Bidens plan to retro fit millions of properties

Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes

Well not sure if you folks watched the Debate I mean WTH was that ?

Any way.. Biden had some interesting ideas for jobs that related around our industry.. part of that was retro fitting buildings and other up grades to properties..

I wonder if this will just be another thing added to the expense of owners creating properties to rent. And maybe there is some tax credits?

However given the slim margins ( with full leverage ) that most BP investors run on.. I can see mandatory upgrades another burden on landlords ?

thoughts? Oh and Oregon just extended the no eviction laws to end of year and portland to end of Jan... Wonder were it will stop.

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Steve Morris

Real Estate Broker · Portland, OR · Member since 2019 · 4k+ posts · 2k+ votes

"Biden had some interesting ideas for jobs that related around our industry.. part of that was retro fitting buildings and other up grades to properties.. "

I'd put that in the same bin with "We need to spend money on infrastructure" braggadocio by politicians to get elected.

In effect, it'll prob be like stimulus check for $1B OR got 10 years back - It'll go in the GenFund, and then 80% will go to PERS (aka the budget blackhole).

That's the problem is they're a good idea but mostly are "lets cut a check" and don't audit effectiveness.

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Clint ShelleyPro Member
Surveyor · Dothan, AL · Member since 2014 · 425 posts · 391 votes
6y
I tried to watch the s show, but turned it off. It's a novel idea, I just see it as another tax on land lords and developers. Code enforcement could alleviate some blight, but I think the solution is to have people want to be home owners. But that has to come from within. I don't know the answer or of there is one. You have seen nearly all types of real estate and it's different aspects. In your opinion and experience, is that even practical or is he just selling a dream?
Clint
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Jay HinrichsBusiness Member
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Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
6y
@Clint Shelley well no plans were detailed last night between the name calling and such.
just speculation but maybe BIDEN's thought is tax credits to do certain work.. But if they start to mandate
like they have done in other markets regarding lead based paints asbestos and other things.. it will be a burden on landlords and if rents dont go up to pay for it values would have to come down.. to keep the risk reward working.
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Steve Morris
Real Estate Broker · Portland, OR · Member since 2019 · 4k+ posts · 2k+ votes
6y
"Biden had some interesting ideas for jobs that related around our industry.. part of that was retro fitting buildings and other up grades to properties.. "

I'd put that in the same bin with "We need to spend money on infrastructure" braggadocio by politicians to get elected.

In effect, it'll prob be like stimulus check for $1B OR got 10 years back - It'll go in the GenFund, and then 80% will go to PERS (aka the budget blackhole).

That's the problem is they're a good idea but mostly are "lets cut a check" and don't audit effectiveness.
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Eric Bilderback
Real Estate Agent · Sisters, OR · Member since 2014 · 1k+ posts · 1k+ votes
6y
How could the enforce this. Who is going to go to homes and ensure they have been winterized?
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Jay HinrichsBusiness Member
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Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
6y
Originally posted by @Eric Bilderback:
How could the enforce this. Who is going to go to homes and ensure they have been winterized?

I know Oregon does not really require CO's for rental properties.. but back east its a big deal in many cities and they have inspectors for this stuff.. For instance in certain cities in and around Cleveland OH there is what is called POS .. and when properties change hands the municipality does an inspection and requires a large sometimes very large deposit from the buyer with a laundry list of things that must be addressed ( although most of it U would normally do in a rehab.) but you have to put the money up AND you have to complete the work to get your deposit back.. so in essence you need enough cash to rehab twice.. :( So implementing this in many markets will not be difficult.

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Andrew SyriosPro Member
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Residential Real Estate Investor · Kansas City, MO · Member since 2014 · 10k+ posts · 5k+ votes
6y
I watched a bit but it was such a dumpster fire I had to turn it off. I suspect this will be like solar panels if it even happens; credits and incentives to do it, but not mandatory.
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Andrew Bosworth
Rental Property Investor · Harrisburg, PA · Member since 2013 · 161 posts · 62 votes
6y
My guess is that within the next decade or two all new construction - commercial and residential - will have to comply with "green" standards. This will significantly increase the cost of new homes, pricing many folks out of buying. This will also make owning rental properties all the more costly to buy and manage, pricing many average investors out of the market.

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JD MartinBusiness Member
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Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 16k+ votes
6y
NO POLITICS. Discuss policy idea = OK Discuss personalities and what crimes they are/are not guilt of = politics.
As for the retrofitting plan, I can see how it can work but there's plenty of opportunity for shoddy workmanship and fraud in things like that. There's already programs out there that will winterize homes for low-income by changing windows, adding insulation, etc. Some of it is worthwhile, some of it just makes work.
Overall it's not a bad idea but you really have to be paying attention to keep the money from just going down a black hole. As mentioned above, you would definitely need some kind of independent inspection of the work.
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Frank Hinck
Rental Property Investor · Minneapolis, MN · Member since 2020 · 540 posts · 285 votes
6y
@Jay Hinrichs
Agree with both Andrew commenters, probably going to be like it was with solar panels (incentives, reimbursements). Also likely HUD will offer new homeowners credits on rehabs that includes weatherization. That Cleveland program, some other cities have as well but that would be tough to nationally implement, tough to get cities to enforce it if you're not paying for their staff.
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Colin L.
Architect · San Diego, CA · Member since 2013 · 244 posts · 101 votes
6y
@Eric Bilderback
NYC will fine you a cool $1M per year for not complying:
https://www.npr.org/2019/04/23/716284808/new-york-city-lawmakers-pass-landmark-climate-measure
Of course this only applies to buildings over 25k sq ft.
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Seth Borman
Rental Property Investor · Phoenix, AZ · Member since 2016 · 553 posts · 314 votes
6y
The easier solution is for municipalities to upzone and build new buildings to code. This will be especially effective in places that don't allow gas for new construction.

Energy retrofits on rental housing is largely a waste of time, particularly in markets where more housing is desperately needed.
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Johann Jells
Rental Property Investor · Jersey City, NJ · Member since 2011 · 1k+ posts · 876 votes
6y
Originally posted by @Seth Borman:
The easier solution is for municipalities to upzone and build new buildings to code. This will be especially effective in places that don't allow gas for new construction.

Energy retrofits on rental housing is largely a waste of time, particularly in markets where more housing is desperately needed.

Agreed, plus eliminating exclusionary low density zoning. That's the single biggest thing causing high housing costs in the expensive coastal cities.

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Eric Teran
Architect · Alexandria, VA · Member since 2016 · 317 posts · 371 votes
6y
@Jay Hinrichs as an Architect in my day job I found this statement interesting. Here in DC where most of my clients are based the city has recently updated to the 2017 IBC (international building code). Most places are a few years behind because they then add amendments to the IBC. Anyway, the 2017 compared to the 2015 has much stricter energy and building codes. For example, lighting efficiency must now be 85% LED compared to 75%. The Structural bracing, lateral loads, snow drift, etc. require a higher safety factors. Insulation must now be at least R5 continuous plus R19 between the studs. This will vary depending on the climate region but the point is the new code is a lot stricter on energy and building compliance.
All these upgrades that are now required will add cost to the construction budget. Right now it is required and not a choice for any work requiring a permit. Will the government help homeowners or investors cover the difference when they are looking to renovate?
The Weatherization Assistances Program (WAP) was created in 1976 (thanks Wikipedia) and they have been helping low income families weatherize. Will this potential new plan help real estate investors as well? How about a flipper?
I’m all for this but I know it is going add more to the construction budget and make it difficult on some people. One day we will all be living in a Passive House.
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Franky Aikens
Wholesaler · Philadelphia, PA · Member since 2016 · 124 posts · 81 votes
6y
Plan hasn't been laid out so there's nothing to critique. Anyone who does would just be speculating. I see no point in speculating without getting the details or even knowing who the president will be.
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Andrew SyriosPro Member
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Residential Real Estate Investor · Kansas City, MO · Member since 2014 · 10k+ posts · 5k+ votes
6y
Originally posted by @Nik Moushon:
@Jay Hinrichs

I will echo what @Eric Teran said. Here in WA, the energy code is way above IBC/IRC minimums and they already have a new WA State Energy Code update to increase it even further. It would've been implemented this year but got pushed off till next year because of covid. It is going to be brutal to the bottom line for new construction. It will be interesting what developers do with the new required build standard that is not cheap. Do they cut costs elsewhere or do rents go up even more? Hard to say at this point.

As for Biden's comment I mostly see it as a political promise that will never happen. If he does do something it will be very minimal and will be a very painful application process to get the government funds to do (what gov program isnt a painful application process?). It will more than likely only target existing low income housing. As that political party tends to panders to that demographic and tends to ignore the middle when it comes to housing. This will also get paid for by the middle through tax increases, especially us REI folks as there have been plenty of comments basically saying we are all greedy millionaires. So it could be greatly beneficial to the low income buildings/owners but at the cost to the middle class. It's definitely a two-edge sword. Increasing the building efficiency is a great thing to try and do. But if you take the profit margins out from others to do so does that not prevent them from being able to afford to do those same efficient upgrades?

@Andrew Syrios - Solar panels are already mandatory in CA for ALL new home construction. There have already been gov grants, tax credits and incentives that have come and gone. All that is left is mandatory regulations.

Of course they are... I should have just assumed that. Aren't they banning gas-powered cars too now?
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Chris Martin
Investor · Willow Spring, NC · Member since 2009 · 5k+ posts · 3k+ votes
5y
Originally posted by @Johann Jells:
Originally posted by @Seth Borman:
The easier solution is for municipalities to upzone and build new buildings to code. This will be especially effective in places that don't allow gas for new construction.

Energy retrofits on rental housing is largely a waste of time, particularly in markets where more housing is desperately needed.

Agreed, plus eliminating exclusionary low density zoning. That's the single biggest thing causing high housing costs in the expensive coastal cities.

I think you are correct (although I can't cite a source) about "...eliminating exclusionary low density zoning. That's the single biggest thing causing high housing costs in the expensive coastal cities."
It's been a few months so some text is coming out.
Under the topic "Build, preserve, and retrofit more than two million homes and commercial buildings to address the affordable housing crisis" the text from FACT SHEET: The American Jobs Plan says:
Eliminate exclusionary zoning and harmful land use policies. For decades, exclusionary zoning laws - like minimum lot sizes, mandatory parking requirements, and prohibitions on multifamily housing - have inflated housing and construction costs and locked families out of areas with more opportunities. President Biden is calling on Congress to enact an innovative, new competitive grant program that awards flexible and attractive funding to jurisdictions that take concrete steps to eliminate such needless barriers to producing affordable housing.

See my post on Raleigh zoning changes to relieve 2/3/4-plex shortage regarding one city that anticipates federal funding grants for this purpose.
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