new administration to solve the interest rate problem may find themselves entirely out of luck, so a new market or strategy must have the “wiggle room” to allow generation of returns even if interest rates do not perform as hoped. LEGISLATION: A POWERFUL NEW MARKET DRIVER In the “Lord of the Rings,” the hobbit Frodo and his friends journey in search of a “ring to rule them all.” This ring binds anyone who places it upon their finger. Only those who are truly resilient by virtue of not being human can avoid being governed by it, even temporarily. In real estate, everyone is ruled by something even more powerful than a supernatural jewelry item. We are ruled by laws, policies, and regulations. We have no choice. If a law exists in a market where we want to invest, we better plan to abide by it. In today’s world, legislation is playing a bigger and more influential role in real estate than ever before, and widely divergent philosophies around how housing and development should be regulated are creating stark divides between markets where investors are welcomed and those where they are left undefended or even ostracized. For example, consider the controversial elements of “squatting,” a practice wherein a party who does not own or have any rights to inhabit a property literally breaks into the property, changes the locks, and moves in. Most investors would assume this practice is entirely illegal and, as such, infractions would be easily remedied. Sadly, in many states, these squatters can accrue more rights than the owners themselves if they manage to remain undetected for a long enough time.
Real estate is facing the ‘perfect storm’ as the cost of borrowing rises, rents level, and what once appeared to be manageable debt becomes slowly and steadily insurmountable.”
They may be able to position themselves in a property indefinitely, stalling evictions and even suing for damages or demanding financial assistance in order to move on (and out). In 2025, particularly given the number of natural disasters, states and municipalities that protect the rights of property owners over those of squatters and that effect legislation permitting prompt, effective action when a squatter is discovered will play host to the most successful and attractive markets in the country. WE’RE DUE FOR A BROADER PERSPECTIVE Whether an investor has been in the business a few months or a few decades, 2025 is going to be a year like no other for the real estate space. Real estate is facing the “perfect storm” as the cost of borrowing rises, rents level, and what once appeared to be manageable debt becomes slowly and steadily insurmountable. Proceed with caution, yes, but do not be afraid to proceed. There will be many
opportunities to do a lot of good in the coming year and to generate positive results for your real estate business in the process. Just be very sure you are considering every angle and factoring every economic element before committing to a new type of investment.
BRUCE MCNEILAGE
Bruce McNeilage, the CEO and cofounder of Kinloch Partners, is a passionate advocate for housing affordability and homeownership. He invests heavily in Nashville, Tennessee, as well as throughout the Southeast. Learn more about his projects, including single-family built-to-rent communities and the Solo East condominium project at www.Kinlochpartners.net.
46 | think realty magazine :: march - april 2025
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