What the Trump Election Means For The Real Estate Market

Donald J. Trump is going to be the next president of the United States. Wow. So now what? How will this important and historically unprecedented political and economical development in America’s history affect your real estate portfolio? And what changes if any should you be making in your real estate portfolio? Look at the policies he wants to implement: international trade agreements, incentives for business building to create jobs, infrastructure improvements, and military expansion. Success or fail, people will still need a place to live. Houses will still be there and Americans will still live in those houses. However, it really comes back to the economy. If the economy does well, the real estate market will ride that wave upward as wages increase and rents increase and people trade up into nicer homes, this will all be positive for the real estate market. I see the economy and the real estate market as corollaries. If the economy improves, the real estate market will be robust. Both rents and prices will increase in a healthy Trump economy. However, the opposite will also be true. As the economy falls, so too do wages and home prices and eventually rents. Therefore, how do I answer the question, which was posed as the topic? How will the election of Donald J Trump affect your real estate portfolio and what are the winning strategies for the short term 2-5 years. The short answer deals with my conclusion two paragraphs earlier. What happens in a real estate market when there's a boost to the economy? Prices go up. So plan on that. The residual effect of a rising market is that increase rents and values on your hold properties. So take heart my child, you'll see that an entrepreneur's goal is to rise all boats not just his own. I'm excited to see how this will shape our industry especially if dodd-frank gets the pink slip.

The Wall Street Gamble

Growing up with a stockbroker for a father gave me a unique perspective of the equities market.  My financial education started at the kitchen table each night at 6pm, after my dad came home from the firm.  "Do you know what makes money?"  he would ask me,  "it's money that makes money.  And the money that money makes, makes more money".

That idea that money as a product, is the foundational premise behind our business.  Money sells itself because everyone needs it.   

The challenge for the Managers of that money is to invest it wisely.    The old idiom, a fool and his money are soon parted, is true.  You must be wise, prudent, skeptical, and cover the downside in order to survive and thrive.   Too many investors just look at the potential; however, the prudent Manager must first look at covering the downside.   Remove the risk and let the profit take care of itself. 

Each year, Dalbar publishes a research paper on how investors underperform as compared to the index fund for the S&P 500.  Once again the 2015 study shows that the average mutual fund investor makes 8% below what the index fund makes.   The average return is close to 5.5% APR.    

Two things.  
#1) That's an incredibly low return.  How can investors stand for that?
#2) This does not take into account inflation, opportunity costs and taxes. 

What's the current level of inflation?   According to our government it's closer to 1.5%-2%.    According to ShadowStats.com the rate is closer to 10%.   

In either case, you're either barely keeping up with inflation, or you're purchasing power is falling behind.  

How do we solve this?   We need to move to what my friend George Antone calls the right side of the equation.  

We'll talk more about these next time. 
Marc

More Election Calamity

It's time to start again.

I'm loving the election series.  Here's what I see.  Donald J Trump vs the Democratic Party, most likely Hillary Clinton but Bernie Sanders might pull it out on an upset victory at the convention.  My vote is for the Constitution.   My vote is for liberty and independence.   The debt unfortunately needs to be addressed.  Mistakes happen and it's time to rebuild and restart.   I propose a new plan for build outs of manufacturing plants and smoother commerce and easier entry to business. More appointments later.

Run it like a business.
M

How Trump Wins White House

He's a deal maker.  And he makes very admirable deals.

Yes, that's right Donald Trump knows how to meet an objective, by making deals.  In fact, I think he has made a deal with Mexico to build the wall.  However, it's not going to be a wall between the US and Mexico.  Nope.  What would make more sense is that Donald has already negotiated a deal to buy Mexico.   The wall he'll negotiate getting built will be between Mexico, (which will now be called "Old Mexico"), and Guatemala and Belize.  A much shorter distance, and then that will solve the immigration problem and give us more natural resources to boost our economy.

How will he get the money?   From China of course. He'll discount the debt on our country or maybe just sell more debt.  It's an easy path to boosting the economy and creating a larger free robust economy.  

This will solve several topics: immigration, minimum wage, manufacturing, trade, national debt.

A Housing Crash Repeat?

These government leaders just don't learn!   Why are they setting up the American public for another taxpayer funded bailout of the housing collapse???     The housing market is booming - you say?   Well, I say it's a false representation to what's really going on.

Let's recap what Freddie Mac and Fannie Mae do for the country.  These pseudo-government agencies go to the banks, like Chase, US Bank, Wells, BofA and they say - "hey, we'll buy your loan as long as it fits within these parameters....guaranteed!"     

So Chase goes out and makes loans - pushes people into loans as much as possible, adhering to the guidelines, and sells them to these 2 pseudo-government agencies for full face value - less the fees.   Who gets the fees?   Well that's what Chase and US Bank and Wells gets for playing the game.    

So, Chase gets their money back for the loan (a process called hypothecation  and they go off to do another loan.    Fannie & Freddie don't really care if Sally or Joe Homeowner default - because they know that the government won't let them fail.   

If they get close to failing, the government will step in and bail them out just like they did  in 2008 and 2009 with all the government sponsored programs like TARP and all the other nanny-state programs that we have in this country funded by who?????  You! and ME!  and everyone else that makes a living and who pays taxes.  Of course if you're reading this and don't pay taxes, then that doesn't apply to you.   

In essence it's state sponsored homeownership.   Why do we do this?   We're just setting ourselves up for another failure once again!    And this is all sponsored by the taxpayer.  Why?   Why do we have a mandate or an entitlement for owning a house?   Other countries don't have that... like Canada for instance.  They don't have government sponsored loans.   

Are we trying to falsely build up the housing economy in hopes that it pulls the rest of the economy out of the toilet to promote an agenda for the 2016 election?  I don't know but its wrong, it won't work, and it's yet again another failure of our government leaders.   

We need to elect people to office that have business experience to effectively run this great business called the United States of America.  Otherwise the fate of Greece or Detroit will be instilled upon this great democracy.    Please consider electing people with experience not the best looking or the best orator.    We are in trouble - and we need help.