This Could Devastate Your Real Estate Investing Business
What I’m about to say might not make me popular, but it may be the most important thing you’ll ever read about the safety of your real estate holdings.
Want more articles like this?
Create an account today to get BiggerPocket's best blog articles delivered to your inboxSign up for free
I want to talk about what can only be described as a nightmare-ish scenario for real estate investors.
There are so many potholes in the road to real estate investing success. In fact, I wrote a book about how to avoid many of them.
Unfortunately, there was one thing I did not anticipate!
The Set Up
Let’s say, after months (or even years) of planning, hard work, dedication, and penny-pinching, you made it to closing. Your real estate investment is finally all yours.
In the following days, the tension in the air seemed to magically melt away. The clouds broke, the sky turned blue, and it’s a warm, sunny day at the beach.
After all the hard work, your financial hopes and dreams are coming true. You’re confident your investments are going to grow in value, and for the first time in a long while, you can actually relax.
The Promised Land
Now that you’ve reached “real estate nirvana,” it’s time to sit back and reap the profits. Things could not be better.
Just off to the left in your peripheral vision, did you see something menacing? A huge shadow maybe?
You look again with a full stare but see nothing. You relax, thinking it must have been your imagination.
The warm, gentle breeze rustles the palm fronds and your eyes are getting heavy. You’re about to fade off and take a short siesta… when there it is again!
It’s unmistakable this time—definitely a shadow. And it’s huge!
It’s accompanied by a very faint and eerily familiar sounding tune…
The tempo is slow at first but getting faster: duunnn dunnn… duuuunnnn duun… duuunnnnnnnn dun dun dun dun dun dun…
Your palms grow sweaty and the hair on the back of your neck stands up. Suddenly, you’re very afraid!
(OK, obviously I am being overly dramatic and recreating a scene from “Jaws.”)
Trouble in Paradise
All kidding aside, there really is trouble brewing in paradise. In a worst case scenario, it may very well spell the end of your real estate investing career!
Millennials and Gen Zers make up 62 percent of the current population. They account for the vast majority of tenants who are served by the rental housing and storage industries. They are a force to be reckoned with, and they are just now coming into their own as a huge voting block.
Their view of capitalism is very different from their parents. For a number of reasons, young Americans are drawn to socialism and big government.
It’s a topic discussed in great detail in an article by Steve Chapman titled “Why Young Americans Are Drawn to Socialism.”
Additionally, the University of Chicago’s GenForward Survey found that only 26 percent of baby boomers would prefer to live in a socialist country, while 44 percent of the younger crowd would.
This young cohort takes for granted the vast array of benefits capitalism has provided, which include cell phones, cheap airfare, plentiful food sources with unlimited choices, and never-ending entertainment options. They weren’t alive (or can’t remember) a time when those things did not exist, so they’ve come to expect them.
At the same time, millennials and Gen Zers were likely impacted by the brutal recession of ’07 to ’09, living through the pain it caused them and their families. Pain like that is not easily forgotten.
Chapman points out in his piece, “For eight years, as the economy steadily improved, many Republicans denounced President Barack Obama as a socialist out to demolish the free market. Obama left office with a 77 percent approval rating among millennials. If he was a socialist, many of them must have decided, socialism can’t be so bad.”
Also during this time period, the universal healthcare, free college tuition, and unlimited immigration movements were born.
So, guess what’s next from the socialist’s maternity ward?
Guaranteed Housing for All
While I believe in responsible care of the environment, the Green New Deal introduced by Rep. Alexandria Ocasio-Cortez, D.-N.Y., is not just about environmental issues. It includes every socialist agenda item from the last 20 years rolled into one tidy little package.
The guaranteed housing for all movement couched in the GND is an extensive wish list that includes a provision for the government to provide exactly that and to also end all foreclosures and evictions.
Impossible, you say? Sixty House Democrats and nine Senate Democrats have signed on.
How does that sit with all you landlords out there?
To this crowd of youngsters (most of whom have limited financial or economic training), capitalism is summed up as being a bunch of evil corporate goons who secure good housing for their cronies while pushing dilapidated slums on the rest.
Rounding up all the greedy real estate owners, confiscating their properties, walking them through the streets, and publicly flogging them is not a scene from some futuristic Orwellian sci-fi flick to them. Nope. It’s just a good start!
The Aforementioned Huge Shadow
If you have not figured it out by now, the huge shadow that was lurking in the deep blue water, the one thing that may ruin your real estate investing career, is socialism! It used to be tucked away in the dark corners of the U.S. political landscape, but it has now taken center stage and is on display for all to see!
I know some of you out there are mumbling to yourselves, ”Come on, doc. Aren’t you being a bit extreme? That will never happen in America!”
Recent News Stories
To that I say, really? Consider these headlines:
- “2019 Oregon Passes First in the Nation Rent Control Legislation”
- “New Jersey Set to Tax Rain!”
- “Municipalities with Growing Tax Revenue Shortfalls Eye Apartment Owners”
- “Green New Deal Suggests Air Travel, Gas Powered Cars, and Cows Should All Be Eliminated in Just 10 Short Years”
- “Amazon HQ2 Cancelled After Push Back From a Number of Citizens Groups Including the Democratic Socialists of America”
Unfortunately, socialism has been championed by a number of high profile Hollywood types. They claim it is the answer to closing the gap between the “haves” and the “have-nots.”
Unfortunately, most of those pushing this dangerous agenda have never been to a socialist country like Venezuela, where the only “equality” the people experience is equal amounts of misery.
Are government mandated rent freezes, confiscation of privately-held properties, and public housing for all right around the corner?
America is not perfect. It does not have all the answers. Some people are born with a leg up; some have figured out how to work the system.
But the fact is capitalism in America offers opportunities to all and rewards hard work and ingenuity. It still stands as a bright city on a hill.
In my life, I have been fortunate enough to travel to Canada, Russia, Mexico, Puerto Rico, Dominican Republic, Germany, Austria, England, Scotland, and New Zealand. And I can say, compared to all the other options out there, I will take America every time!
Possibility of Socialism in America: Yay or Nay?
Venezuela and South Africa (socialism’s most recent shining examples) have recently torn up their constitutions and begun confiscating landowner properties—including apartments.
If socialism does hit the U.S. (as it looks like it may), choosing to buy real estate in the most landlord-friendly states may only be a short-term hedge against the inevitable.
So, tighten your seat belt, folks. I think we are in for some turbulence!
What do you think? Should investors be worried? Do you think this movement will gain traction or fizzle out?
I’d love to read your thoughts below.