As my portfolio grew, I knew I needed to diversify my portfolio a bit more so I started acquiring attractive real estates. I am sure the thought about being a landlord and collecting easy rent is something many of you thought about. And for those perverts who are addicted to porn, a scenario of having a hot tenant and all the nasty things you wish would happen (but most likely won’t happen) might still be something you want to do. Let me give it to you straight.
There is no easy money in rental income.
I tried it and got so tired of it. And at the end of the day, I did the math. It’s better to own REIT’s. Not just any. $DRN. Direxion Daily MSCI Real Estate Bull 3X Shares. It’s a leveraged ETF and these are known to be risky. Then why? As you can see from the chart below, it still has almost 100% upside.
How do I know that it has that much upside? Take a look at everything since the pandemic. I can give you charts after charts. Everything went back to the simple straight-line trend. Look at everything (except $XLE, which I will talk about in another blog).
So what’s really good about $DRN?
- A potential 100% upside
- Diversification
- Options premium
What about options premium? DRN doesn’t move much. If you buy some today and write a covered call at $28, you collect about $0.72 for a month. $0.72 / $26.41 = 2.7%. Yes, 2.7% return just on premium alone in one month and if it gets exercised, then you will collect another $1.59 (another 6%) all in 1 month! That’s a total monthly return of 8.7%. Let me put that in perspective. You spend $250,000 to buy a condo and have to deal with all the headaches, brokers, fixes, missing rent to collect $1,500 a month in rent, which comes out to be 0.6% ($1,500 / $250,000) with an average of 6% annual appreciation for housing.
Does this make sense to you?
Conclusion: Buy DRN, write covered calls, sit back and enjoy your premium without the worries and headaches of being a landlord. Repeat this process every month. Then again, do your own DD before you invest anything. Oh, did I mention that DRN also give dividends? What?????