In Light of the Election, Will 2017 Bode Well for Investors & Entrepreneurs?

by | BiggerPockets.com

As this year quickly winds down, many people are taking this time to reflect on the good and bad developments that occurred in the past year. They’re also thinking towards the upcoming year with regard to their goals or potential opportunities.

What opportunities are out there for you this year? And will you take advantage of them?

If you’re looking to get into real estate — or even if you’re looking to try out a new strategy with your real estate investments — maybe 2017 will be your year. Interest rates are still low, property values are on the rise, and we now have a president with experience in business and real estate.

Economy and the Election

How the results of the election will impact the economy, as well as the real estate market, is not yet known. In regard to my business, especially this year, this is still one of the most common questions fund investors and note buyers ask me.

To be honest, the election surprised me as much as the next person. I went to bed expecting one outcome and woke up to a different landscape. Like I told my youngest son before the election, as crazy as what I’m going to say sounds, it’s more about how we react to what happens than the actual events (especially those outside our control) that occur in life. If something positive happens, be ready to take advantage of that opportunity. If you encounter adversity, learn from it, try to be creative, and you may become a better person in the long run. I don’t know anyone who’s become legendary in any aspect of life who had all things come extremely easily.

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After the Dust Settles

I’ll be the first to admit that the current landscape is unprecedented. Sometimes change is welcomed, and sometimes it’s necessary. Many challenges are still facing us and our leaders today politically, economically, and socially. But there may be some good changes on the horizon that would impact those in real estate and note investing.

Related: What Will Happen to Real Estate Tax Loopholes Now That the Election is Over?

As a small business owner with 30 employees, lowering corporate taxes could help us. So could revisiting the high cost of healthcare insurance, especially since our rates increased dramatically last year. I would love to see a total revision of the current healthcare, insurance, and pharmaceutical game in this country, which seems very unscrupulous and unfair. Healthcare is one of the only businesses (besides going to college), where the consumers can rarely figure out what things really cost or are going to cost them.

Regulations

No one thinks that banks need to be held accountable and that consumers need to be protected more than me. But I do believe the pendulum of regulations has swung too far in this country. It has literally crippled the lending business, and many folks, especially the self-employed, still can’t get mortgages and business loans. Revisions in these areas could be beneficial to real estate investors if banks not only feel it’s easier to release their distressed assets into the marketplace, but also feel that they can start to lend again with more types of responsible lending.

Dodd Frank absolutely had as many negative impacts as it did positive, and in many ways, it made the largest banks much bigger to fail, while at the same time wiping out the seller financed industry, which had absolutely nothing to do with the crash. Sure, we would all like to see responsible, well underwritten loans, but it would be nice to see some relief on the lending requirements side too. That being said, the new administration seems to recognize that the financial industry is over-regulated, which may lead to future changes.

Opportunity

When you factor in a change in government due to a pro real estate president with a same party congress, with a pro-business attitude, maybe there is some hope for small business in this country.

Can more jobs be brought back or created? Time will tell. Will there be inflation and higher rates? I’m not sure, but I do know real estate is a good hedge against inflation. And notes are also backed by real estate.

Related: New Seattle Law Lays Out Tenant Selection Rules: Here’s How It Affects Landlords

Real estate values are also on the rise in many areas. This has led to an increase in pricing for mortgage notes, but it has also increased the value of our portfolio. Like they say, “High tide raises all ships.”

So, if you’re new to real estate investing, why not pull the trigger on your first deal this year? Don’t let fear or uncertainty keep you from trying something new, whether that’s real estate, taking a course, traveling somewhere, or meeting new people.

What opportunity, or opportunities, will you create for yourself this year?

Let me know your thoughts with a comment.

About Author

Dave Van Horn

Dave Van Horn is President at PPR The Note Co. - an operating entity that manages several funds that buy/sell/hold residential mortgages, both performing and delinquent. Dave has been in the Real Estate business for over 25 years, starting out as a Realtor and contractor and moving onto everything from fix and flips to Raising Private Money.

8 Comments

  1. David Krulac

    Dave,
    Another great article.

    Healthcare is so out of control. Just got billing info today and my 2017 bill is $15,000 for health insurance, and with the high costs of medical care if you an afford the bill you can’t go without.

    “Too big to Fail” was further promoted by Dodd Frank. In my little town, in the last year and half, 6 banks have closed their doors and been taken over by larger out of town banks; all the result of Dodd Frank regulations. Smaller banks can not keep up with increasing compliance. The results here are that 100s of people lost their jobs, and bank branches are sitting vacant. One bank branch was turned into a Juice Bar, lasting less than a year in business and now the branch is empty again. Another bank branch became office space for the YMCA. Still other have their commercial “available” signs gathering dust. And ironically the State Unemployment Office announced this week that they are laying off 500 employees.

    And as far as Dodd Frank regulations on seller/private financing, I think it was an unattended consequence. Hopefully members of all political parties will make adjustments to those aspects of DF.

    • Dave Van Horn

      Thanks David, and you bring up a lot of good points about DF. Another case of government good intentions thwarted by unintended consequences. Politicians for better or worse, aren’t economists. Both sides participated in enacting it, hopefully both sides can learn from the mistakes.

      Best,
      Dave

  2. Andrew Syrios

    Regardless of the presidency, I think the cheap money policy of the Fed has probably pumped up the real estate market a bit more than it should be and it will likely soften, maybe even have a mini-crash (nothing like 2008 I think… and hope). Removing some of the overregulation that hurts community banks in Dodd-Frank would be beneficial and Trump might do that.

  3. Huiping Sheng

    Totally agree with Dave about the healthcare which is a subject nobody knows it. National level claim found: from 2014 to 2015, the specialty related drug cost increased 26% nationally which contributes most for the increased cost of healthcare cost and it will keep on increasing.
    Should investors invest for drug, healthcare or real estate, or health for this 26%?

  4. Patrick Huey

    As someone who has spent the past 20 years working in health care finance both on the provider side and the insurance side, I can tell you that the mind-boggling confusion about health care rates is by design. It’s meant to enrich the insurance and pharmaceutical companies at the expense of patients and small businesses. While Obamacare was a first step in the right direction in getting more people covered by health insurance, it had the unintended consequence of getting large insurance companies to pull out of unhealthy (i.e., unprofitable ) markets and leaving little choice for people who needed to get coverage. Insurance premiums were supposed to go down, yet while they did initially, this insurance pullout has caused premiums to start skyrocketing up again, plus out of pocket costs like deductibles and copays are increasing as well.

    • Aleksandar P.

      Patrick, you are trying pretty hard to justify all wrong-doings of Obamacare, but it did not go well. As great Milton Friedman said: “One of the great mistakes is to judge policies and programs by their intentions rather than their results.”. And based on results Obamacare failed miserably. You said “it had the unintended consequence”… ?? Sorry, but anybody who understood the healthcare business and Economics 101 knew that this was about to happen and they warned us about it. However, elected officials preferred to push it anyway justifying that with now famous words “We have to pass in order to see what is in it”. That’s how we ended up here.

      • Franz Max

        I don’t think any of us, Patrick or Aleksandar wants to be cheated if our children need hospitalization. I don’t want to suggest that this problem is not ours together. The truth is, I know it is our problem but I don’t know if any of us will start to list the possible solutions. I want to be able to focus on what we all need to do. Don’t get sidetracked. Don’t confuse each other.
        1. What next innovative step can we all take to move TOGETHER to lower the high costs? Please write down OUR next innovative steps:
        a. Talk to our employers about our concern-share our concerns?
        b. Talk to our doctor, health care provider? to see if they have any suggestions.
        c. ??? it has to be simple to succeed..

  5. Great article, if rates do indeed increase, how will this effect home prices? Is it appropriate to look at the 1970’s and 80’s; rates were much higher for traditional mortgages (12+%) but home prices were low. Will this be another case for supply and demand? As rates increase, the cost for families to buy a home is much to costly making rental properties much more likely. Therefore, buy and hold strategies become more lucrative.

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