As a real estate investor, I’m often asked: “What inning do you think we’re in now?”
Candidly, I’m not sure the baseball analogy – that so many in our industry use – really fits the real estate cycle. If baseball was like real estate, it’s entirely possible we’re in extra innings or are playing the second game of a double header.
The challenge is that each real estate cycle is uniquely different from prior ones. Whereas, baseball games are fairly predictable. Each baseball game usually has nine innings, and every game has the milestone “seventh inning stretch” along with the “last call for alcohol.”
Much has been written about the new tax code, known as Tax Cut and Jobs Act or TCJA, that was approved by Congress in late December 2017. However, I haven’t seen anything written about one particular unintended consequence of this new tax code. A consequence that is very relevant to real estate investing. The unfortunate truth is that the new tax code puts a wedge between real estate investors and real estate sponsors/developers based on how profits are taxed for each of the participants in the same deal. You might ask why this matters? Real Estate investing is not just about location. It’s also about timing.