Now that there’s a new sheriff in town CRE investors need to ask the question: What does this mean for me?
This is because President elect Donald Trump has promised to ramp up deportations during his campaign ASAP.
In so doing, the Federal government will need help from local law enforcement in cities and states across the country. The success or failure of this effort will likely depend upon their cooperation.
It is already apparent in the media that this cooperation will break along red state / blue state lines.
On November 19th, in a 13-0 vote, the LA City Council passed a Sanctuary City Ordinance. This follows hard on the heels of Governor Gavin Newsom’s “call to arms” with an emergency session of the California Legislature to “safeguard fundamental freedoms we all hold dear.”
Not to be outdone by his deep-blue coastal brethren, Denver Colorado Democratic Mayor Mike Johnston has threatened “armed conflict” to protect immigrants.
All this overheated rhetoric by liberal poseur’s eager to fill the vacuum created by the Harris-Waltz election debacle aside, we should ask how this may effect property values.
Well, there’s good news and bad news.
Assuming Team Trump does the logical thing when partnering with local law enforcement and focuses on illegals with a history of violent crime at home or criminal records here, this could significantly reduce the risk of red state landlords renting to bad actors.
Landlords’ ability to screen tenants adequately has been greatly circumscribed over the last decade or so. This was hugely exacerbated by the last 4 years of ‘weird’ promoted by Biden Administration functionaries: anything goes and the world owes me a living. Why pay rent?
Assuming red states reverse course, this could be an inflection point where control begins to revert back to property owners.
In blue states it may have the opposite effect, concentrating malefactors in and around sanctuary cities. Why stay in Texas, Arizona, Florida or a host of other red states when something as simple as a bus ticket can take you to safety in LA, San Francisco, Portland, Seattle, Denver, or Chicago?
By way of example in North Carolina, Republican lawmakers recently overrode Democratic Governor Roy Cooper’s veto of a bill that would require sheriffs to work with ICE. The message here is clear: bad guys need to clear out.
No such luck in Oregon. Here, local and state agencies cannot comply with Federal immigration requests absent a judicial subpoena. As an illegal with a criminal record, where would you rather be?
Putting aside the enormous financial strain 4 years’ worth of open borders places on taxpayers, these people simply don’t belong here. They can either enter legally or not at all.
In the interim, rental conditions may very well get worse in blue states as the criminal element is increasingly concentrated there, (WSJ 12/20/24) not unlike distilling down really bad moonshine.
CRE investors may be wise to take advantage of the mobility DSTs afford them in 1031 exchange. Not only can you “follow-the-money” in terms of where people and business are moving but your ‘sweat equity’ might be safer in those places where the law is enforced rather than ignored.
George Soros and his pro-crime district attorneys, think Chesa Boudin/San Francisco and George Gascon/LA made little headway outside their blue state enclaves. As a CRE investor, you are well served, putting your equity as far out of their reach as possible.
The powers that be in blue states appear to be doubling down to make things worse not better, they refuse to learn from their mistakes. It may be time to get out while you still can.
