How Will Joe Biden as US President Affect Real Estate

Buying & Selling Real Estate
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How Will Joe Biden as US President Affect Real Estate

Wale LawalBusiness Member
Real Estate Broker · Houston | Dallas | Austin, TX · Member since 2018 · 5k+ posts · 2k+ votes

I will like to know how you guys think his administration will affect Real Estate and Investors. 

I have listened to diverse opinion on this from folks that are not investing in Real Estate but I will like to hear from Investors and Real Estate Professionals.

As a Real Estate Agent and Investor from Houston Texas, I have received calls from clients seating on the fence to see who win the election. 

How will this affect the General Buying and Selling of Real Estate?

Do you think Joe Bidden will save foreclosures in 2021?

Do you see any big changes in the next few months?
Should New and Experience Investors buy if the number works of wait for few months to see how his policies will affect Real Estate?

Please support your opinion with facts if possible. Appreciate your meaningful contributions.

Thank you 

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Mike Dymski
Investor · Greenville, SC · Member since 2016 · 5k+ posts · 13k+ votes
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Focus on deal flow and your criteria.  Everything else is noise.

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  • Edward Dawson
    Rental Property Investor · Phoenix, AZ · Member since 2019 · 26 posts · 47 votes
    5y

    @Steve Morris Thanks for the insight!  I hope that doesn't happen for all of us RE investors.

    0Reply
  • Keith Andrews
    Real Estate Agent · Colorado Springs, CO · Member since 2019 · 26 posts · 15 votes
    5y

    @Wale Lawal - Buy and hold and it will all work out wonderfully!

    1Reply
  • Dave FosterBusiness Member
    Qualified Intermediary for 1031 Exchanges · St. Petersburg, FL · Member since 2013 · 9k+ posts · 9k+ votes
    5y

    @Henry Lazerow, Your data is limited to your own experience which, while valid, is not the experience of real estate investors as a whole.  Each year there are over 500,000 1031 exchanges completed.  And the average sales price of the properties exchanged is around $300,000.  So 1031s are neither rare nor are they only done by the richest individuals.

    1031s are the incubator that fuels the growth for many investor both to transition to larger - and to transition from large to passive and other classes as @Joe Splitrock said.

    But to everyone on the forums I'd say "take a deep breath".  This isn't the first time that 1031s have been on the chopping block.  And it is a little concerning  that 1031s and certain depreciation, and the current capital gains rate, and the step up in basis are all being targeted at the same time.  But what a president wants and what they get are generally two very different things.  Cool heads and sound arguments will prevail ( I hope :). 

    Meanwhile, conduct business the way you always have - under the rules of today.  You can't do business today using what worked yesterday.  And you can't do business trying to predict the future.  Take advantage of what's out there now and make hay while the sun shines.

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  • Sean T.
    Rental Property Investor · MA · Member since 2014 · 420 posts · 213 votes
    5y

    @Dave Foster Hey thanks for the detail in your post.  I am aware of an older study that shows the $300K number and I am really curious if your numbers are from that or something newer!  I was looking at the NCREIF research but couldn't pin a specific paper down.  If possible, could you share the reference or source?

    Thanks either way!

    1Reply
  • Dave FosterBusiness Member
    Qualified Intermediary for 1031 Exchanges · St. Petersburg, FL · Member since 2013 · 9k+ posts · 9k+ votes
    5y

    @Sean T., It was probably that same study although I'd have to go through my files to find it.  We uncovered it while doing some due diligence on another consulting job a year or two ago.  The IRS is notoriously slow (or non-existent) on keeping up with underlying data on the 8824s.  But the general point is there - 1031s are mom and pop not fat cats.  Unfortunately no ones liberty or property is safe while congress is in session!

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  • Ryan Nastase
    Rental Property Investor · Tucson, AZ · Member since 2020 · 16 posts · 12 votes
    5y

    @Wale Lawal this is a good thread, thanks for posing the question.

    As seen in this article

    https://www.google.com/amp/s/therealdeal.com/2020/08/25/five-ways-biden-could-change-the-game-for-real-estate/amp/

    some of the potential changes are:

    1) 2017 federal tax law - potentially do away with

    2) opportunity zones - potentially do away with

    3) Fair Housing in suburbs- reinstate

    4) 1031 Exchange- potentially do away with

    5) SALT - increase to $20k in expensive cities

    By in large, these policies will cut into REI profits but then again we shouldn't count on these things to remain profitable. Continue searching and investing in deals that cash flow and if these tax incentives remain its just gravy.

    0Reply
  • Jai Reddy
    Edmond, OK · Member since 2012 · 456 posts · 270 votes
    5y

    @Michael Deering

    Are your tax liabilities treated differently than other real estate investors? Can you explain?

    0Reply
  • Justin Gottuso
    Rental Property Investor · Columbus, OH · Member since 2015 · 184 posts · 162 votes
    5y

    @Wale Lawal

    Sounds like you’re in the analysis phase, or have you already purchased an investment property?

    If you find a GREAT deal, get it! We don’t live in a third world country where massive social disruption happens at every election. People whine and protest a bit, but thank God and our ancestors for the sacrifices they made to make our country great.

    As far as Biden, his #1 agenda item is getting COVID19 under control ASAP. The short run might see more regulations and more protections for renters, but he will also push for more stimulus/cash to Americans. So, more cash in people’s pockets plus COVID19 numbers going down the economy will start recovering. I think :-)

    Buy GREAT deals.

    Get GREAT property management.

    Dream big, work hard, and you’ll do GREAT!

    3Reply
  • William S.
    Flipper/Rehabber · Elmira, NY · Member since 2020 · 9 posts · 1 vote
    5y

    @Guy Gimenez yeah it’ll just be on people making over 250k p/yr

    0Reply
  • Ray Schwanenberger
    Real Estate Investor · Florence, KY · Member since 2014 · 6 posts · 2 votes
    5y

    @Derrick Dill I would tend to disagree. Biden has already stated he will do away with cost-basis on the inheritance of real estate, and has hinted that he would levy higher taxes on “real estate investors”.

    0Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    5y
    Originally posted by @Steve Morris:

    I just don't thing increasing taxes will be a priority in 2021.

    Hate to disagree, but Biden has already said the rich (ie anyone with a job) are not paying enough and he wants to fund green energy and affordable housing projects.

    On interest rates, I kinda thought they'd go up also, but right before COVID hit, the economy was going nuts and they still said they didn't want to raise rates.  I don't think they have that much more down side on rates in any case.

    Affordable housing..  HOw do you do that in certain markets..  when permits SDC just to get right to build may cost 30 to 75k per door ?? like it does for us on the west coast.. then I just paid for a lumber pac on a 2k sq ft home  46k JUST FOR THE LUMBER..  so right there those two numbers are near 100k and you have not bought the dirt.. run utls  and the rest of the components for a dwelling.

    you have affordable housing in massive areas of the US  its called the Mid west.. were median prices in many of those areas is still under 150k.. for existing housing stock..  The interesting thing is trying to shoe horn buyers into less than desirable neighborhoods and school systems. you cant force buyers to live where they dont want to live..  we all know schools systems MATTER  more than politics..

    You can have all the great ideas and feel good ideas but reality is a far cry.. Only way affordable housing gets built is if Govmit subsidies the heck out of it. And we all know how subsidized housing looks 5 to 10 years down the track..

    Forcing developers in MF to create a % of units for subsides housing will simply slow things down.. Developers wont take the risk. Right now there is no laws or mandates in our area for SFR developments to create a subsidized housing unit.. I can only see this really affecting the MF projects.. If it creeps into the SFR developments.. that would be very interesting to see how the big players deal with it.

    Also his idea of appraising all homes the same this will lead to a level of mortgage fraud that will make 08 GFC pale.. you will have the wholesalers and such going right into the hood  buying 15k houses were the same sq ft in a better neighborhood in any number of mid west and deep south citys is worth say 150k.. they will get a juiced up appraisal pull the cash out and rent and then default.. that's what will happen.. just watch any of the shows in markets like Milwaukee  and really any big city in the mid west deep south Nor east that has same housing product built throughout the city.. but one area ( the hood prices are 20 to 50k) same house in better area its 300 to 500k  its just a fact and reality.. I know i fund a ton of it seen it first hand..   West coast we have a little of that  In Gresham a 3 and 2 rancher is say 350k in Lake oswego its 650k.. same house.. different location.  LOCATION matters.

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  • Guy Gimenez
    Investor · Corpus Christi, TX · Member since 2012 · 2k+ posts · 1k+ votes
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    @William S.

    That is what they would like you to believe. When they tell you they won't raise taxes, don't believe them. When they tell you they will raise taxes, believe them. Rescinding the Trump tax cuts will affect most everyone who is working.  

    0Reply
  • Joe SplitrockPro Member
    Moderator
    Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes
    5y
    Originally posted by @Guy Gimenez:

    @William S.

    That is what they would like you to believe. When they tell you they won't raise taxes, don't believe them. When they tell you they will raise taxes, believe them. Rescinding the Trump tax cuts will affect most everyone who is working.  

     The personal portion of the TCJA tax cuts expire in 2025, so taxes are going up even if Biden does nothing. If they want to increase taxes before that, it will require the House and the Senate. Taxes will likely be a major debate point in the next presidential election. The TCJA was a tax cut for poor, middle class and upper middle class, so everyone loses when it expires.

    3Reply
  • Peter MckernanBusiness Member
    Residential Real Estate Agent · Irvine, CA · Member since 2013 · 2k+ posts · 1k+ votes
    5y

    Agreed 100% with @Mike Dymski Keep your head down and keep the deals flowing. If you let yourself get caught up in the political noise you will ultimately anxious, nervous, and focused on stuff that does not immediately effect your bottom line or your clients bottom line.   

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  • Anna L.
    Investor · Philadelphia, PA · Member since 2016 · 73 posts · 43 votes
    5y

    My plan is to be agile with the market trends. There are deals to be made in every market. 

    2Reply
  • Guy Gimenez
    Investor · Corpus Christi, TX · Member since 2012 · 2k+ posts · 1k+ votes
    5y

    @Joe Splitrock

    I think we'll see E.O.'s utilized in ways never before seen, so the Senate will be marginalized and IF a Biden admin. stacks the SCOTUS, well, the Senate will be of no consequence...the SCOTUS will be the legislative body. They know how to play the long game. Just my opinion as a long-time political junkie while at the same time despising politics as a whole. I want my government and my competition to think I'm dead. Makes business much more profitable and fun for me.  

    1Reply
  • Bryan Trelegan
    Rental Property Investor · Hyannis, MA · Member since 2016 · 19 posts · 18 votes
    5y

    When trying to analyze the effect election results will have on Real Estate its good to separate the National market from the Local markets. If you are investing in REITs or stocks based on Home Builders and building supplies then policies affecting immigration , Suburban Zoning , Covid dictates , monetary policy and interest rates and very important.

    For an individual investor investing in a few rentals local economic conditions and demographics will be the big impact factors.

     Areas with increasing wages , increasing population and above average incomes will likely outperform in both rent increase and appreciation.

    If you have a few units or are just starting out this is an awesome time to be an investor. The market will show us the winning zip codes.

    Remember to stack strategies and options,

    How you may wonder ?

    Buy property that you would live in , 

    Buy property that appeals to above average tenants,

    Buy property with at least two income options. Duplex ,  Single in-law apartment , Garage or commercial space .

    Try to buy a " Walk to FUN Stuff " location that has short term rental potential.

    And remember ..Zip Code is everything !

    2Reply
  • Jimmy Suszynski
    Rental Property Investor · Pittsburgh · Member since 2018 · 69 posts · 28 votes
    5y
    Originally posted by @Darius Ogloza:

    Biden HAS announced that he is going to end the 1031 exchange and the basis step up for inheritances.  Changes to those tax laws will have profound impacts on many real estate investors as it will kill deal flow.  A lot depends on Georgia.  

     His policy clearly states that he intends the 1031 exchange to go away only for those investors whose annual income exceeds $400,000. That is an annual PROFIT exceeding $400,000. How many BP members fall into that camp? How many people, in general, fall into that camp?

    2Reply
  • Darius Ogloza
    Investor · Marin County California · Member since 2018 · 1k+ posts · 2k+ votes
    5y

    If you have held a property for longer that 10-15 years (like many, many of us), especially in one of the major urban areas in the US, you are probably sitting on at least $400K in capital gain.  Do a thought experiment: start with a six figure number and compound it by 8%-9% over 15 years.  What do you get?  Most of us who got into real estate did so for this precise reason .

    4Reply
  • Debbie FalesBusiness Member
    Lender · Annapolis, MD · Member since 2018 · 145 posts · 47 votes
    5y

    In my opinion, divided government is the best case scenario so that both parties are limited as to how much change they can actually make. 

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  • Jessie ReddPro Member
    Flipper/Rehabber · Raleigh, NC · Member since 2018 · 57 posts · 26 votes
    5y

    @Wale Lawal

    I doubt if we will notice much difference. Just stick to your parameters and invest for the long term

    4Reply
  • Tchaka Owen
    Real Estate Agent · Merritt Island, FL · Member since 2017 · 986 posts · 1k+ votes
    5y
    Originally posted by @Darius Ogloza:

    If you have held a property for longer that 10-15 years (like many, many of us), especially in one of the major urban areas in the US, you are probably sitting on at least $400K in capital gain.  Do a thought experiment: start with a six figure number and compound it by 8%-9% over 15 years.  What do you get?  Most of us who got into real estate did so for this precise reason .

    No, most of us have not. You're in a high-cost area (we know Marin) but that doesn't represent all of the country. And for those that it does represent, you're not stuck. Your ability to invest does not come to an end. If you feel it does, then sit back and hold off doing anything and hope that one day things change back - this of course assumes that Biden pursue ridding of1031s and is successful. For the majority of us, we either aren't going to be affected or we will not let it stop us from continuing to invest.  

    0Reply
  • Joe SplitrockPro Member
    Moderator
    Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes
    5y
    Originally posted by @Jimmy Suszynski:
    Originally posted by @Darius Ogloza:

    Biden HAS announced that he is going to end the 1031 exchange and the basis step up for inheritances.  Changes to those tax laws will have profound impacts on many real estate investors as it will kill deal flow.  A lot depends on Georgia.  

     His policy clearly states that he intends the 1031 exchange to go away only for those investors whose annual income exceeds $400,000. That is an annual PROFIT exceeding $400,000. How many BP members fall into that camp? How many people, in general, fall into that camp?

     Households making over $400K a years isn't that rare in certain parts of the country. I am talking high cost cities like NYC, San Diego, San Francisco, etc. Still it affects everyone, because who do lower income earners buy properties from? Higher income earners! You exchange your duplex into a 10 unit and the owner of the 10 unit exchanges into a 60 unit and the owner of the 60 unit builds a new 200 unit complex. The point of 1031 exchange is to encourage people to sell and trade up. If people at the top are not selling, there is nothing for people down low to trade up to. Take away the exchange and increase taxes, the net result is higher income earners will sit on their properties.

    See your point, I am just encouraging you to look at the bigger picture. 

    6Reply
  • Marty Hernandez
    Member since 2020 · 1 post · 0 votes
    5y

    @Sarah KartsherI think it also depends in what state you live. The seller market shift to buyer market can happen within a few months.

    0Reply
  • Darius Ogloza
    Investor · Marin County California · Member since 2018 · 1k+ posts · 2k+ votes
    5y

    It's all about deal flow.  By eliminating the 1031 tool for one segment of the market you inhibit deal flow across many markets - especially true in commercial.  It's like putting a LARGE rock in the middle of a narrow river.  Sitting back and not selling is exactly what people in NYC, SF, LA, Miami, Boston will do (as will large commercial players in smaller cities).  If we sit, less deal flow for all.  

    1Reply
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