How WIll A Trump Presidency Affect Multifamily | How To with Gino Barbaro

[00:00:00] Hello and welcome. My name is Gino Barbaro, one of the co-founders of Jake and Gino. And in this video, if you want to learn how a new Trump presidency is going to affect the overall economy and more specifically multifamily, then I want you to listen on.

[00:00:16] Very interesting, this whole election cycle for the last three months, that's all we've been hearing is Trump, Kamala, who's going to win? It's been such a drag.

[00:00:27] But now that it's all over, it's put past us. I want to really focus on not politics, but policy. And I think that's the first thing that you need to do as you're speaking to somebody, especially in the business world.

[00:00:41] Let's put aside politics. You know, we're coming up on Thanksgiving, we're going to go meet and hopefully spend time with family. Not everyone's going to agree upon everything.

[00:00:51] But let's look and let's parse out the political aspect of it to what the policy looks like. And that's what I'm going to be doing in this video, because it's really important.

[00:00:59] Because there's certain things that Trump has to do to help multifamily and to help real estate and the overall economy.

[00:01:08] So the first thing that Trump needs to do, and it wasn't talked about enough, I rarely heard anyone mention this.

[00:01:17] If we want to take care of inflation in this country, first of all, inflation is an increase in the supply of money.

[00:01:23] The overall effect of inflation is higher prices. Now we've seen that.

[00:01:29] And everyone made the argument on the Democratic side that Trump won because people didn't want to pay more for eggs.

[00:01:36] And that's part of it. You can talk about the other policies, the other stuff that was going on in the country.

[00:01:41] But the Democrats could have done this as well. And I hope Trump does this with this creation of what he calls DOGE, the Department of Government Efficiency.

[00:01:52] If we can get inflation under control, that money that's coming out and being printed, if you understand that we're paying debt right now in the country, I think it's around 11% of the GDP.

[00:02:09] Not sure exactly how much that number is. All I know is the cost of the debt right now to the country is more than the defense spending.

[00:02:17] Let that sink in for a second. We are paying more on the debt, interest on the debt, than what we spend for defense.

[00:02:24] This has only been exacerbated by when Trump got into office. That was one of the things that I talked about.

[00:02:29] I didn't like how he was ramping up spending. This time around, hopefully he gets people out of the swamp and implements his policies.

[00:02:37] But when he was in there, he was just as guilty as the Democrats printing money.

[00:02:42] 2020 comes, all of a sudden the floodgates open and it's continued.

[00:02:46] We need to stop this reckless spending. You know, when we're looking at 61% of the Pentagon budget, it's unaccounted for.

[00:02:54] When the Pentagon's failed their audit for the seventh time, we have to push back.

[00:03:00] It's pretty simple how to figure out how to take inflation under control.

[00:03:05] Stop wasting money. Stop having to print new money and issue new bonds to continue this reckless spending.

[00:03:13] You know, the government, I looked at a website the other day and it said that the government owns or rents out over 7,900 buildings for their various offices and agencies.

[00:03:24] There have been, I think, over 400 agencies created since the beginning of our country.

[00:03:29] That's almost two a year on average.

[00:03:32] Now you say to yourself, they're created to start a mission.

[00:03:35] Now that the mission is done, should they stop?

[00:03:38] No, they continue. Look at the Department of Education.

[00:03:41] It was started back in the late 70s and it had an amazing mission.

[00:03:45] It was for the segregation of schools.

[00:03:48] African-Americans and whites, they were there to stop that, to prevent that, especially in the South.

[00:03:52] Well, once the mission was over, they should have stopped the Department of Education.

[00:03:56] Their budget's $70 billion.

[00:03:59] Do we need to spend that?

[00:04:00] Does that have to be a federal program or should it go back to the states?

[00:04:03] These are things that we're going to have to quarrel about and have to have discussions about.

[00:04:06] But one thing's for certain, if we don't stop this reckless spending and we don't get the debt deficit under control,

[00:04:12] we are not going to get inflation under control.

[00:04:14] And that pulls money out of the private sector and into the public sector where it gets completely wasted.

[00:04:20] So if he does that, that's going to be great for the economy.

[00:04:24] It's going to be great for multifamily.

[00:04:26] We want more money going into the system.

[00:04:29] And as interest rates drop, as they're dropping, because right now we're about 6% interest rates for community banks.

[00:04:37] If you're looking out to get a mortgage, it's really stalled the economy.

[00:04:41] And you've seen that for the last 12 to 18 months.

[00:04:43] Real estate is not where it was 12 to 18 months ago.

[00:04:45] We need to get those rates dropped.

[00:04:47] We need to start stimulating the economy.

[00:04:49] But we can't do that until we have inflation under control.

[00:04:53] The Fed can do whatever they want.

[00:04:55] The 10-year treasury went up.

[00:04:58] That's what we use in commercial real estate to actually go against what commercial rates are, commercial mortgages are in multifamily.

[00:05:05] Well, that number went up.

[00:05:07] The 10-year treasury went up to 4.4%.

[00:05:10] That means a rate in multifamily.

[00:05:12] If you're looking for debt right now, you're 150 to 200 basis points above that.

[00:05:16] So you're between 6% and 6.25%.

[00:05:18] That's why there are a lot of deals that aren't getting done.

[00:05:20] The cost of capital is too high.

[00:05:23] So let's take care of inflation.

[00:05:25] Let's do what you said you were going to do, President Trump.

[00:05:27] Let's get the spending under control.

[00:05:29] Let's be more efficient.

[00:05:30] And let's be wiser.

[00:05:31] Let's be more transparent.

[00:05:33] I think that's what we all want.

[00:05:35] Especially business owners.

[00:05:36] Because we understand income, expenses, NOI, or whatever is left over.

[00:05:41] That's the money left over.

[00:05:43] We want this thing balanced.

[00:05:44] We're sick and tired of wasting money, especially taxpayers' money.

[00:05:49] We want these wars to end.

[00:05:50] We want the countless money going over there, being recycled back here and back and forth.

[00:05:56] Is it even getting to Ukraine?

[00:05:57] Let's stop these senseless wars.

[00:05:59] Let's stop this senseless spending.

[00:06:01] Now, the next one.

[00:06:03] I have this little thought about what's going on with these markets.

[00:06:07] They're getting very frothy.

[00:06:09] Now, we're talking specifically multifamily.

[00:06:11] This is not something that Trump can or can't do.

[00:06:14] But you're seeing what's going on.

[00:06:15] There is pent-up demand for these assets.

[00:06:19] Any type of asset that can create a return.

[00:06:21] Right now, there's not a lot of transactions going on in multifamily and residential.

[00:06:26] But if you're looking at Bitcoin right now, Bitcoin right now, as of this recording, is at $93,000.

[00:06:34] It's up 40% in one month.

[00:06:37] It's signaled that there's so much money sitting on the sidelines that's just waiting to be deployed.

[00:06:42] And they see Bitcoin as that alternative.

[00:06:45] And that's what they're doing.

[00:06:47] We need these rates to drop in multifamily.

[00:06:50] We need – and this is what's important.

[00:06:52] If you're looking to get into it and saying, I'm going to wait for the market to crash, it may pass you right by.

[00:06:57] You need to understand right now that if you don't get in right now, it may pass you by.

[00:07:04] Once rates start dropping, you're going to see a lot more transactions.

[00:07:07] You may see pricing may not go down from where it is right now.

[00:07:11] Because if you're seeing the cost of capital drop, prices may not drop.

[00:07:15] Just be aware of that.

[00:07:16] You're seeing Bitcoin right now in bubble territory.

[00:07:19] You're getting all the people in and you're getting suckers coming in at this point.

[00:07:23] And when you're seeing everybody talking about it, go back to 2021 and 2022 multifamily.

[00:07:29] It was the same thing.

[00:07:31] You have waitresses, waiters.

[00:07:33] You have Uber drivers.

[00:07:35] They're all talking about real estate.

[00:07:37] That's when you know that you're in bubble territory.

[00:07:39] Now, I don't know what Bitcoin is going to do long term.

[00:07:42] I don't really care.

[00:07:43] To me, it's a very tough decision to invest in something where it's instant gratification.

[00:07:50] I can look at my Bitcoin and listen, I'm up about 30% as well over the last two months.

[00:07:56] And I can see it and I can exit it.

[00:07:57] It's a very difficult vehicle to really create wealth long term.

[00:08:01] You need to be disciplined.

[00:08:03] You need to be able to buy in the dips.

[00:08:04] You need to be able to hold long term.

[00:08:06] You need to be able to implement stop losses.

[00:08:08] A lot of that stuff when you're trading.

[00:08:10] I know a lot of people who made money in Bitcoin that are looking to get into multifamily.

[00:08:15] That's the interesting thing.

[00:08:16] Now, as we continue on with Trump, talking about the inflation, talking about getting all these people approved, he needs to get control.

[00:08:25] And for me, when we look at what needs to happen, what you need to specifically do for your multifamily portfolio, it's all about buy right, manage right, and finance right.

[00:08:38] And it's all about picking a market where jobs are going.

[00:08:41] And that's another thing that Trump needs to do.

[00:08:43] He needs to create real jobs, private sector jobs.

[00:08:48] He needs to spur the economy.

[00:08:49] He needs to get manufacturing back into this country.

[00:08:52] And when he talks about these tariffs, everyone freaks out and says it's a tax.

[00:08:56] Well, what I think he's doing is he's negotiating a fairer deal for us.

[00:09:00] Whereas these countries have these tariffs that are so onerous on us that we can't make anything in this country and export it to them because it costs too much.

[00:09:08] He's trying to level the playing field.

[00:09:10] It's as if when he took over and we were paying for the majority of NATO and all he said is pay your fair share.

[00:09:16] That's all he's trying to do with these countries is to make them pay their fair share.

[00:09:21] So let's look at buy right, manage right, finance right.

[00:09:24] Another thing that Trump can do, he can spur affordable housing.

[00:09:28] He can spur building because the only way you get affordable housing under control and provide more affordable housing is not by rent control.

[00:09:37] It's by supply.

[00:09:39] Let's get some of these federal lands to be able to build.

[00:09:42] Let's get some of this money in the private sector, whether it's let's continue the opportunity zone, see how we can make that better.

[00:09:50] Let's give tax incentives and tax breaks and tax credits to companies that can build.

[00:09:55] Let's get these onerous regulations a little less burdensome.

[00:10:00] It's ironic that Boston, of all places in the last week, they announced that they want to have $100 million fund to be able to create affordable housing.

[00:10:09] They see that there's a huge need and it's so regulatory.

[00:10:14] It takes so long to be able to build in Boston.

[00:10:16] It takes so long and it costs so much.

[00:10:19] Let's start looking at those regulations to be able to have regulations because we need regulations in this country.

[00:10:24] You can't let these corporations just run roughshod and do what they want.

[00:10:28] You need to keep them and open the level playing field.

[00:10:31] What I love, Elon Musk made this reference.

[00:10:35] You've got a playing field and you've got referees.

[00:10:37] You need refs on the field, but you want the players to play.

[00:10:41] So how many refs do you need?

[00:10:43] Can you do with three refs?

[00:10:44] That may be good.

[00:10:46] Can you do with five refs?

[00:10:47] That still may be good.

[00:10:48] But as you start adding more refs, aka regulations, the players have a harder time to play.

[00:10:56] It's going to be a lot slower.

[00:10:58] There's going to be a lot less innovation.

[00:11:01] So let's remove these regulations.

[00:11:03] A lot of these that are just onerous and that are slowing things down.

[00:11:06] But let's at least have some to protect the environment and to protect the citizens, to protect the consumer.

[00:11:12] We need those.

[00:11:13] But if Trump can figure a way out to get the supply up in all markets, that will not only help the affordable housing issue, but it will help rents.

[00:11:21] Rents won't have to go up 10 or 12% a year because you're going to have competition coming online.

[00:11:27] Now, ultimately, as I wrap this up, if you're thinking about getting into multifamily, don't wait.

[00:11:35] Now is the time.

[00:11:37] The brokers are still taking your phone calls.

[00:11:39] There's still the ability to network.

[00:11:42] It's part of the cycle right now where people are hitting the exits.

[00:11:47] You should be going the other way.

[00:11:48] Be contrarian.

[00:11:50] Do the opposite.

[00:11:52] When everyone was buying deals in 21 and 22, Jake and I, we took a little bit of a pause.

[00:11:57] We saw that prices weren't making sense.

[00:12:01] So we're buying smaller deals.

[00:12:03] Now prices are starting to stabilize.

[00:12:05] They're starting to come down.

[00:12:06] Debt is getting a little bit harder to get right now.

[00:12:10] But the deals will come back.

[00:12:12] And I want you to be ready.

[00:12:15] Now, what I want you to do is if you want to get some really great content that we put just for our YouTube subscribers, subscribe to the Jake and Gino channel.

[00:12:25] Hit that subscribe button.

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[00:12:33] Jake and I do a weekly masterclass Monday with the Jake and Gino community.

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[00:12:45] Now, ultimately, remember, at this Thanksgiving holiday and even for the Christmas holidays, think about politics versus policy.

[00:12:56] You're only there to discuss policy and how to move this country forward.

[00:13:01] Let's not talk about politics.

[00:13:03] Focus on policy.

[00:13:05] Thanks for spending part of your day with me here at Jake and Gino.

[00:13:09] And I will see you on next week's How To.

[00:13:12] Take care, everybody.