EP277: Trump is Back– What does this mean for the future of real estate?

APPLE PODCASTS | SPOTIFY

Big news for all you real estate investors out there: Donald Trump is back for a second term as President, and the entire industry is buzzing with anticipation.

So, what does this mean for your investments and the future of real estate?

From potential tax policy shifts to changes in interest rates and the future of Fannie Mae and Freddie Mac, things are about to get interesting.

But don’t worry, we’re here to give you the real rundown—no noise, no politics, just a straightforward look at how Trump’s policies might impact the real estate market.

Buckle up, because this term could be a game-changer.

Let’s Start with the Big One: Tax Policies

NO. 1 Bonus Depreciation

If there’s one thing we know about Trump, it’s that he understands real estate, being an investor himself.

There’s chatter that with Republicans controlling the Senate and potentially the House (fingers crossed), we might see 100% bonus depreciation reinstated.

What does this mean for you?

The chance to immediately deduct the full cost of qualifying assets, making it more enticing to invest in new real estate projects.

NO. 2 1031 Exchange & Capital Gains Tax

Good news here too. Trump is expected to back policies that maintain the 1031 exchange without any of the restrictions previously floated during Democratic administrations.

Plus, there’s talk about lowering long-term capital gains taxes—a major win for those looking to grow their wealth through long-term investments and reinvestments.

NO. 3 The SALT Deduction Cap

Ah, the $10,000 cap on state and local tax (SALT) deductions—a thorn in the side for many high-income investors in states with high local taxes.

There’s a possibility that Trump’s administration could revisit or even remove this cap, which would be a huge relief and could boost disposable income for investors, making real estate investments even more appealing.

Interest Rates & the Federal Reserve: What’s on the Horizon

Trump has made it no secret that he’d like to have more influence over the Federal Reserve’s decisions.

Why does this matter?

With the Fed responsible for the 11 rate hikes we’ve seen over the past year, any shift towards a more predictable or favorable rate environment could make borrowing more accessible and investment planning less stressful.

But, here’s the flip side: some experts warn that reducing the Fed’s independence could shake up investor confidence and impact the stability of U.S. capital markets. Something to watch closely, for sure.

What About Fannie Mae & Freddie Mac?

Privatization Talks

Here’s where things could really shake up: Trump’s insiders have been hinting at plans to privatize Fannie Mae and Freddie Mac, which currently back around 40% of the $2.2 trillion multifamily mortgage market.

What would this mean?

Potentially more global investment in the U.S. real estate sector and increased liquidity in the multifamily space.

The idea is to have the Treasury Department offer a sort of safety net for some agency loans, akin to FDIC protections. For investors, this could introduce new dynamics in mortgage financing and fresh capital opportunities—but it’s also a development that comes with its own set of unknowns.

The Bottom Line for Investors

Trump’s second term brings a mix of excitement and uncertainty for real estate investors.

With potential changes in tax laws, interest rates, and regulations, the landscape is set to evolve in big ways.

Will these policies create new opportunities or pose fresh challenges?

The answer is probably a bit of both.

But here’s the key: staying informed, adaptable, and ready to pivot as needed will be essential.

For those willing to navigate these changes, this could be a time full of unique opportunities. Here’s to tackling whatever comes our way and making the most of this new chapter in real estate investing!