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Biden to continue Trump plan …

As of this writing, the U.S. presidential election has yet to be formally certified. Both sides are claiming victory. There’s obviously a lot of disagreement.

As investors trying to make long-term strategic decisions, the situation is challenging.

After all, policy decisions affect the economic landscape we’re navigating. So knowing who has their hands on the levers is important.

Biden’s promised to roll back the Trump tax breaks … many of which have benefited real estate investors.

After the Biden tax plan was released, we interviewed CPA Tom Wheelwright and he said the Biden proposal is not favorable to real estate investors.

Of course, that’s Tom’s opinion about what was proposed.

Politicians often make promises they don’t intend to keep or can’t push through. Trump promised to repeal and replace Obamacare and that didn’t happen.

So with an election outcome not 100% certain … and two very different policy philosophies competing for control … it’s hard to see the lay of the land.

For now, we simply focus on what’s highly probable no matter who eventually takes the oath of office.

By looking for common policy probabilities, we’re able to move forward in spite of the uncertainty.

As we’ve discussed before, we’d bet more stimulus is coming no matter who gets sworn in. This also portends low interest rates for the foreseeable future.

It seems nearly everyone currently in power or likely to be … including the White House, Wall Street, Congress and the Fed … all agree on more stimulus.

Meanwhile, a VERY interesting article popped up in our news feed …

Biden’s team sees promise in a tax break championed by Trump 
Accounting Today, 11/16/20

“… opportunity zones — a controversial piece of the Republicans’ 2017 tax overhaul — are likely to endure even as Biden vows to roll back many of his predecessor’s policies.”

This caught our eye because we’ve been watching the Opportunity Zone program ever since it was announced.

The Opportunity Zone program promised a potentially substantial wave of capital into easily identified geographic areas.

Seeing where capital could be flowing allows alert real estate investors to position themselves to ride that wave.

But even though Opportunity Zones have had some success, between political distractions and the pandemic, they didn’t quite get the traction hoped for.

Nonetheless, throughout the campaign, the Trump team touted them as an important part of the go-forward plan for revitalizing the U.S. economy.

So prior to the election, we stated if President Trump were to win re-election, there would likely be a renewed effort to promote Opportunity Zones.

But we weren’t sure about the fate of Opportunity Zones in a Biden administration. In fact, we thought the program might get scrapped.

After all, if the plan is to erase all things Trump, it seemed likely the Opportunity Zones would end up on the chopping block.

However, while this report is only a point on the curve, it’s an encouraging sign.

For those unfamiliar, Opportunity Zones are geographic regions identified by state governors as needing an influx of capital to develop or redevelop properties and cultivate business.

The Opportunity Zone tax incentives reward private investors for investing unrealized capital gains … many of which are in the stock market … into Main Street real estate.

(Side note: We tend to like anything which encourages the movement of money from Wall Street to Main Street … a big reason we promote real estate syndication and Main Street investing in Main Street.)

The best Opportunity Zone tax incentives go to investors who make long-term commitments, which gives those investments time to coalesce into critical mass in a community.

This coordinated influx of massive amounts of capital allows private investors to effectively “syndicate” … pool their capital … into a specific geographic area.

This concentration of capital kick-starts the local economy … creating infrastructure and jobs … and lifting all “ships” in the zone. Including yours.

Individual investors and syndicators get in on the action simply by investing in these Opportunity Zones. Invest early … and the gains could be substantial.

Of course, the pandemic lockdowns derailed all kinds of things … including the full development of the Opportunity Zone program.

And though the world is still trying to find its way out of lockdowns, our bet is eventually the Main Street economy will return to some semblance of normal.

If the article is accurate, then perhaps a potential Biden administration includes support for some version of the Opportunity Zone initiative.

Now if you combine the idea of more stimulus with some version of Opportunity Zones …

… it’s not a big stretch to think some of those stimulus dollars might join with private capital to develop specific geographic regions real estate investors can identify today.

That smells a lot like opportunity.

So as cliché as the great hockey player Wayne Gretzky’s quote is, it seems Opportunity Zones may provide some clues about where the puck is going.

In any case, we’re still paying attention because Opportunity Zones may have a future no matter which way this contested election goes.

Stay tuned …

Until next time … good investing!


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