JF3387: Inside Congress’s Attack on Institutional Investors ft. Logan Freeman
The Best Ever CRE Show
Introducing the American Neighborhoods Protection Act and Sponsor Ad
Discussion on a new bill proposing an annual fee for corporate owners of multiple single-family homes to fund housing assistance, targeting institutional investors.
Welcome the the Best Ever midweek news brief, a new series where we will highlight the top headlines CRE investors should be paying attention to this week, followed by a deep dive on a larger news topic or trend alongside a CRE expert.
Today’s Headlines
Six Interest Rate Cuts in 2024? A recent report from ING Economics predicts that federal interest rates will likely be cut six times in 2024. That’s a bold prediction based on what we’ve seen in 2023. The report cites three key factors: a labor market that it intentionally describes as “cooling, not collapsing,” a gradual easing of inflationary pressures, and — even though spending is still strong — the outlook points to financial pressure hitting millions of households, and soon, which should curb spending and slow overall economic activity.
Midwest Corners Market on Apartment Competition: In RentCafe’s 2023 Year-End Report, the company broke down the U.S. rental markets based on competition. And while Miami was the nation’s hottest rental market, the Midwest was the clear winner, with three cities in the top 5 and 10 of the top 30 most competitive rental markets in the U.S. for 2023.
Today’s Guest: Logan Freeman, co-founder and principal at FTW Investments, joins Paul Mueller to discuss two recent bills proposed in Congress targeting institutional investors that would reduce their ability to own single-family homes. The first — called the End Hedge Fund Control of American Homes Act — would impose tax penalties that would force big investors to sell off the single-family homes they own over a 10-year period, effectively banning them from owning them entirely. A second bill titled the American Neighborhoods Protection Act was also introduced, and this bill would require corporate owners of more than 75 single-family homes to pay an annual fee of $10,000 per home into a housing trust fund to be used as down payment assistance for families.
Key Takeaways:
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The title of the first bill may refer to hedge funds, but the definition within the bill says that it would target any applicable entity that “manages funds pooled from investors,” which encompasses a large swath of commercial funds and businesses.
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Should these bills pass, mobile home parks could be significantly impacted by institutional investors shifting their focus. As investors move out of single-family rentals and into multifamily properties and mobile home parks in an attempt to profit from the affordability crisis, rental rates for manufactured and small homes in these parks may rise sharply. This could benefit park owners but exacerbate the affordability crisis for renters living in mobile homes, who may struggle with rising housing costs.
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These Democrat-led bills are unlikely to pass in a Republican-controlled house; however, these bills (and those that have come before them) are an indication of what Congress is thinking about. So even if these bills don’t pass — and if Congress decides not to entertain the myriad of potential alternatives that could help with affordable housing — future attacks on real estate investors, institutional or otherwise, could be in coming down the pike.
Logan Freeman | Real Estate Background
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Co-founder and chief development officer of FTW Investments LLC, where their strategy involves acquiring, operating, and the eventual disposition of large-scale commercial real estate assets in key sectors and markets.
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Previous episodes:
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Portfolio: GP of 1,500 multifamily units across four states, plus 600,000 sq. ft. in the office, industrial, and retail sectors.
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Based in: Kansas City, MO
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Say hi to him at:
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