Tax Free Real Estate Investments in Opportunity Zones

Under new tax laws, investors can defer tax on any prior real estate gains until December 31, 2026, so long as the gain is reinvested in a Qualified Opportunity Fund, an investment vehicle organized to make investments in Qualified Opportunity Zones.  In addition, if the investor holds the investment in the Opportunity Fund for at least ten years, the investor would be eligible for a step up in basis equal to the fair market ... Read more

Marijuana Law Update

Of the 29 states having approved medical marijuana sales, only 3 have approved sales for recreational use.  State and federal laws still clash, because all marijuana sales are still illegal under federal law.  Hence, marijuana is still an all-cash business because credit cards and bank accounts are federally controlled.  Given cash caps on real estate transactions, commercial property owners and managers risk running afoul of federal money-laundering laws by accepting cash rents. Although Trump ... Read more

Green Street Researchers Warn of Declining CRE Values

Commercial real estate investors can expect property prices to trend downward soon, according to Green Street Advisors, a real estate research firm headquartered in Newport Beach, California. “Value appreciation has practically stopped in aggregate,” said Joi Mar, senior analyst at Green Street.   However, sectors vary. Industrial—especially last-mile industrial—has seen rising values, and malls have seen big losses, she noted. Prices on industrial assets recorded an 11% gain year-over-year, while mall valuations have dropped by ... Read more

3-D Printed Sustainable Homes for $4,000

An Austin-based company plans to change the home buying market by making houses more universally accessible and sustainable. According to its website, ICON debuted the first permitted 3-D printed home in Austin on March 12, 2018, built using a prototype of a mobile printer that will have the ability to produce "a single-story, 600 to 800 square foot home in under 24 hours for less than $4,000." The founders of the company partnered with ... Read more

Driverless Cars Just Around the Corner

Driverless cars will be testing on California streets next month. Companies working on driverless vehicles include Google, Apple and Uber, as well as traditional automakers like Audi, BMW, Ford, GM, Volkswagen and Volvo. How will these cars affect real estate? Public transportation, and the value of real estate built around transit hubs, could be diminished. Additionally, the need for parking lots will decrease, thereby creating new development opportunities for property currently used for parking. ... Read more

Trump Tariffs Hurt Real Estate and Cost 146,000 Jobs

Trump's imposition of steep tariffs on steel and aluminum imports has sparked dire warnings from architects, contractors, REITs and real estate associations, who say the tariffs will put more pressure on already rising building costs -- causing developers and investors to postpone or cancel new developments.  Despite a carve-out for North American trading partners Canada and Mexico, Trump’s signed proclamations formalize 25% and 10% tariffs on imported steel and aluminum that will take effect ... Read more

Feds See Warning Signs of Correction Reminiscent of 2007

New data and commentary from federal financial regulators are pointing to signs of increased risks in CRE lending. Notably, the amount of delinquent multifamily and owner-occupied property loans on the books of U.S. banks increased in the 4th quarter of 2017, according to statistics released this week by the Federal Deposit Insurance Corp. The FDIC data follows the Federal Reserve's latest Monetary Policy Report that noted growing vulnerability in the commercial real estate sector. “By ... Read more

Cap Rate Survey for 2nd Half of 2017

In CBRE’s Second Half 2017 Cap Rate Survey, key U.S. takeaways include: Commercial real estate pricing was broadly unchanged, with the exception of some retail segments. Industrial cap rates fell by 13 basis points to 6.52%. Multifamily infill cap rates fell to 5.23% on average from 5.27%. Stabilized suburban assets also declined to 5.59% from 5.66%. Office and hotel sector cap rates were generally stable. Retail cap rates increased, with power centers moving to ... Read more

Bitcoin Payments For Real Estate

Bitcoin payments for real estate have become increasingly accepted in cities across the US, as well as in the United Arab Emirates, Indonesia, Ireland, and other parts of the world.  Acceptance of this new channel reflects a willingness by many real estate owners and developers to respond to the market.  Of course, Bitcoin payment has its challenges due to the current volatility in the crypto markets (with Bitcoin’s price going from $20,000 to $7,000 ... Read more

New Tax Law Impacts on Real Estate Owners & Investors

1031 Exchanges for real estate remain the same. Capital Gains Rates remain the same (ordinary income rates changed). Mortgage Interest Deduction for a primary residence or a second home is now limited to interest on debt of up to $750,000 (rather than $1 million). Interest on home equity loans will not be deductible unless the proceeds are used to substantially improve the residence. Exclusion of $250,000 Gain ($500,000 for married couple) Upon Sale ... Read more
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