This Election’s Biggest Winner Might Be Landlords
By Scot Aubrey
As the 2024 U.S. presidential election recently closed, landlords across the country are celebrating many of the positive outcomes they saw in regard to housing, tax, and economic policies that will affect their businesses. Whether it’s rent control, tenant protection laws, or economic conditions, this often-contentious election outcome will have an impact on the investment real estate market for years to come. Here’s what landlords should be on the lookout for:
- Rent Control
Normally reserved for large population center cities, rent control has moved beyond big-city limits and is trying to make its way into our local communities. The outcome of many propositions around the country promoting rent control policies were effectively shot down, mostly by landlord voters like you. Even in California, Prop 33, which would have put rent control policies in place statewide, was defeated. These proposals could have limited a landlords’ ability to raise rents, which normally leads to an adverse effect on a property’s profitability. With the defeat of the many rent control proposals around the country, regulations are either relaxed or blocked, thereby providing landlords more flexibility to increase rents in response to demand.
- Affordable Housing and Market Competition
Affordable housing was a focal point for many area in the country during the 2024 election. Several types of government subsidies were approved to help with the shortage of affordable rental units in many areas. Building restrictions were also eased as well to open up more areas and communities to provide affordable housing alternatives. With these projects comes increased competition, especially in high-demand urban areas. On the other hand, changes to policy that reduce some of the regulatory burdens can help promote accelerated construction, potentially bringing new, investment ready properties to the market.
- Tax and Incentive Changes
Tax policies have and will continue to significantly impact landlords. The current administration introduced several tax reforms that affected property owners, including limiting deductions for property depreciation and increasing corporate taxes. Reduced profitability is on the near horizon for landlords in areas that have increased taxes on real estate investments or rental income. If you are a landlord interested in investing in green upgrades or low-income housing projects, become familiar with the local changes in your area to see if there are any opportunities that will benefit you. But move quickly as many experts are hinting that these may be eliminated with the new administration.
- Interest Rates and Economic Conditions
Every investor has felt the sting that has resulted from higher interest rates. Either you’re paying more for properties, or you are holding still with your current portfolio and not expanding your investments. Both of those hurt landlords and coupled with the impact of broader economic conditions, there are a lot of unanswered questions in the rental market. For all but the institutional investor, these higher rates keep most landlords out of the market and reduce profitability. Policies that curb inflation or reduce interest rates will benefit landlords while a stable economy almost always leads to an increased tenant demand, reduced vacancy rates, and boosted rent prices.
- Tenant Protection Regulations
The COVID-19 pandemic was the birthplace for many of the regulations that are impacting landlords today. Check your local regulations to see if laws like extended eviction moratoriums, rent control measures, or limits on late fees and security deposits were put in place. Although not designed with this in mind, these measures protect tenants but also make it harder for landlords to manage their properties effectively, particularly when dealing with non-paying tenants. In the landlords favor there has been a push for reforms to make eviction processes faster or provide better protections for landlords facing financial strain.
While the long-term effects are speculative in nature, the 2024 U.S. election will significantly affect landlords, from rent control and taxes to tenant protection laws and economic policies. Landlords need to closely review the election results and prepare for any changes that will impact their businesses. We always recommend interacting with a local real estate investors association as they are very familiar with local rules and regulations. Stay informed, stay active, and stay adaptable. After taking a beating for a few years as a landlord, is this our time to come out on the winning side?
Scot Aubrey is Vice-President for Rent Perfect, a private investigator, and manages short- term rentals. Subscribe to the weekly Rent Perfect Podcast (available on YouTube, Spotify, and Apple Podcasts) to stay up to date on the latest industry news and for expert tips on how to manage your properties.
Members of National REIA can take advantage of special pricing from RentPerfect; the solution for rental property owners and managers for screening & managing tenants. Learn more by visiting www.rentperfect.com or calling 1-877-922-2547.
