Podcasts Business Investing Best Real Estate Investing Advice Ever JF3387: Inside Congresss Attack on Institutional Investors ft. Logan Freeman

JF3387: Inside Congresss Attack on Institutional Investors ft. Logan Freeman

Published: Dec. 13, 2023, 8 a.m.

Welcome the the Best Ever midweek news brief, a new series where we will highlight the top headlines CRE investors should be paying attention to this week, followed by a deep dive on a larger news topic or trend alongside a CRE expert.

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Today\u2019s Headlines

Six Interest Rate Cuts in 2024?\xa0A recent report from ING Economics predicts that federal interest rates will likely be cut six times in 2024. That\u2019s a bold prediction based on what we\u2019ve seen in 2023. The report cites three key factors: a labor market that it intentionally describes as \u201ccooling, not collapsing,\u201d a gradual easing of inflationary pressures, and \u2014 even though spending is still strong \u2014 the outlook points to financial pressure hitting millions of households, and soon, which should curb spending and slow overall economic activity.

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Midwest Corners Market on Apartment Competition: In RentCafe\u2019s 2023 Year-End Report, the company broke down the U.S. rental markets based on competition. And while Miami was the nation\u2019s hottest rental market, the Midwest was the clear winner, with three cities in the top 5 and 10 of the top 30 most competitive rental markets in the U.S. for 2023.

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Today\u2019s Guest: Logan Freeman, co-founder and principal at FTW Investments, joins Paul Mueller to discuss two recent bills proposed in Congress targeting institutional investors that would reduce their ability to own single-family homes. The first \u2014 called the\xa0End Hedge Fund Control of American Homes Act\xa0\u2014 would impose tax penalties that would force big investors to\xa0sell off the single-family homes they own\xa0over a 10-year period, effectively banning them from owning them entirely. A second bill titled the American Neighborhoods Protection Act was also introduced, and this bill would require corporate owners of more than 75 single-family homes to pay an annual fee of $10,000 per home into a housing trust fund to be used as down payment assistance for families.\xa0

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Key Takeaways:

  • The title of the first bill may refer to hedge funds, but the definition within the bill says that it would target any applicable entity that \u201cmanages funds pooled from investors,\u201d which encompasses a large swath of commercial funds and businesses.

  • Should these bills pass, mobile home parks could be significantly impacted by institutional investors shifting their focus. As investors move out of single-family rentals and into multifamily properties and mobile home parks in an attempt to profit from the affordability crisis, rental rates for manufactured and small homes in these parks may rise sharply. This could benefit park owners but exacerbate the affordability crisis for renters living in mobile homes, who may struggle with rising housing costs.

  • These Democrat-led bills are unlikely to pass in a Republican-controlled house; however, these bills (and those that have come before them) are an indication of what Congress is thinking about. So even if these bills don\u2019t pass \u2014 and if Congress decides not to entertain the myriad of potential alternatives that could help with affordable housing \u2014 future attacks on real estate investors, institutional or otherwise, could be in coming down the pike.

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Logan Freeman | Real Estate Background