Real estate investors have a tendency to look down on paper assets, arguing that the stock market is an ill-advised place to keep your money. We talk about the volatility of stocks and avoid paper assets like the plague, assuming that there is no way to mitigate the associated risk. But what if investing in the stock market is not so different after all? What if we could apply real estate investing strategies to stocks and generate additional cashflow? What if we could leverage paper assets to complement a multifamily portfolio and even hedge against a decline in the real estate market?
Andy Tanner is the founder of The Cash Flow Academy, a platform designed to empower and inspire investors and entrepreneurs to generate their own income. An expert in the realm of paper assets, Andy has served as a Rich Dad Advisor for the last 11 years, and he is passionate about teaching in a way that is fun, simple and real. He is also the author of two must-have books, Stock Market Cash Flow and 401(k)aos.
Today, Andy joins me to share the parallels between real estate investing and the stock market, explaining how to achieve cashflow in stocks via puts and calls. He discusses the best way to manage risk as an investor on the exchange and describes how the rich are able to ‘predict the future’ and make decisions that make money. Andy also offers his predictions for the short- and long-term future of the stock market and walks us through the benefits of investing in buy-and-hold real estate. Listen in for Andy’s insight on leveraging paper assets to hedge against a decline in the real estate market and learn to apply multifamily investing strategies to stocks and generate even more passive income!
Key Takeaways
Why real estate investors should appreciate paper assets
- ‘It’s not the asset class, it’s whether you’re educated’
- Take real estate approach and apply to stock market
The parallels between the stock market and real estate
- Fundamental analysis (cap rate = P/E ratio)
- Look for undervalued property or stock
How to achieve cashflow through the stock market
- Get paid to promise to buy if price declines (puts/calls)
The best way to manage risk in the stock market
- Purchase contracts (insurance) that lock in ability to sell high
How to hedge against a decline in the real estate market
- Buy puts on IYR (real estate fund) for pennies on dollar
How the rich go about predicting the future
- Policy + demographics (i.e.: Medicare + baby boomers)
- Pay attention to balance sheet and identify trends
Andy’s predictions around the future of the stock market
- Okay for little while longer but Fed ‘out of bullets’
- Pay more for stock than ever before from earnings standpoint
Why Andy recommends investing in real estate
- 100% chance value of US dollar will continue to decline
- Borrow, trade, trade back + return to short USD
- Make money with natural inflation as rents go up
The multiple profit centers available in real estate
- Cashflow and tax advantages
- Appreciation of property + rent (via inflation)
- Principle paid down, refi for stronger short position
Connect with Andy
Resources
Stock Market Cash Flow: Four Pillars of Investing for Thriving in Today’s Markets by Andy Tanner
Warren Buffet on Kraft Heinz
Podcast Show Notes
