Bidenproof your portfolio?
Carl FischerPro Member
Rental Property Investor · Ambler, PA · Member since 2015 · 2k+ posts · 1k+ votesHas anyone come up with strategies or ideas of what they would do differently if Biden wins the election?
Will property taxes increase? Would you sell or buy properties? Hoard cash or buy assets? Borrow more or pay off debt? Etc. Any ideas or strategies would be appreciated.
C'mon Man! You know the thing!
It depends, and is anyone's guess. He could legislate much like he did with Obama from 2008-2016, or he could be pushed left and legislate for lower rents. Ilhan Omar in Minneapolis wants free housing. The best way to Biden-Proof the portfolio is to stay away from Democrat states and cities!
C'mon Man! You know the thing!
It depends, and is anyone's guess. He could legislate much like he did with Obama from 2008-2016, or he could be pushed left and legislate for lower rents. Ilhan Omar in Minneapolis wants free housing. The best way to Biden-Proof the portfolio is to stay away from Democrat states and cities!
Has anyone come up with strategies or ideas of what they would do differently if Biden wins the election?
Will property taxes increase? Would you sell or buy properties? Hoard cash or buy assets? Borrow more or pay off debt? Etc. Any ideas or strategies would be appreciated.
I would use the November 2020 to January 2021 time period to divest of real estate. I wouldn't put it into a bank since by law they have the right to take your money
Too Big To Fail Banks Can Keep Your Money If They Fail https://www.huffpost.com/entry... Can too big to fail banks really take your money if things go sour and leave you screwed without access to your cash? The short answer is: Yes
About that time Mexican Pesos will look good
If Biden wins the election, it will already be too late. The markets will react quickly. I suspect property values will take a major hit. It all really depends on the democrats winning a majority in both houses. If that happens, all bets are off.
To be on the safe side, I would either sell now, or refinance and pull out as much cash as possible. In a worst case scenario, you could walk away without losing much equity.
Well, depends on his staff and the economy. If economy is lousy and high unemployment, then the "tenant bill of rights" will be an issue.
OK economy and I think it'll fall behind the other social engineering issues.
I'd be more curious on his staff since I think Biden really has no plan or goals (at least I've heard him explain) beyond getting elected. Staff will call the shots then.
This isn't talked about enough IMO. There is a lot on Biden's campaign website about various platforms regarding his vision for America. Rarely are taxes mentioned on his website, and when they are, they are footnotes to other topics, not given their own section which is a little...interesting.
I'm going to just stick to the facts, and not give commentary as I'd like to let the readers form their own opinion. This is what we currently know about Biden's tax plan as it relates to the real estate industry:
According to Biden's campaign officials and his campaign website, he envisions what his campaign officials call a new "caring economy" in which entitlement spending will be increased approximately $775 billion over 10 years.
Per Biden's official campaign website: The plan will cost $775 billion over 10 years and will be paid for by rolling back unproductive and unequal tax breaks for real estate investors with incomes over $400,000 and taking steps to increase tax compliance for high-income earners. [Emphasis Added] (https://joebiden.com/caregiving/)
A senior Biden campaign official kept things vague when questioned on this issue, but did indicate 1031 exchanges might be targeted, as well as the ability of real estate professionals to use non-passive rental real estate losses against their other income. (https://www.accountingtoday.com/articles/bidens-775b-plan-paid-with-real-estate-taxes)
Biden's plan would also eliminate capital gains tax rates for those making over $1 million and subject that income to tax at the former top ordinary income bracket of 39.6%: As President, Biden will roll back the Trump rate cut for the very wealthy and restore the 39.6% top rate he helped restore when he negotiated an end to the Bush tax cuts for the wealthy in 2012. Biden’s capital gains reform will close the loopholes that allow the super wealthy to avoid taxes on capital gains altogether. The Biden plan will assure those making over $1 million will pay the top rate on capital gains, doubling the capital gains tax rate on the super wealthy. (https://joebiden.com/healthcare/)
This is a good summary of other general provisions in Biden's tax plan: https://taxfoundation.org/joe-biden-tax-plan-2020/
On a personal level, I really hope we get debates, even if they are split screen and remote like a podcast. The American people have a right to know what they are voting for and what each candidate's platform contains.
Will property taxes increase?
Property taxes are mechanisms of state and local governments. If property values fall, assessments and therefore property taxes decrease, unless the millage rates are corresponding increased.
Hoard cash
If a highly inflationary economic environment, you know, one in which the fed is printing money like crazy, rarely does it make sense to stockpile cash. Even a relatively stable currency like USD. Hard assets...real estate, precious metals, etc tend to preserve value here. Look at what's been happening to the price of gold and silver since economic disaster relief was announced and the printing presses were opened full throttle.
Real estate is a great hedge against inflation. Biden, like Trump himself and the most of the rest of Congress, have succumbed to modern monetary theory - if our currency inflates, there's no better place to be. Still, I personally do not see inflation as being the greatest risk factor in the next 4 years. Eliminating the 1031 exchange and the inheritance basis step up are the big risk factors for RE investors from a Democratic Congress/Presidency.
Thank you -do you think Biden will bail out the states or will the states be forced to raise taxes? Government always tries to get money from the rich but it falls short and then go after everybody. Business owners, land owners, bank and brokerage account owners seem to be the usual targets.
"will be paid for by rolling back unproductive and unequal tax breaks for real estate investors with incomes over $400,000"
Then $300K, then $200K, then $100K, then everyone.
Will property taxes increase?
In OR, we have M5 which limits TAV increase to 3% p.a. (with main exception being if you make "major" improvements). I know the pub employee unions are targetting a roll back on that since it's in the Constitution. However after 30 years, it'd take a lot of compression to get RMV down to TAV. Bigger issue is instead of new taxes, people vote on bonds which are pushing 50% of the annual bill in Portland. However, it looks like the latest big increase is now an employer tax (conveniently exempting govt employers) so maybe polling is showing that owners are getting tired of bonds?
Still, I personally do not see inflation as being the greatest risk factor in the next 4 years. Eliminating the 1031 exchange and the inheritance basis step up are the big risk factors for RE investors from a Democratic Congress/Presidency.
I think what you probably mean is that "I personally do not see inflation as being the greatest risk factor for me in the next 4 years", and that is okay. As far as macro economic risks go, inflation is the by far the biggest one in the next 1-3 years for the general population, and will hit the purchasing power of our seniors particularly hard as they disproportionately hold bonds, CDs, and cash.
Take a look at the M2 money supply curve over the past few years and you'll notice a trend with 2020. All of that money was printed for pandemic economic relief. Read: there has been massive inflation to provide pandemic economic relief so far this year and very few people are talking about it. The money the government is giving out was printed, not collected via taxes. Round two of relief is on the horizon.
do you think Biden will bail out the states
It's anyone's call, but I don't think he'd be averse to it. I don't think President Trump would be averse to it either, depending on the redness or blueness of the state, FWIW.
"do you think Biden will bail out the states"
I think it's top of the list. This is the big diff on the CARES numbers now between Ds and Rs. Ds want to send cities/states fat checks.
It'll get worse as the liabilities on pub employee retirement funds gets deeper.
At least in OR, politicians do NOT want to p*** off public employee unions. They're the biggest political donors by far here.
Everyone always panics that X president will be good or bad for market and it causes short term volatility. If you look at the actual statistics whether a dem or rep is in power has little influence on the actual economy.
What statistics are you referring to?
Still, I personally do not see inflation as being the greatest risk factor in the next 4 years. Eliminating the 1031 exchange and the inheritance basis step up are the big risk factors for RE investors from a Democratic Congress/Presidency.
I think what you probably mean is that "I personally do not see inflation as being the greatest risk factor for me in the next 4 years", and that is okay. As far as macro economic risks go, inflation is the by far the biggest one in the next 1-3 years for the general population, and will hit the purchasing power of our seniors particularly hard as they disproportionately hold bonds, CDs, and cash.
Take a look at the M2 money supply curve over the past few years and you'll notice a trend with 2020. All of that money was printed for pandemic economic relief. Read: there has been massive inflation to provide pandemic economic relief so far this year and very few people are talking about it. The money the government is giving out was printed, not collected via taxes. Round two of relief is on the horizon.
do you think Biden will bail out the states
It's anyone's call, but I don't think he'd be averse to it. I don't think President Trump would be averse to it either, depending on the redness or blueness of the state, FWIW.
I don't think interest rates have any chance of being raised. It would collapse the economy, because right now the economy is based on printing money not on production of goods. That fact is driving the gold market which has hit new highs. Real estate is relatively "safe" in states where pension funds are under control. States that have a lot of unfunded liabilities will raise real estate taxes, wealth taxes, sales taxes etc to compensate. I see that the Democrats would bail out the states but I doubt the Republicans would.
This whole current economy is one side trying to shut everything down and the other trying to get things jump started. This current economy all about the election. The day after the election COVID-19 will disappear as an issue and Masks will be declared hazardous to your health (Read what the Danish, Swedes and Norwegians microbiologists have published).
Between Aug 28, 2020 and Sept 4 2020 some really very enlightening disclosures will be made that will affect the election. Those dates are chosen because both conventions will be over and Sept 4 2020 is more than 60 days before the election. Watch for the names Barr, Durham, Storch, Bash and as of now two unnamed others.
The October surprise this time around arrives in early September. Or, I could be completely wrong and we are in bigger trouble than I imagined and then I'm switching to gold.
I'm buying properties like crazy right now, but I expect the real deals to be later this year when forbearance agreements and eviction moratoriums expire.
@Carl Fischer
Since the economy and stock market historically do better under democratic presidents, I’m thinking I’ll just stay the course. 2008-2016 was very good for me. And the Bill Clinton years was the best stock market in history. So, I’m not seeing the panic that some people are.
If you’re investing for the long term, there is no need to worry.
We have eviction moratoriums, loan forbearance, helicopter checks, $50k annualized unemployment benefits, and trillions in other stimulus benefits. That currently exists...NOW...in one year with a republican president and senate. So, do you have to trumpproof or bidenproof?
If we buy in good locations, with added value, cash flow, prudent debt and reserves, we will be fine and the rest is just noise.
@Carl Fischer
For most people this question is just a diversion. I've been successful under Bush, Clinton, Obama, Trump, and will do the same under Biden.
Main issue with trump is that he cap property taxes as t 10k and that hurts homeowners.
I suspect with Biden that he may increase the tax deduction which will help but mess around with the capital gains rates which will hurt.
Other than that I only worry about nation welfare being handed out like candy and Biden (Americans) will be stuck with the bill.
Thank you for the input- I am trying to look forward because I got hurt in 2008/9. I would like to know what moves you made in past years or did you just keep finding good deals and adjust as required.
In my area 80% of my real estate taxes are the school tax. I imagine Biden will push to throw more money into the failing school system, so logic would say schools would not need more local revenue, but of course that will not happen. I am not concerned about what Biden is jabbering about taxes because even a DNC congress will not eliminate the capital gains tax. The DNC is the party of the rich that rides on the back of poor voters.
@Mike Dymski well I’m not sure this post was considering 4 years of pandemics. These were bipartisan emergency measures (and the left actually wanted far more). I’d look at Nov 16- Feb 20 vs last 3 months and make a judgement on that, good or bad.
@John Farady That Huffington Post article seems to indicate it pertains to banks in the EU. Does this clause also exist here in the States? Canada?
To answer your question, Dodd-Frank is a law that is continuously being modified that applies only to banks doing business in the USA
As the article states:
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"What Dodd-Frank does is prevent these bailouts from encumbering the taxpayer by forcing the banks to liquidate anything and everything to pay off bad debts. This includes your money in a deposit account or bond.
Specifically, Title II is aimed at “ensuring that payout to claimants is at least as much as the claimants would have received under bankruptcy liquidation.”
In all the reply posts I only saw 1 taking not of the agenda that has been presented by the Biden campaign and 1 noting the stated intent of Biden allies, the rest is a lot of "what if" and "maybe...", it will be a great regret stated by many of why didn't I see the signs and ironically they are not just signs they are stated, promoted agendas.
Make no doubt in a Biden win housing industry will be squarely inn the cross hairs simply for a fact of math, where else are they going to get the impacts they want for their voters and infill the spending spree? Banks, not a chance as banks have enough power to defend themselves and win, housing industry is a perfectly fragmented industry working under significant regulation and licensure, ripe for directive.
In an ultra-progressive assault on for profit rental housing the mechanism for such take over will come to be through the Sec8 and Sec45 programs. View it this way, the logistics of a gov take over on for profit rental housing is impossible in scale to anything ever done, but the sec8 & 45 is an existing system in place nationwide, all that is required is change of policies forcing more % of rental market into sec8 jurisdiction and expanding of the programs and staffing as a whole. This is all achievable under the guise of "housing stabilization". How will they get landlords to enter it, how about promise of receiving rents, don't believe me? Well, it's already done, how is the moratorium working for you thus far, how about a perpetual moratorium or one that is 1-2yrs in length? Gov will expand sec8 federal funding via added Real Estate and wealth tax's, and from there landlords will start jumping on because it is the only "secured" rents available.
Check out the recent supreme court ruling in MN on sec8, it may be of interest in this regard.
Now you must remember a foundational rule of REI that ownership means nothing, it's just control of the property we are after, that is what wholesaling is built upon correct? The progressives are many things but dummies they are not, they also know ownership of rental housing is not the interest, it's control, and sec8 is the perfect control mechanism.
In addition as the dollar waivers and the fed is the only one buying bonds all it takes is a reduction in US bond rating and capital value will drop in a blink, this is why there is a current rush into assets and the informed will continue this so no I would not horde cash at all.
As much as I hate to admit it I will probably engage into the sec8 program more and more because it is a fact of the math of it all. For myself silver is the other asset market to be on.
Other than that, I would be exiting everything commercial office and retail, that is in apocalyptic cycle at the moment. As well there is a major shift in progress for what was the booming metropolitan housing norm, not to say this is collapsing but it is shifting as virtual working has brought a new X factor to the game and it is changing things, we are just in the adoption phase of things much like dialup days of internet, in a short couple years we will look back and see it all as obvious what was coming in change.
In summary we have a lovely "witches-brew" of factors coming to play all at once. The only certainty is change and adjustment, their is going to be changes and adjustments.