Investors who have been in business a long time ( 15 years or more) and done hundreds and hundreds of deals are thoroughly upset with the new proposed State and Federal government intervention in private property rights.
People like Peter Fortunato, Dyches Boddiford, Jack Miller, David Tilney, Jimmy Napier all saw what happened happened in the 80's when the government completely changed the tax code. They were forced to sell their entire rental portfolio in a few months or pay very high taxes.
Long term capital gains previously went from 15% to 30% in an effort to get more money coming in to the government. Currently capital gains at 15% again. What would happen to your profits if they went back to 30% again? How would you have to change your exit strategies? If you think a tax free exchange is the soluton, that may not work because the government is not proposing taxing exchanges too.
If they passed a law that capital gains would go to 30% next year, there would be a huge sell off of assets to avoid the extra 15% tax. We saw that happen just before the presidential election because Obama was talking about the need to increase the capital gains tax. TRILLIONS of dollars were lost because people sold short.
I remember in 1999 when Texas changed the rules on Contract for Deed. They said instead of a 30 day notice to cure, I had to give a 60 day notice to cure, plus a lot of other government induced changes to my personal property. To make matters worse they made it retroactive. I had 27 Contract for Deeds (plus a lot of other property) at the time and had to switch all of them to Warranty Deeds as fast as I could - paying thousands of dollars in attorney fees.
Yep, just a little extra paperwork.
Selling with a Contract for Deed was completley eliminated from my exit strategy.
Then a few years ago in Texas, they changed the laws so you can't do a lease option. Another exit strategy was completely eliminated. Well, you can do a lease option but no one in their right mind would do them because you cannot make the option consideration non-refundable, you risk a $250 per day fine if you forget to give annual accounting, and under certain circumstances the tenant/buyer can stay for 6 months, change their mind about buying and you have to give ALL their money back ( option and rent payments). The list of government imposed rules and regulations for lease options in Texas goes on and on and on....
In Florida, Maryland, Oregon and some other states it is now against the law to contact someone in preforeclosure. There could be a fine as high as $50,000 and up to 3 years in jail in some states.
I think Georgia now has restristions on doing Subject to Deals or you MUST use a real estate agent to buy that way.
Experienced investors are very concerned about any attempt for the government to take away personal property rights and to dictate what, where, when and how our investments are bought and sold. (ie. telling us how to run our businesses)
Experienced investors are also concerned about any kind of legislation that gives the government the authority to make the decision that a multi family owner is under capitalized so the government can TAKE OVER your property and sell to someone else - whether you want to sell or not.
Inexperienced investors (those who do not have much experience) see these changes as just a "little extra paperwork" or a "few extra steps" but fail to see the big picture or to read between the lines of proposed government legislation.
Inexperienced investors do not have decades and decades of experience and a thorough knowledge of federal and state laws and the tax code to base their information on. They will read one little sentence in the new law and say that's not so bad.
But they don't have the experience to know or see the big picture.
Reading proposed law changes is just like reading the Bible, you can't read one sentence and get a full understanding. You have to read the whole chapter ( or book) and very often you need a thorough understanding of other laws already on the books and how the new law will work with existing laws when combined and the tax implications.
It's been my experience that people who have only been in business a few years don't have a clue how the economy and the government can totally change their business. Often these people have had a few good years but have never had to deal with significant changes and therefore they don't thoroughly understand how changes can affect their business, their profits, and their cash flow. They tend to think there is an easy fix but fail to see the domino affect of how one fix can lead to a new problem, then a new problem, then a new problem and possibly increased taxes too. They can't see the BIG picture because they just don't know enough. They don't know what they don't know.
A little extra paperwork today can easily turn in to elimination of an entire exit strategy tomorrow. If we don't voice our opinions loudly to stop intervention in to personal property rights now, you may wake up one morning and find there are NO MORE personal property rights.
If you're an inexperienced investor and don't see the implications of more government intervention, or if you think it is just a little extra paperwork, then you need to find the most experienced investors in your town, take them out to a long dinner, and ask them how their lives and profits have been forever changed because of small little changes and extra paperwork the government required in their business over the years. I assure you you will get an earful.
The smart old investors created new ways to run their business - they were forced to change.
Many other investors have been forced out of business because of law changes which eliminated their entire exit strategy or a way of buying houses.
Anytime you are taking advice from someone be sure to know how experienced they "really" are. There are a lot of pretender investors out there - they have read a lot of books/courses and understand the theory of investing but have rarely actually done a lot of deals. You can often find pretender investors selling expensive courses and seminars.
People like Peter Fortunato, Dyches Boddiford, Jack Miller, David Tilney, Jimmy Napier all saw what happened happened in the 80's when the government completely changed the tax code. They were forced to sell their entire rental portfolio in a few months or pay very high taxes.
Long term capital gains previously went from 15% to 30% in an effort to get more money coming in to the government. Currently capital gains at 15% again. What would happen to your profits if they went back to 30% again? How would you have to change your exit strategies? If you think a tax free exchange is the soluton, that may not work because the government is not proposing taxing exchanges too.
If they passed a law that capital gains would go to 30% next year, there would be a huge sell off of assets to avoid the extra 15% tax. We saw that happen just before the presidential election because Obama was talking about the need to increase the capital gains tax. TRILLIONS of dollars were lost because people sold short.
I remember in 1999 when Texas changed the rules on Contract for Deed. They said instead of a 30 day notice to cure, I had to give a 60 day notice to cure, plus a lot of other government induced changes to my personal property. To make matters worse they made it retroactive. I had 27 Contract for Deeds (plus a lot of other property) at the time and had to switch all of them to Warranty Deeds as fast as I could - paying thousands of dollars in attorney fees.
Yep, just a little extra paperwork.
Selling with a Contract for Deed was completley eliminated from my exit strategy.
Then a few years ago in Texas, they changed the laws so you can't do a lease option. Another exit strategy was completely eliminated. Well, you can do a lease option but no one in their right mind would do them because you cannot make the option consideration non-refundable, you risk a $250 per day fine if you forget to give annual accounting, and under certain circumstances the tenant/buyer can stay for 6 months, change their mind about buying and you have to give ALL their money back ( option and rent payments). The list of government imposed rules and regulations for lease options in Texas goes on and on and on....
In Florida, Maryland, Oregon and some other states it is now against the law to contact someone in preforeclosure. There could be a fine as high as $50,000 and up to 3 years in jail in some states.
I think Georgia now has restristions on doing Subject to Deals or you MUST use a real estate agent to buy that way.
Experienced investors are very concerned about any attempt for the government to take away personal property rights and to dictate what, where, when and how our investments are bought and sold. (ie. telling us how to run our businesses)
Experienced investors are also concerned about any kind of legislation that gives the government the authority to make the decision that a multi family owner is under capitalized so the government can TAKE OVER your property and sell to someone else - whether you want to sell or not.
Inexperienced investors (those who do not have much experience) see these changes as just a "little extra paperwork" or a "few extra steps" but fail to see the big picture or to read between the lines of proposed government legislation.
Inexperienced investors do not have decades and decades of experience and a thorough knowledge of federal and state laws and the tax code to base their information on. They will read one little sentence in the new law and say that's not so bad.
But they don't have the experience to know or see the big picture.
Reading proposed law changes is just like reading the Bible, you can't read one sentence and get a full understanding. You have to read the whole chapter ( or book) and very often you need a thorough understanding of other laws already on the books and how the new law will work with existing laws when combined and the tax implications.
It's been my experience that people who have only been in business a few years don't have a clue how the economy and the government can totally change their business. Often these people have had a few good years but have never had to deal with significant changes and therefore they don't thoroughly understand how changes can affect their business, their profits, and their cash flow. They tend to think there is an easy fix but fail to see the domino affect of how one fix can lead to a new problem, then a new problem, then a new problem and possibly increased taxes too. They can't see the BIG picture because they just don't know enough. They don't know what they don't know.
A little extra paperwork today can easily turn in to elimination of an entire exit strategy tomorrow. If we don't voice our opinions loudly to stop intervention in to personal property rights now, you may wake up one morning and find there are NO MORE personal property rights.
If you're an inexperienced investor and don't see the implications of more government intervention, or if you think it is just a little extra paperwork, then you need to find the most experienced investors in your town, take them out to a long dinner, and ask them how their lives and profits have been forever changed because of small little changes and extra paperwork the government required in their business over the years. I assure you you will get an earful.
The smart old investors created new ways to run their business - they were forced to change.
Many other investors have been forced out of business because of law changes which eliminated their entire exit strategy or a way of buying houses.
Anytime you are taking advice from someone be sure to know how experienced they "really" are. There are a lot of pretender investors out there - they have read a lot of books/courses and understand the theory of investing but have rarely actually done a lot of deals. You can often find pretender investors selling expensive courses and seminars.
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