This pitch about “Federal Rent Checks” has been circulating for quite a while, and it’s still being mailed out with a July 2018 date under the signature (I got a few questions about it just this week), so I decided to take a second look. And what do you know, there has been a LOT of change in this particular investment being teased since I covered it when those ads started rolling in July. So the ad hasn’t changed, but I have some updates for you anyway.
I’ll leave the original assessment in place, and then provide you some updates at the end.
7/23/18: This ad is one of so many that make me grit my teeth over the “checks” that “everyday Americans” can easily “claim” to receive thousands of dollars a month… they’re all technically true, but they omit so much that I’m sure folks who can’t afford to get sucked into this silliness end up losing money.
So let’s look at those “Federal Rent Checks” today, dear readers — this is a pitch from Money Morning, and I’m sure some readers start salivating as soon as they read the intro:
“Under an IRS directive, millions of Americans can now collect: “FEDERAL RENT CHECKS”
“Please review the following information to see how you could receive $1,795 or more every month!”
And then some language that starts to make it seem like, hey, maybe this crazy idea of me getting free checks could be real!
“You already know that it’s your tax dollars paying for each building and facility being used by the DOJ, CIA, NASA, FDA, Congress, and even the White House.
“At one time or another, citizens like you graciously covered the construction costs.”
Right, so that’s MY White House, yes? I get to charge rent on it! This is starting to sound possible, yes?
Sorry, Not really. Not like you’re thinking. Here’s the next bit:
“Currently, over 100 federal agencies are required by law to pay rent for the properties they occupy.
“This cash is flooding into the Treasury Department, where it’s being stockpiled in the Federal Buildings Fund.
“This year it will have $11.1 billion in it.
“That’s worth repeating…
“It’s an enormous, $11.1 billion pool of money.
“And some very smart Americans have discovered an investment that allows them to tap into a large portion of it.
“Their reward: A hefty monthly check.”
See what they did there? Use an insanely huge number ($11.1 billion) and then talking about a “hefty check.” Which word gets downplayed? Investment.
So yes, this is not a free check you get in the mail because you’re a US citizen and your forefathers helped buy Columbus, Ohio… this is an investment. As you’d expect from, well, an investment newsletter.
Though, of course, the emails introducing the ad don’t use the term “investment” at all… that comes later.
What’s the actual newsletter being peddled? It’s a little complicated, but they’re primarily selling D.R. Barton’s 10-Minute Millionaire Insider, which seems to be focused on technical trading and options as well as on higher-income investments. It’s a relatively low-cost letter, they offer it at $79 for the first two years, but also throw in a one-month trial to Private Briefing, another of their newsletters that after a month will renew at $99… so if you sign up and don’t pay attention or cancel anything, you’ll end up eventually paying $178 a year. You’ll probably see lots of other prices bandied about, they tend to test price points pretty aggressively in different promotions.
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This is part of how the email from Mike Ward was worded:
“… it turns out some folks have uncovered an ingenious way to exploit Uncle Sam’s rent situation.
“They’ve figured out how to add their names to a special distribution list.
“This entitles them to collect what we’ve classified as ‘Federal Rent Checks.’
“Around the second week of every month, some Americans are receiving an envelope in the mail with $1,795 in it. We found others collecting over $3,000 and $5,000 every month.”
But yes, as with every single email ad that promises you that you can “enroll” or “sign up” or “put your name on the list” for some particular checks that will come flowing your way… the word they should be using is “invest”.
These checks are returns on your investment, in pretty much every case… as is said so often it sometimes gets ignored, “it takes money to make money.” The person who collects the most rent is the person who owns the biggest chunk of the building.
Still, we think, those checks… maybe they’re really “hefty?” What does “hefty” mean, anyway?
More from the ad:
“I like to refer to them as ‘Federal Rent Checks.’
“And they can be quite large.
“Some folks have been pocketing significant amounts of money…
“Like Mitchell Lorens. He is collecting Federal Rent Checks worth $2,670 a month…”
They show dozens of smiling photos of folks who are collecting these checks, in amounts ranging from about $2,000 a month to well over $100,000 a year, all of which serves to set a baseline in your mind… “hey,” you might be thinking, “even if the lowest amount is $1,795 a month, that ain’t bad!”
Which is true, of course, $1,795 a month is nothing to sneeze at… but that’s not the amount you get if you just “sign up” with one share.
And they reiterate many of the arguments that are often made about the special “checks” you can receive if you only join this newsletter and “sign up” … how it’s better than Social Security because there are “no restrictions” on who can “sign up” … but what they really do is keep punching that hot button (for anyone who’s close to retirement) and mentioning those monthly checks.
“‘Federal Rent Checks’ are issued around the second week of every month, January through December.
“And by implementing a simple strategy, you can collect them every month!
“Brad Thomas served as an advisory board member for President Trump’s original campaign.
“He compared the ‘Federal Rent Checks’ that folks like John, Bonnie, Simon, Al, and Lindy are collecting to printing money.
“Money you can count on, because it’s backed by the full faith and credit of the United States.”
So that’s enough of my huffing and puffing about the language in the ad… this is an investment they’re teasing, so what is the investment?
It’s all about government buildings — or, more specifically, the buildings that are leased by the government. Naturally, like any other business, when the government needs more office space they have to rent it — they do occasionally buy buildings, but more often the government does what it always does… rent instead of buy, because that makes the current financials look better.
And as governments have become more and more strapped, both on the federal level and in states and municipalities, they’ve actually sold more properties and leased them back to give a bit of a one-time cash infusion… just like a corporation might when they’re trying to make their books look better and become more “asset light.”
So how do you profit from that? Here’s what the ad says…
“Altogether, the U.S. Government is legally required to pay rent for 9,600 federal buildings this year…..
“And there is a way for you to receive a “Federal Rent Check” every month from these “private agencies.”
“It takes about 10 minutes to set up.
“You can even use your cell phone to get started!
“Depending on your investment…
“Each of your ‘Federal Rent Checks’ could initially be made out for $1,795.
“But over time those checks could be worth much, much more.
“And that’s because…
“The longer you are on the distribution list… The bigger your Federal Rent Checks can grow!”
So how does one “claim a coveted spot on the distribution list for federal rent checks?”
I’m afraid it’s just as simple as you’re imagining: You buy shares of a Real Estate Investment Trust that owns government buildings, then collect your dividends… it’s those dividend payments that D.R. Barton is calling “Federal Rent Checks.” And the “special strategy” he cites is… buying more than one such investment, because then your dividend checks come more regularly (most REITs still pay their dividends quarterly, but if you own a bunch of them you might time it to get a check every few weeks).
For those who are unaware, REITs are Real Estate Investment Trusts — they trade just like regular companies on the stock exchange, but they are pass-through businesses when it comes to taxes — they don’t pay corporate taxes, and in exchange for that tax exemption they’re required to pass through at least 90% of their income to shareholders in the form of dividends (with the assumption