart, today’s chart of the day, has a volume profile read indicating 450.20 could be a strong support level. As I’m typing, SPY is trading at 450.59…

SPY 60-minute chart

Remember our lesson on reward-to-risk? That would allow me $0.39 of reward opportunity on a potential move to the downside, so I’m going to take a pass on playing the short side of things as long as SPY continues to trade above 450.20.

Should SPY continue to trade above 450.20 support today, I’ll be interested in trading SPY to the upside, and when I plan to make my move, I’ll be sure to give an advance alert to my Market Navigator members to let them know when I plan to make my move.

With this much education and detail laid out, it’s time for me to get to the trade of the day with members, but I’ll see you here at 7 PM ET…

Think simple,

Davis Martin

Author: RagingBull

RagingBull is the foremost trading education website where traders of all skill and experience levels can learn to trade or to become a better trader. Students can learn from experienced stock and options traders, and be alerted to the real money trades these traders make. Become a better trader with RagingBull.com's courses and programs.