Epic Real Estate Investing - End of Days for Real Estate Investors? Biden’s Rent Cap Explained | 1316

Episode Date: July 18, 2024

If you thought rent hikes were already sky high, brace yourself. Biden's latest move is a game-changer for tenants and potentially game over for landlords. President Biden is proposing a national rent cap aimed at large landlords to combat rising housing costs. This cap would limit rent increases to 5% annually for properties backed by federal or state funding. While aimed at making housing affordable, the proposal could deter real estate investors, reduce housing quality, and distort the job market. Discover the full implications and what it means for real estate investors in this episode. P.S. Whenever you're ready to go deeper and further with your real estate investing, looking into my partner program to help you get your first deal might be the move... take the first step here for free 👉 https://epicearnwhileyoulearn.com/ Learn more about your ad choices. Visit megaphone.fm/adchoices

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Let's go. If you thought rent hikes were already sky high, brace yourself. Biden's latest move is a game changer for tenants and potentially game over for landlords. Here's what you need to know because there's two sides to this. Let me know in the comments where you stand. But President Joe Biden is pushing for a national rent cap aimed at large landlords to combat rising housing costs. The proposed cap would limit rent increases to 5% annually for properties backed by federal or state funding. And this move comes in response to some.

skyrocketing rents, which have outpaced income growth, causing financial strain for millions of Americans. We've all seen it. The administration is rallying state and local governments, along with the private sector, to support renters. Some housing agencies and states like Wisconsin and Pennsylvania have already agreed to these steps. Additionally, the National Association of Realtors is encouraging property managers to accept housing choice bouchers and provide rental assistance information. However, not everyone is satisfied. Lawmakers like representatives, Representative Jamal Bowman and Senator Elizabeth Warren argue that these actions are not enough to curb corporate profiteering and stabilize the rental market.

They are pushing for more aggressive measures, including leveraging the Federal Trade Commission's power to enforce rent control. Yet legal experts doubt the FTC's authority to impose such controls, predicting significant court challenges. I don't blame the people that are for this move for the right reason to make housing affordable again, because it is a problem. But does it come with unintended consequences? a basket of brand new problems.

For example, one, reduced investment in housing. Rent caps can deter real estate investors from entering the market or maintaining properties. If landlords can't raise rents to match rising costs, they may cut back on maintenance and improvements, leading to a decline in housing quality and availability. Over time, this can reduce the overall supply of rental housing, exacerbating the very problem the cap aims to solve. Two, distortion of the job market.

Rent caps can make it less profitable for landlords to invest in rental properties, potentially leading to fewer job opportunities in the construction and property management sectors. This reduction in investment can slow economic growth and reduce the number of jobs available in these industries, ultimately hurting the job market and the broader economy. Three, inefficiency and housing allocation. Rent caps can lead to mismatches between housing supply and demand. Tenants in rent-controlled apartments might be less likely to move, even if their housing needs change, leading to inefficient use of space. Think golden hands. handcuffs. Newcomers or those needing more suitable housing may find it difficult to secure rentals,

while some tenants occupy more space than necessary, reducing the overall efficiency of the housing market. Number four, encouragement of black market activity. Rent caps can lead to the development of an underground market where landlords charge unofficial higher rents under the table. This can create a lack of transparency and fairness in the rental market, making it difficult to enforce regulations and protect tenants' rights. And number five, the negative impact on capitalism because rent caps can interfere with the free market by artificially limiting the price landlords can charge, which can undermine the principles of supply and demand. This can discourage innovation and efficiency in the housing sector, as there is less incentive

for landlords to improve or expand their properties if they can't realize a fair return on their investment. One of the very reasons investors are attracted to rental property is because of the government's incentives to build it and manage it. If you remove the incentives, is the government prepared to step in and start building building affordable housing themselves? I've never lived in government housing, but I have many close friends that have, and according to them, you don't want the government in charge of housing. For private real estate investors, this shift represents both challenges and opportunities.

While rent caps could limit immediate profit margins, they may also stabilize long-term rental income and reduce tenant turnover. As a private real estate investor, the key is to stay informed and adaptable, to be flexible, to be nimble. Look for opportunities and markets with favorable conditions and consider diversifying your portfolio to mitigate risks associated with new regulations. This evolving landscape requires strategic planning to maximize returns while navigating potential legislative changes. But as of right now, this is just a proposal. Will it pass? What do you think? Let me know in the comments. Take care. And that wraps up the epic show. If you found this episode valuable, who else do you know that might too? There's a really good chance you know someone else who would.

And when their name comes to mind, please share it with them and ask them, to click the subscribe button when they get here and I'll take great care of them. God loves you and so do I. Health, peace, blessings, and success to you. I'm Matt Terrio. Living the dream. Yeah, yeah, we got the cash flow. We didn't know.

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