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Real estate is always good to invest in, right? We’re big believers. You guys know you should always be investing in real estate and generally speaking, that is 100% the case, but you also need to be aware. Of what would one man versus another man and their potential policies do to your real estate portfolio?
What would that look like? What could the future be with a Trump reelection or a Biden election? What would your life look like if you could replace all of your working income? With simple and conservative investments that could do it for you. Over the last 13 years, we’ve helped thousands of clients transact over half a billion dollars in simple and conservative real estate transactions, allowing them to begin replacing their work income with real estate investment income.
Each week we’ll be pulling back the curtain on the ins and outs of real time retirement based real estate transactions that will transform your financial future even if you have no real estate experience. This is Replace your Income with me, Kevin Clayson and Steve Earl. All right, Well, hello everybody and welcome to Replace Your Income with me, Kevin Clayson and my co-Ho.
Is not here. Yeah, that’s right. Steve actually isn’t here. So this is just a solo episode today, guys, and I’m really excited to do this episode. Steve is taking some very well deserved time off, and next week we, I think Steve’s gonna be back next week and we’ve got an incredible guest that’s gonna be on with us next week.
And part of what we’re gonna do today, the topic today is leading in to next week. Next week we’re gonna launch the podcast the day before the presidential elections of 2020 and we are gonna be doing an election special. Focused on real estate, but an election special with our friend and our client, the one in only Buck Sexton.
Now, if you don’t know who Buck Sexton. Go check him out on Fox News. He’s got his own TV show on the first tv, uh, right after Bill O’Reilly. And he is a nationally syndicated radio host. He is an up and coming rising star. Um, he used to work for cnn. He appears frequently on Fox News, and he is one of the most intelligent.
Analysts that I’ve ever heard speak politically, financially, you name it. Now, we sponsor his radio show and we’ve loved sponsoring his radio show. He recently transacted a piece of real estate with us and had a really good experience. And I said, Buck, you should come on. Let’s talk about your experience and let’s talk about your focus.
Cuz he focuses on, on politics. That’s what he does. He’s a former cia. He’s uh, he used to work for the N Y P D in intelligence. He has served our country overseas. He is amazing. And next week we’re gonna have him right here. So, as a lead up to that, I thought what we ought to do today is we ought to help, you know, what should you be expecting as you look to 2020 as you look to this election that’s coming up, right, Just in a couple weeks, actually, by the time this episode.
I think we’re like gonna be a little more than a week out from the election. Now listen, I’m not here to tell you who you should vote for now. I did study political science. I went to Brigham Young University. That was my background, political science, and I’m not here to tell you that the right side of the aisle or the left side of the aisle is right or wrong.
My guess is some of that may come across, but that’s just because all I’m doing is expressing my personal. That have come from a place of research and analysis, and I wanna be very clear that that’s what today’s episode is about. Okay. This is about research and analysis. This is about, let’s take a look at Trump’s policies when it comes to real estate.
Let’s take a look at Biden’s projected or potential policies when it comes to real estate, and let’s just evaluate them on their merits. Okay? Let’s take a look and let’s say our Trump’s policy is gonna. Favorable to you and me that are trying to replace our income and that are investing and that are trying to utilize free market principles in order to kind of get ahead in life and, and grab life by the horns and say, uh, look, we’re gonna do this thing, or, or our Biden policy is gonna be favorable, or are one or the other going to sort of, uh, I don’t know, limit our ability to grow, limit our ability to command our own financial destiny.
And so, just so you guys know, I want you to kind of know my background. So you, you may be thinking, Okay, Kevin, this is a real estate podcast. Yes, it is a real estate podcast and we are talking about real estate. But you guys have to understand that real estate, this whole idea of replacing your income, it’s fundamental to everything you do when it’s fundamental to your ability to succeed financially.
This is your, this is the wellbeing of you and your family. You don’t mess with the man’s finances, right? You don’t have finances, you don’t have financial ability. You don’t. Freedom that you deserve in order to live the life that you wanna live. And so this is an important topic, and here’s the deal. Real estate is always good to invest in, right?
We’re big believers. You guys know, you should always be investing in real estate. And generally speaking, that is 100% the case. But you also need to be aware of what would one. Versus another man and their potential policies do to your real estate portfolio. What would that look like? What could the future be with a Trump reelection or a Biden election?
And so we’re gonna talk about that today. Now, you guys, just so you know, I’d study political science. Like I mentioned, my favorite book in the world is Atlas Shrugged, and this is basically what you guys need to know about me. Okay? I am a freedom loving capitalist who believes. Excessive taxation, stifles growth and your, and my ability to grow in our own potential financially and otherwise.
You know, Atlas Shrugged, if you’ve read that book. I love that book. It really kinda sorts the world into two general categories, producers and consumers. And it says that if you’re a producer, you’re somebody that believes that consumption comes after production. You add value, you do good in this world, you go and you do things that matter to people and then you can consume.
If you are a consumer, not a producer, then you probably. Feels sort of entitled, right? You believe you’re sort of entitled to make it to to real estate, or you’re entitled to more money than somebody else. When you see somebody driving down the freeway and they’ve got more money than you were, they have a nicer car, you kind of think, Oh, well what do they have that I don’t have?
That’s a very consumer minded mentality. The producer mentality says, How do I go in a. Affect my future. The producer believes in reason and analysis, whereas the consumer is just kind of like, I’m kind of a victim and, and it’s, nothing’s really my fault. I’m just trying you guys, and it’s just not fair.
And if somebody would just gimme a leg up, then maybe I could own real estate too. So I am a freedom loving political science grad who believes that excessive taxation, stifles growth that you ought to be producing as opposed to simply consuming. And here’s what I mean by that, okay? I want you guys to know this cuz as we jump into the conversation and as I juxtapose the Biden proposals and the Trump proposals, you guys kind of need to know who I am and what my fundamental belief system is so that you know that I’m making sense of this through the eyes of reason.
Now, when it comes to reason by the. I am a big believer of Tom, what Thomas Jefferson said. He said, Fix reason firmly in her seat, right? And he goes on and he says, Question with boldness that even the existence of God, because if there be one, he must more approve of the homage of reason then that of blindfolded fear.
So what does that mean? That means that take everything I say today with a grain of salt. Go do your own research. Research the Biden proposals, research the Trump proposals. Use reason. Ultimately make your determination, and maybe it does impact who you vote for for the election. I don’t know if that’s gonna be the case.
That’s not necessarily what I’m trying to accomplish with this episode. I’m simply saying, Hey, here’s the deal. Here’s the facts, Here’s the analysis. Here’s what you need to know. Fix reason firmly in her seat, and use your powers of analysis in your powers of reason and everything you’ve learned listening to replace your income and take it and everything you’ve learned.
Side of replace your income and, and fix reason firmly in her seat and say, Does this make sense? Who would I rather have as president from a proposal standpoint, when it comes to real estate, we’re not gonna talk social issues, we’re not gonna talk straight politics. We are gonna say, what does Biden largely believe in and, and what is he advocating in real estate?
What does Trump largely believe? What’s he advocating in real estate? You make the determinations and decisions from. Now, I gotta tell you guys, one of my favorite quotes in the world is from this awesome audio program by Earl Nightingale called The Strangest Secret, and he quotes Rolo May, and he says, The opposite of courage in society is not cowardice, it’s conformity.
The last thing I want you to do is conform. I don’t want you to just do what everybody says, you ought be doing that the opposite of courage in society. It’s not cowardice, it is conformity. So be courageous, choose your own path, use reason, use analysis, use what I’m gonna share with you here today. And take that and do what you will with it.
Okay? So like I said, I’m a freedom loving capitalist, right? I believe in free market principles because you know, when I, when I talk to my daughter and she asks me kind of what that means, she’s 11. And so I use kind of the example that you’ve probably heard before. I say, Hey, Brooklyn, if you’re in a class with a bunch of students and you work really, really hard and you get an A and nobody else in the class gets an A, they all get D’s and F’s, and the teacher says, Hold on, this isn’t fair, Brooklyn, you’re too.
You work too hard. You study too hard for this test, so I’m gonna lower your grade to a C and I’m gonna raise everybody else’s grade to a C because you have two. You have an abundance of potential. Brooklyn. You need to sh, that’s my daughter’s name. You need to share it with the rest of the class. I’m not a believer in that because I believe that.
DS incentivizes production, that D incentivizes someone to take action and control their own future and financial destiny, which is why I believe that when it comes to real estate proposals and when it comes to the stuff that Biden’s proposing versus the stuff that Trump’s proposing, here’s the two categories that I’m gonna put it in for you guys.
And by, by the way, stay tuned. There’s one major policy that one of these two guys is proposing that I think would literally kill real estate. It would. Everybody from an investment standpoint. I’m not gonna tell you whose proposal it is or what it is yet. Just stay tuned because it’s coming. Okay? So here’s the way I boil it down.
If I look at Biden and I look at Trump, here’s kind of the way that I’m going to put it in terms that that I understand. And again, fix reason firmly in her seat. Take what you will with this. Decide however you want, control your own financial future and your own ability to go and replace your income with real estate.
We believe. Done with simply conservative real estate, one property at a time. So I’m largely gonna be looking at this through the lenses of single family residential real estate investment. Okay? That’s largely how I’m gonna be looking at the policy proposals of both Biden and Trump. Okay, so here’s what it boils down to.
When we jump into the Biden proposals, the, the, the, his proposals largely favor those who can’t do it themselves. Okay. He’s saying, Look, let’s help the little guy because he can’t do it themselves. It taxes the people who can to help those who can’t. Okay? Um, it kind of punishes the investor producer mentality and it’ll likely, you’ll see in a second.
What Biden’s trying to do is he largely, To prop up and subsidize the more kind of liberal, downtown metropolitan, more densely populated areas. Those areas that people are moving away from right now, most of his proposals are, are centered around those and diversity and how, what the role is that that plays.
In housing, which is a great idea, right? We want that. But you’ll see here in a second kind of what those proposals look like. And if I look at Trump’s proposals, which are not perfect by the way, there’s some things he’s done I totally disagree with, and some things that that I wish he would undo, that he has done.
But I’m gonna, at the end of the day, while his proposals aren’t perfect, they largely favor innovation and growth in investment in free market princip. Now he does also, there’s some punishment in the Trump proposals too. Okay. He does kind of punish the more blue or kind of liberal states. The, the, the places where there’s densely populated areas.
Okay. And, and those areas that are kind of in favor of move everybody to, you know, stack everybody on top of each other. And those are largely kind of, you know, democratic blue, I guess we could say liberal. Areas. Trump does not do much to incentivize those states, but he does a lot to kind of incentivize the middle of the country.
Okay? Which, as you guys know, is a, is kind of a lot of where we do the real estate investment. All right, So let’s kind of jump into this stuff. Okay? Now again, I’m not gonna say bad, good, bad and bad. Trump good, Trump bad. I may get into that a little bit. I will say policy good, policy bad, and I will kind of give it to you in that context.
All right, so I don’t want this episode to be too long, so let’s dive right in. So, the way I’ve kind of broken these up is I, I’ve broken into some of the positive things that Joe Biden wants to do. Some of the things that I’m not sure if they’re positive or, or negative. And then some of the negatives of the, of the Biden proposals.
And then I’ve done the same thing with Trump. Okay. I have kind of some of the negatives of what Trump has done or what we can’t anticipate him doing. Some of the things that he’s proposing that I’m not really sure if it’s positive or negative. And then the things that I think are just 100% positive from the Trump standpoint.
So, okay, let’s dive in. Okay. Let’s start with Joe Biden. So let’s start with Joe Biden’s Positives. All right. So one of the things that Joe Biden is propos. And I, and I, I kind of like this, I think is he wants to create kind of a down payment tax credit for up to $15,000 for first time home buyers. Now, I don’t think that’s a bad thing.
I love the idea of incentivizing home ownership, right? That totally fits into the paradigm of command your own financial future. Now what I don’t know is some of the incentives that Biden has proposed and some of this stuff, he kind of only wants to give it to you if you’re willing to be, uh, kind of in more diverse or lower income neighborhoods.
Some of those dense, more dense. Populated areas. Okay. But, but if it was just kind of this, look, here’s a tax credit for $15,000 for a down payment. I love, I love the idea of tax credits because I believe that we ought limit and minimize taxation. I don’t think we should, uh, punish production. Right. And so I like the idea if it was just a straight down payment tax credit, I think it’s brilliant.
Okay. We, it’s kind of yet to be seen how he wants to kind of shape that up because there’s been some, I. That he would wanna apply it only if you live in certain areas. Like for example, he’s done some stuff and said some stuff where people that are affected by Covid can qualify for potential incentives where he to become president when they look at buying a home, moving into a home, you know, when they look to their personal investment in real estate they live in, however, He was kind of dangling the carrot and saying, I’m only gonna give this to you if you live in, uh, lower income areas, more densely populated, uh, and frankly kind of more, more of the blue liberal counties and districts, then maybe I’ll give this to you.
Right? And so I don’t really know how I feel about that part of it right now. One of the other things that Joe Biden has proposed, I don’t think this has got a lot of press, but I love this idea actually. I think it’s a brilliant idea. I would love to see Trump do something like this. He kind of want, and, and again, here’s the only sort of thing I don’t love.
He says he wants to establish a public credit agency. Now, I don’t know if I love the idea of public credit agency cause I, I’m not just a huge believer of like, government should control every aspect of our life. But here’s what he wants it to do. And I think this is actually really positive and part of it is I’m not necessarily an advocate of fico, right?
We’ve got these credit bureaus, we’re kind of slaves to them and they, they kind of control our ability in America to. Get the right type of insurance rates and qualify for mortgages and interest rates and, and we’re sort of controlled and we’re, we’re sort of slave, I guess, a little bit to this idea of our FICO score and our credit score.
I don’t love that because that releases some of the control we have. Yes, we have control over making payments on time, but I don’t necessarily know that I love, like this sort of outside thing being opposed upon us, but what, what Joe Biden wants to do with this idea of a credit agency, a public credit.
Is he would actually, he, he would use it to kind of raise the scores of minority home buyers and it would consider things like rental payment history and utility utilities, paid history, stuff like that. I like the idea of that because I think if there was a way that if we are gonna be slaved to credit scores, which I don’t think that’s going to win anytime soon, but if we are gonna be slaves to the credit score and if there was ways to raise credit scores, cuz a lot of times right now the whole game is you have to go get.
Installment loan, right? You have to, You have to go and own a home. You have to go and own a car. You have to go and have credit cards in order to establish a credit history so that you can qualify for rates and get the best insurance rates and qualify for mortgages. I don’t love the idea of you have to go into debt in order to establish credit so that somebody will judge your credit worthiness and be willing to.
Fund your opportunity for the future. I, I see. I don’t love that approach to it, so, but if it’s gonna be there, I like the idea of, of doing something like taking rent into account and utilities paid into account so that, People that don’t necessarily have a mortgage yet, don’t have a car loan yet or whatever, can start to get some score that could help them get into their first primary residence.
Cuz I think everybody should own a primary residence, um, at some point, right? Uh, Steve and I have talked about this. We all go through phases in our lives. I love the idea of. Doing something for the person that’s in the phase of life where they’re not ready to own yet to boost their ability to go own.
So I like that. That’s another positive thing that I’ve seen as in terms of what Biden has proposed. And then here’s another one. I’m kind of iffy on this, but, But generally, I mean like in principle, I think this is pretty good, which is Joe Biden wants to expand Section eight vouchers. So that every low income American who qualifies for the program would get assistance.
Now, I’m not an expert on section eight, for those of you that, that, uh, listen to other real estate podcast. There’s some folks that totally advocate the idea of Section eight housing, right? Section eight housing is, uh, if you are a lower income individual, um, Section eight pays your rent for you. Wh what I don’t love about section eight is if somebody’s making all my payments for me, what incentive do I have to take care of the property?
So like we don’t love to own Section eight properties necessarily. Because Section eight properties maybe aren’t great properties. They’re not in great neighborhoods, uh, sometimes. And if the rent is being paid for my tenant, then what incentive does the tenant have? To really take care of the property.
Yes, they’re trying to get on their feet and move upward and outward. I get that, but I think there’s some li limitations to the Section eight idea. Yet at the same time, I love the idea of helping people that are maybe a little bit down on their luck, trying to get a leg up. What I don’t like is, Hey, just be a consumer.
You don’t have to work for this. You don’t have to do anything. Life has handed you a. A, a bad, you know, you’ve got a bad shake from life, so let me give you everything you need. Cradle to grave. I gotcha. Not a fan of that. That’s why I’m kind of iffy on section eight. Right. And so, you know, this idea of expanding Section eight, I like it from the standpoint of, okay, I’m torn, right?
I like the idea of giving people potential to move up, right? Like the Jefferson’s moving on up. But I don’t love the whole section eight idea, and that may be just my limited understanding of it. So those are some of the Biden positives. Now, here’s some of the stuff with Biden that I don’t really know if it’s positive or negative, but here’s the deal.
You know, Biden is kind of an advocate of rent and mortgage forgiveness. So look, we’ve all been hit by Covid. We get it. Some of us lost jobs, some of us lost income and potential. So the idea of rent and mortgage forgiveness, like I get it, right? It’s like, okay, well yeah, C’S kind of not your fault and, and the economy kind of got hammered and gosh, you’re kind of in a rough spot.
But at the same time, you guys, I don’t love this idea of just forgiving you. I think it sets a bad precedent, right? I. If we say, Look, we’re just gonna forgive any debts that you have, any debt to society, or any creditor without you feeling any sense of an obligation to kind of improve your life or get better, I think that sets a bad precedent and that moves us closer to this idea of, you know, let just let the government take care of everything for you.
And guys, I lived in East Germany and I am here to tell you it doesn’t work. Okay. I, those people who lived in East Germany were not happy. Again, not trying to make it political, not trying to give you a political commentary, but I could tell you that the idea of the government controlling every facet and aspect of your life does not work.
It never works. It does not create real production or real incentive for you to be a producer and control your own financial future. And I don’t like it for that, which is why I don’t know how I feel about the rent and mortgage forgiveness stuff, right? Another thing I’m sort of like, Real sure on is he’s kind of proposed this renter’s tax credit so that a renter would never have to pay more than 30% of their income to rent wherever they’re renting.
So you know when mortgages, you’re usually not supposed to spend more than 30%. That’s part of the qualification a lot of times of a mortgage, Right. Is your. Debt to income ratio of what your paying and mortgage payment versus what’s owed. Should it be more than like 30% and, and meaning your, if your mortgage payment is X and you make y, your mortgage payment should not exceed 30% of y.
Okay. Um, that’s kinda what that, so I like that. But when, when it comes to rents, I mean, couldn’t you say then, okay, well, well if I’m a landlord and I own a property and, and it’s a nice property and I’ve got an expensive rent and now somebody’s coming in that maybe shouldn’t qualify for my property, maybe isn’t.
Bit, but they’re never gonna have to pay more than 30%, cuz the government’s gonna give ’em a kickback for it. I mean, I don’t know. Right? It’s kind of like the section eight stuff. I don’t know. I feel like there’s a lack of personal accountability there, but I also get it. I get the idea of not putting renters in a tough spot if they can’t afford to rent a home, but they wanna be in a nicer property to kind of give their family a leg up.
Right. You guys, I mean, this is just kind of what I struggle with internally. So I don’t know if I love it or if I hate it. I don’t know kind of how I feel on it, but that, There you go. Right. Okay, so, and, and I kind of mentioned this one already, you know, he’s proposed some assistance for those that have been affected by the covid.
But the assistance is kind of only available to them if they’re willing to move into lower income areas. And I feel like that’s kind of an attempt to shape and impose area demographics. Like, like, you know, you owe me this move into this area that’s probably gonna favor me politically anyway. And, and I’m gonna give you these.
Things so that you love me and you’ll vote for me. Like I don’t love that because I feel like it’s trickery. So anyway, so there we go. Biden positives some stuff that I’m not sure if it’s a positive or a negative. Okay, now here’s the big negative. Remember I told you there was a big negative? This is a big negative and it comes from Joe Biden.
Here’s the big negative Joe Biden has proposed ending the 10 31 exchange, otherwise known as like kind exchanges in order to fund an elderly and childcare plan. That looks, sounds awesome, right? We wanna, we wanna help the elderly and we wanna help with childcare, but it’s got a price tag with 775 billion and Biden wants.
Finance that campaign by eliminating the 10 31 exchange. Okay, let me give you this first. So here’s what the Biden campaign says, then I’ll kind of, if you don’t know what a 10 31 exchange is, I’ll kind of explain that to you and then I’ll tell you what some of the negative impact would be on it. Okay. So according to the Biden campaign, here’s what they say.
They say that the plan for the elderly in childcare, it’s gonna cost 775 billion over 10 years, and it’ll be paid for by rolling. He says, they say unproductive and unequal tax breaks for real estate investors with incomes over 400,000 and taking steps to increase tax compliance for high income earners, Right?
So it’s the stuff you hear in the debates all the time. Like, Oh, you know what? We’re gonna go tax the rich because they have too much. Well, here’s the deal, you guys, and this is where it gets tricky, and this is where you gotta be careful. So if they are saying, Okay, we’re gonna roll back 10 31 exchanges.
Now, by the way, 10 31, since 1921, investors have been permitted to defer paying capital gains taxes on investment property sales. If they reinvest the proceeds from the home, they just sold into a similar investment property, and they have to do that within a specified timeframe. We’ll do a podcast in the future on 10 31 exchanges, but it kind of works like this.
The if after an investment property is sold, you have, like you, you sell a property, you have to identify that property as a 10 31 exchange. As you’re selling the property, then you have to identify a new property that you’re gonna roll your proceeds, your tax free proceeds into within 45 days. And then you have to.
Close on the transaction within 180 days of selling your first property as you’re rolling into your new property. And you can do that sort of in perpetuity, which is a big piece of the income replacement plan that we help our clients create. Buy one home, let it grow for you. When you sell that home, take the proceeds, use a 10 31 exchange, go buy two properties cuz you’re not paying capital gains taxes.
Okay, now here’s the problem you. It sounds good to say we wanna fund childcare and elderly. Yes, I believe it. Good. I love it. 775 billion. Yep. Big price tag. Okay, now you wanna fund that by rolling back 10 31 exchanges for high income earners, quote unquote, people that make 400,000 or more a year. Well, here’s the problem.
If you make, let’s just say you make a hundred thousand a year, okay? You are not one of the $400,000 people. You’re thinking, I’m not gonna be affected. But what happens when you sell a home for $300,000? If those $300 are counted as income in that year to you, that’s not a super expensive property you guys.
But if you were to sell a home for $300,000 plus your $100,000, or if you were to, let’s say you make $50,000 and you sell two homes that are each $150,000 at once that you wanted a 10 31 exchange, well all of a sudden those homes, if they count as income, you lose the ability to do a 10 31 exchange. So it actually is really.
Bad for people that are investors and that are wanting to roll their investment forward, forward, forward. Now, if you, if you have two properties, you’re trying to turn it into three or four, you’re probably gonna be counted as that person who makes more than 400,000, which means you will not get the 10 31 exchange, which means that totally stifles and kills your ability to grow your real estate portfolio.
Now you don’t have to just take my word for it. Kay. So, um, I actually was doing a little bit of research on this. What would the impact. If the 10 31 got rolled back, GDP would be estimated to fall by 8.1 billion each year. You guys, I mean, each year is that crazy. And investment would would is estimated to fall by 7 billion.
In the long run. So this is like a massive multi-billion dollar negative swing to the economy. Not to mention the negative impact it would have on you personally. This whole idea of rolling back the 10 31 exchange, I think is such a massive negative that that, that right there alone is enough for me to kind of take a look and say if that were to be implemented, I have a real problem with that policy.
Right? That. That is almost enough for to decide my vote right there as a real estate investor. I’m not saying it should decide yours, I’m just saying that this idea of getting rid of the 10 31 exchange for people for most, for the vast majority of us, would be incredibly destructive and may sound good on the front, but it may really negatively impact you in the long run.
And we don’t want that, right? We don’t like that at all. so, So here’s the deal. That is such a huge negative that would have such a profound impact on real estate investment and on the real estate investment industry that I almost don’t know if there’s anything else worth saying, right. But I’ll give you a couple of the other negatives coming from the biting campaign.
Then we’ll jump into the Trump negatives. Then we’ll go through the stuff that Trump is, is talking about that I don’t know if it’s positive or negative. And then we’ll end with the Trump positives, cuz I wanna put the Trump negatives right next to the Biden negatives. So you don’t think that, I’m just trying to, to dog pile on Joe Biden in his terrible idea of eliminating 10 31 exchanges.
Yes, I said it a terrible idea of eliminating 10 31 exchanges. So here’s, here’s some of the other. Uh, that, that are maybe not great about Joe Biden. There’s no plan for increasing affordability of housing. So he wants to say, I’m gonna give you incentives. I’m gonna help you. I’m gonna give you all this free money so you can invest.
But that doesn’t actually impact the affordability. The more free fake money that gets put into the economy that gets given to people means that the higher. Pricing of homes they’re gonna get because it’s not, you’re, you’re, you’re messing with the supply and demand curve. Okay. Uh, and, and a couple of the other things, he also wants to institute a national standard for appraising homes so that homes in lower income neighborhoods and communities of color wouldn’t be assessed less than, small than similar nice white neighborhoods.
Right. Um, and so, so in other words, What he’s trying to do is he’s trying to now mess with supply and demand and, and free market principles and say, Look, if a, if a home is in a bad neighborhood and nobody wants to live there, then nobody wants to pay for those homes. So the pricing of those homes goes down.
Well, he’s saying, Look, we gotta have a national appraisal standard so that those homes are appraised exactly like the quote unquote nicer homes and the quote unquote nicer white neighborhoods that are suburbs or whatever. Well, that totally messes with the equilibrium of the market, right? You are.
Fearing in something that shouldn’t be interfered and that is not Adam Smith. That is not the invisible hand. That is not free market principles, that is interfering principles. So I don’t know how I feel. I think that’s a pretty big negative, right? You’re foresee a higher appraisal on properties that the market does not believe are worth that amount.
And I think that just has a, a negative ripple effect just across the board. And then the last thing that is kind of a negative with Joe Biden, then we’re gonna take a little break. The last thing that’s, that’s a negative for Joe Biden is, uh, he kind of wants to eliminate the single family zoning and, and instead spend money on public transit, which actually loses money.
So in other words, he wants to eliminate zones. That are zoned as single family residential so that you can build up dense, more densely populated housing so more people can move in. Right. Um, that, that, and maybe these are more the blue and, and kind of, you know, the voter base for maybe the democratic side of the aisle, um, are, are a lot of what lives in metropolitan areas.
Not everybody, but I think it general, if you look at, you know, when, when counties vote. When you see, you know, which areas go blue versus which areas go red. I mean, a lot of times it’s those dense. It’s San Francisco, it’s Manhattan, it’s those areas, right? So what he’s saying is, Look, let’s get rid of single family zoning so that we can do more dense, more densely populated housing.
Let’s get more people. Into the area that might vote our way. And then let’s spend money on public transit to help all those people, which I love the idea of public transit and helping those people, but public transit loses money. So what you’re doing is you’re eliminating potential growth, eliminating the ability of somebody being able to own a single family residence and command their own financial future for the exchange of more public transit, which actually loses money.
So there you go. Oh boy, that was a lot, right? So there we have some of the Biden positives, some stuff that I don’t know if it’s positive or negative. And then some of the Biden negatives. The biggest being that 10 31 exchange going, Bye-bye. So we’re gonna take a little break and then I’m gonna come back and we’re gonna break down Trump, and then we’ll be done with this episode.
See you in a minute.
Okay, we are back. So now we’re gonna talk a little bit about the Trump policy stuff and we’re gonna take a look and see if maybe we like some of what he does better. Maybe we don’t. I will tell you straight. You guys know that this is not some sort of high brow analysis. This is just me doing research on these policies.
And then from my personal point of view, from my paradigm, my worldview telling you kind of what I see. And, uh, as I told you right at the start of the episode, I am a freedom loving capitalist, right? I don’t love high taxation. I love the ability of the market and the invisible hand to work. And I will say that some of Trump’s policies, not all of Trump’s policies, but some of Trump’s policies certainly fall on.
Side of the equation. So if I sound a little bit more positive on the Trump policies, it’s because in large part a lot of what he’s trying to accomplish or, or what it appears that he’s trying to accomplish. Favors free market principles, favors personal accountability and personal wealth building instead of kind of a top down sort of, uh, decree of look.
I will benefit you if you play by my rules. Um, what, what Trump has here is definitely a little bit different. Now, I will tell you that some of what Trump has, I don’t love. So let’s actually start with the negatives. Now, uh, let me also say, In terms of what we’re gonna talk about here for the last little bit of the, of the episode, Donald Trump has not come out and released some sort of, you know, this is my four year housing plan of what we’re going to do with real estate.
All we’re doing is we’re taking a look at things that he said in the past, and we’re taking a look at a four year track record and we’re trying to say, Okay, based on that track record, based on things that he’s said in the past, what are the negatives? What are some of the things he, he’s talked about but has not done yet?
And what are some of the positive things that we. Scene take place over the last, you know, four years. So let me start with the negatives, right? Because I don’t want you to think that I, I’m just trying to, to paint a one-sided picture here. Uh, the reality is Trump capped property in income sales tax deductions, which hurt some people.
Especially wealthier people, and especially in if you live in a, in a more tax happy state, right? Where it’s more expensive to live, like we talked about earlier on the, uh, you know, on the coasts, right? If you’re looking at a, at some of the, the bluer states on the coast, the more populous, the higher taxes, the largely democratic, you know, the, the San Francisco then and the New York, so on and so forth.
Um, he ca. Property and income sales tax deductions. Uh, now, so what that meant is, or, and it really just meant that if you made more money and, and here, and look, here’s the reality. Um, if you look at these areas, because the property taxes are so high, they, they exceeded the cap, right? So you had people living on the coast in more expensive areas of real estate that were not able to deduct as much.
From a tax standpoint because the property taxes in those tax happy states were just higher, so I don’t love that. Right. I like it kind of ended up truly being a little bit of. Penalty if you live in more affluent areas or, or, and if you live in a more affluent area, you probably make a little bit more money.
So in a way, it’s kind of a tax on the wealthy, right? So I don’t love that. But, uh, you know, hey, it is what it is. He felt like he needed to do it and he did. I consider it kind of a negative. Uh, you know, he also lowered the mortgage interest deduction so homeowners can, can write off only up to about 750,000 of their combined primary and vaca vacation home interest.
On their mortgages. The previous limit before was a million dollars and, and so now this policy, it’s, it’s same sort of thing. It didn’t affect the majority of homeowners. Right. A lot of the Trump stuff is favorable to, to maybe those of us in the middle of the country. Maybe we’re more kind of middle class, middle income living in, you know, your, your normal American neighborhoods.
Right? We don’t have a ton of jumbo loans and things like that that we’re dealing with. Well, it probably helped us. But for those in more expensive areas, this was a little bit of a taxes, was a little bit of a, uh, you know, I, I guess a punishment in a way. Um, and it, you know, for whatever reason I didn’t research why he decided to do this, but by capping the mortgage interest deduction at 700 to 50,000, that meant that if you did have a, a large primary residence or, or even not a large primary residence, but, you know, I’ve talked about my.
A bunch of times, you know, $750,000 property in California, that was like a three bed, two bath. I mean, if you, uh, had that home and, and maybe a vacation home, maybe, you know, you weren’t able to write off as much mortgage interest as you previously had. So that is something that I wouldn’t really consider a positive.
And again, it hurt the bank balances of those in, in pricey coastal areas, right? New York City, San Francisco Bay area where a modest starter home can cost more than a million dollars. Uh, it hurt folks like that, but as far as the middle of the country where the median home price is a little bit more, I guess, reasonable, it wa it didn’t affect that.
Those types of folks as much. So those are a couple of the negatives that I don’t like about what Trump’s done, because I feel like they are, are, you know, I, I guess, punishing, uh, people that live in these wealthier areas, these tax happy states, which are largely, you know, blue type states, uh, liberal, democratic, you know, they largely vote democratic.
They always get the, you know, the electoral votes on the coasts usually go. To the Democratic candidate. Now, I don’t know if he did that intentionally, if that’s why he capped it, where he did. I don’t know. But those are just some of the negatives. Okay. Now let’s jump into some of the stuff that, I don’t know if it’s a negative or a positive.
I could see both sides of it. Right? So one of the things that Trump did is he extended the eviction moratorium. We were in the middle of C. We’re going through this stuff. So, By extending the eviction moratorium through the end of the year, while tenants are expected to pay up, you know, whatever they owe, whenever that moratorium ends, we don’t necessarily know how tenants are gonna pay that back.
How are they gonna be able to pay back everything that they owe? And in the meantime, If you’re gonna intercede as a government, which I don’t necessarily love, right? But if you’re gonna intercede and you’re gonna say, Okay, there’s a moratorium, you know, you can’t kick anybody out, they don’t have to pay.
Okay, fine. I guess then you also need to do something to bail out the homeowners who maybe don’t have the ability to now make a mortgage payment because they’re not collecting rent and, and if they are part of the moratorium, the mortgage moratorium again. Ends, How are they gonna pay all that back? You know, we’ve seen that banks are not real flexible with some of the moratorium payback stuff.
Um, they’re kind of being jerks about it, right? They want a balloon payment or something like that. So the reason why I put this in the, I don’t know if it’s positive or negative category, is I, I like the idea of relief for those that have been affected by Covid 19, but without some kind of a solution.
And I don’t think that the solution necessarily needs to be another stimulus and where we’re just kind of bailing everybody out. Just like Joe Biden. I don’t. You know, I don’t love the idea of kind of bailing everybody out in mortgage and debt forgiveness, but, but at the same time, if we’re gonna do this moratorium thing, what are we doing for the homeowners, uh, that could be negatively affected?
I’m thinking down the road, how does that negatively impact? So I don’t know if it’s po I like the side of it that we’re providing help, but I don’t like that there’s not really a solution for what’s gonna happen after the fact. Okay. Another thing, now this is a big one, and this is one that there’s a lot of.
I don’t really know where I fall on this one. Okay. But Trump has said all along that he wants to privatize Fannie Mae and Freddie Mac. Okay. So Fannie Mae and Freddie Mac, um, they don’t make home loans, but they buy them from lenders and they package ’em into securities and sell them to investors. So if you got a conventional loan, The reason it’s conventional or conforming is because it, it fit into the criteria so that Fannie or Freddy would say, Okay, we’re willing to buy that mortgage from the lender.
You know, so, you know, if you did real estate with us, you probably got a, a loan with, with somebody like Stearns or something like that, right? Then you probably saw that that loan was. Was sold. So you do the loan with one company, right? The company sends the money from their account into yours or, or to the, uh, owner of the property as you’re purchasing it.
And then now they hold the debt, they hold the paper, but they can package and sell that paper to Fannie Mae and Freddie Mac, and now that lender gets their dollars back so that they can make another loan. And they, you know, that’s just kind of the way that that process works. So, Fannie and Freddy, They don’t make the home loans, but they buy ’em, they package ’em into securities, they sell ’em to investors.
Well, we bailed out Fannie and Freddie 11 years ago under the federal government’s, you know, kind of relief package. And it’s been under the federal government control since the 2008 global financial crisis. So now Fannie and Freddie, there’re really critical pieces in the nation’s, in the nation’s mortgage market and they, you know, they provide backing for about half of the, the $10 trillion that exist currently.
In home loans, and if we’re gonna. Fannie and Freddie, if we’re gonna privatize Fannie and Freddie and they’re not gonna make payments to the United States Treasury any longer, um, I like it, right? Because that means that it’s less government control, less government involvement. But what we don’t wanna see is if that happens, if we privatize Fannie and Freddy, does it endanger the 30 year fixed rate?
Do, do rates and fees go up? Cuz right now mortgage rates are exceptionally low. Right. And, and now I like, so I don’t know if that’s a good thing. I don’t know if that’s gonna happen. Right. That’s pure speculation. I like that it reduces the role of the federal government, um, in this home financing world.
But at the same time, you know, look, Fannie and Freddie right now, they send their profits to the treasury. But you know, with the, the end of their government, you know, conservatorship, , those profits could be used to build up cash reserves and assure lenders of, of fiscal wellbeing. In other words, I like the idea that if it does get privatized and, and, and Fannie and Freddy are not having to make PA payments to the Treasury Department, you know, if they can shore up those reserves, that they’re in a stronger financial position and they can do an even better job of backing some of the mortgages that lenders are sending out there because they’re.
Sending all these profits to the Treasury. Maybe they’re paying a fee to the federal government. I don’t know. But it could potentially provide some additional lines of credit that, you know, lenders could have access to. I, I don’t know. Right? We don’t know. It’s speculation, but. So I, I see that there, there could be some negatives, there could be some positives.
And, you know, at the end of the day, whether we privatize Fanny or Freddy, whether we extend the, the moratorium, I don’t know if these things are good or bad. You know, I don’t like that Trump capped property deductions, property tax deductions. I don’t love that he limited the amount of mortgage interest that, that we could write off.
I don’t love that. I don’t know if I like the extended eviction moratorium. I don’t know if I like the. Privatizing, Fannie and Freddie. The hope would be the invisible hand would work, and it would be something that’s really, really good. And, and at the end of the day, I mean, here’s what we see with Trump’s policies, right?
They largely favor the suburban areas over kind of these largely democratic metropolitan areas. And the the likelihood if Trump gets back in office and these policies continue, the likelihood is we’ll continue to keep seeing people moving from these downtown metropolitan areas into the. But what with Biden, he’ll probably spend heavily and prop up those metropolitan areas.
It might make it easier for people to live there, and they’re hoping to get more of a democratic, you know, block vote, I guess in those areas. I don’t know if I want that. I don’t know if I don’t want that. I don’t know if I want people moving in the suburbs. I don’t know if I don’t, I just don’t know. All I know is what I want is I want the invisible hand of the market to work, and I want there to be true supply and demand, and I don’t want government interference.
And so some of what Trump has done, it’s been a little bit of government inter. If he privatizes Fannie and Freddie, Maybe that’s less government interference. Maybe that’s more of the invisible hand. I just want people to have affordable housing and have the ability to continue to grow their personal wealth.
That’s what I said at the top of the episode, and some of Trump’s policies do that. Some may or may not. Now, here’s some of the positives though, right? Like I haven’t shared with you just the the straight positives, but here’s some of the positives with the Trump housing policy. Home ownership, you guys over the last four years has continued to increase and been increasing at staggering rates, which is awesome.
We love that, right? We wanna see Americans get on their feet. Steve and I have said for a long time, there’s always going to be a market for rentals. We know that people will go through different phases of life. If there’s more people buying primary residences and there’s more people buying homes, it can push up home prices, right at supply and demand.
So we’re on, we’re sitting on. Side of that supply and demand curve. If prices continue to raise, there’s arise. We have a growing population, there’ll always be a need for rental real estate, right? So, So I like this. I think this is a really positive thing that we’ve seen under the Trump administration. In addition, we’ve seen record low interest rates, right?
We like that cheap money means more availability of capital and more ability for more people to do more. Scene. We like that. Right. One of the other things that’s been really good that that’s one of the Trump positives is he’s been reluctant to lift strict kind of zoning laws on single family residences.
Like I mentioned, Joe Biden probably wants to. Have more strict, uh, zoning laws and remove single family zoning to kind of prop up more multi-family type housing and spend money on public transportation. I’d rather that we lift strict zoning laws on single family residences in an effort to retain the value of the homes in the communities.
Trump has done that, and I like that. One of the things we haven’t talked about that’s been a major Trump positive is he kind of created these things called opportunity zones, which we’re supposed to encourage new development of investment in poorer and struggling neighborhoods. And what it did is these opportunity zones, it didn’t say, Hey, if you go and do this thing in the opportunity zone and you, you are more diverse, or you’re helping low income neighborhoods, like, then I’m gonna give you, you know, some additional dollars.
What he said is, he said, Hey, Let’s prop up some, or not even prop up, but let’s build areas that need some infrastructure and struggling neighborhoods, and there will be tax incentives for doing so. See, I’m a big fan. We remove taxes, we incentivize the right kind of behavior. I remember going to, uh, my economics class.
At Brigham Young University, and one of the main principles I remember learning about supply and demand. And I remember we went through this thing in the manual and it was this list of like economic principles, like baseline economic principles. And the one that I’ll never forget said, people respond to economic incentives, meaning, and this goes for employers, this goes for your kids, right?
People respond to economic incentives. So when you incentivize good behavior, generally speaking, you should see good results as opposed to penalizing good behavior and. Forcing the results that you wanna see, which is some of what we see on the Biden side. Whereas with Trump, there’s a tax incentive removing taxation in order to incentivize the right types of behavior, like, you know, expanding these opportunity zones to encourage new development.
Now there’s been some criticism of that, saying that it just makes the rich richer look at the end of the day. I love the idea of providing additional opportunity in areas where that are struggling and doing that through tax incentives and creating additional affordable rental complexes and retail centers and having investors able to receive tax incentives as a way to spur that development.
I like it cuz it allows investors who sell assets to delay or defer taxes for years as long as they’re putting those proceeds into these opportunity zones. And what we’ve seen now, this is I, I. I haven’t done the research myself, but according to the Trump administration, right, that’s already poured jobs and investments into like 9,000 previously neglected neighborhoods.
That’s if, you know, you believe that Trump administration, I mean, I think that, uh, Trump has a bit of a proclivity to, to, uh, san big, big things, right? He does it bigly, right? And so if it’s 9,000, you know, maybe the rule of thumb is divided by 10. I have an old friend of mine. Does real estate and, and he does a lot of YouTube videos and he always talks about, you know, his results and what he’s created for himself and others.
And I always kind of have this rule of thumb that, you know, just whatever he’s, whatever number he says and he’s trying to sell you on just divide by 10. And that’s probably realistic. Uh, Trump’s. May be very similar. So maybe even if it poured jobs and investments in the 900 previously neglected neighborhoods, not the 9,000, he said that would still be something that’s positive.
Right. I like that. And so, you know, look, at the end of the day, I like the idea of providing tax incentives versus doing what Biden wants to do, which is imposing Obama error rule. An Obama era rule that says you, you know, suburban communities have to diversify to receive federal housing money. I’d rather there be tax incentives to incentivize people to go and develop those areas.
And so, look, end of the day, here’s what we got. Biden has some good. Biden has some bad one extremely bad, which is the 10 31 exchange thing that we talked about. Okay. Trump has some bad, uh, I think there’s been some penalties that he’s sort of assessed to people that are maybe a little wealthier, but he has some good, Right.
He’s done these, uh, some really good things with interest rates and, and with potentially privatizing Fanny and Freddy and with these opportunity zones and, and with sort of boosting the, the idea of growing these single family residential neighborhoods in these suburban areas. So they both have negatives.
They both have positives. At the end of the day, I don’t know which one resonates with you. I don’t know if Biden’s policies resonate with you. I don’t know if Trump’s policies resonate with you. For me, most of some of Trump’s policies resonate more than Biden’s, but I tell shared with you, I loved the Biden $15,000 tax credit, assuming it doesn’t come with strings attached, you know, so there’s some really good stuff there as well.
But no matter what you. It’s never truly a bad time to invest in real estate as long as you have the ability to do so. As long as you have a strategy, as long as you are thinking ahead and thinking, how do I go and, and benefit my future? By investing in simple and conservative real estate, we think you oughta have it done for you.
So you don’t have to be the expert, but you can get the expert level results. So, The reason I did this episode number one, you know, Steve’s out. So I thought, Oh, what the heck? And yeah, it’s a longer episode than usual because I’m, I’m longwinded, right? But I hope that it was helpful, and at least maybe you haven’t heard about Biden’s real estate stuff.
Maybe you haven’t heard about Trump’s. Housing stuff. Maybe you are an undecided voter. Maybe you know you’re gonna vote for Biden. Maybe you know you’re gonna vote for Trump. I doubt that anything I shared is gonna change you or swing you from one side of the pendulum to the other, but do on it as real estate investors.
Those invested in real estate and interested in real estate. I thought you at least ought to know what we’re seeing on the Biden side, what we’re seeing on the Trump’s. Side, do with it what you will do your own analysis. Do your own research, you know, put reason firmly in her seat. I forgot the, the word that, uh, Thomas Jefferson used.
Fix. That’s it. Uh, hello. Fix reason firmly in her. Do your own research, make your own decisions. You know, Rolo made the opposite of cowardice or the opposite of, of courage is not cowardice. It’s conformity. Don’t just do what everybody tells you you ought to do. Carve your own way, Make your own path, Make your own decisions.
Car your dm right? And do the things that are gonna benefit you and your family while you’re benefiting others along the way. Real estate gives us this incredible opportunity to do so. So at a minimum, I hope this was interesting. I hope it gave you information that maybe you hadn’t heard. Maybe it was a whole bunch of gobbly goo and none of it made sense, but I hope that it was beneficial.
Now, next week, we’ve got this awesome episode with Buck Sexton. You guys are not gonna wanna. It is gonna be kind of our election special. It’s gonna be dropping the day before the election. You’re not gonna wanna miss it. You’re gonna wanna hear Buck’s real estate experience, and you’re gonna wanna hear some of the things that he has to say.
I think he is so articulate and provides such a phenomenal analysis. I don’t want you to miss it. So for now, I will sign off. Can’t wait to get Steve back. Can’t wait to do the Buck episode. Excited to keep talking to you guys. Please share the podcast. Please rate and review it. Uh, maybe you guys think I’m too pro-Trump, and so maybe we’ll get some bad reviews.
I don’t know. Or I’m too pro Biden and I’ll get some bad reviews. I don’t really care. I’m just trying to provide information that you think is beneficial. So at the end of the day, I love you. I’m thankful for you. I hope this was helpful. Keep listening, keep subscribing, keep telling others. It makes all the difference in the world.
And, and just remember, you guys, real estate investing can be done simp. If you’ve got a team that could do the majority of the heavy lifting and hard work for you, so whether you work with us or another company, consider that keep being good at what you’re good at. Take the information we give you and apply it in a way that benefits you and your loved ones.
We love you. Income replacement for you and your family may just be one property away, cuz one can turn into two and two can turn into 10 over time. It’s income replacement, one property at a time over time, and dog on it. Let’s just go get it no matter what. Get out there and vote. Let your voice be heard and let’s together create a better, bigger, more beautiful tomorrow.
Which reminds me of Disney World. You know there’s a great big beautiful tomorrow. So you love that. I love that. What a positive message. Let’s end on that. All right everybody. Thanks. We’ll see you next week. Bye-bye. Thanks so much for listening to Replace Your Income with Kevin and Steve. Do you wanna connect with us and other income replacement rangers out to obliterate the status quo and experience real retirement with income replacement through real estate type done for you Real Estate USA in your Facebook search bar?
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