New Laws That Are Forcing Investors To Switch Things Up
A flurry of new laws are forcing real estate investors to adapt or be regulated out of their niches or entire businesses. Here’s what you need to know…
These are just some of the recent legal issues, new rulings and proposed laws that might make you want to restructure how you do business, your real estate investment strategy, and where you invest.
ADA Lawsuits
ADA lawsuits have been crippling businesses for years. This is especially true in California where they are rife and there are many professional ‘hitmen’ who are making a full time living from suing business owners. Yes, equality is important and so is providing reasonable facilities to those with disabilities. Yet, some of the mandates put on businesses now may catch you by surprise. Some investors may have thought they were in the clear by only operating online. A recent lawsuit against Domino’s pizza changes that. The supreme court shutdown an appeal by the company which is being sued by a blind man who says he couldn’t use their website.
Education
A recent suit against a real estate education company linked to two reality TV stars may shake up some of the many giant guru businesses that have popped up over the past decade. This is not a new concept. Though it is a warning to be very careful about the information you provide to others, and the legal risks of sharing real estate investing education. Especially if you are charging for it.
Hiring Help
The California Trucking Association just filed a new lawsuit appealing new rulings that could kill off 70,000 member jobs. The new employment rules aim to make it difficult for Californian companies to hire independent contractors instead of full time employees with benefits and protections under that classification. It is also an issue for Uber and giants like Apple and Amazon whose workforce includes many remote workers and contractors. There may have been some bad actors forcing contractors to work like employees. Though a new law of this severity could also kill off much of the progress made in the gig economy and millions of jobs. All while making it less desirable to hire people. Real estate investors may find a work around in asking their freelancers if they have a company they can bill as an outside vendor and service provider instead.
Taxes
Real estate investors also need to watch out for new taxes. If Bernie Sanders wins the 2020 presidential election he says he’ll implement a new 25% tax on house flippers, a vacant property tax, and new tax rate of 52% for high income earners. Investors may be able to avoid many of these bankrupting new taxes by switching from buy and hold and flipping houses to real estate wholesaling instead.
Rent Controls
California and New York have recently brought in sweeping new rent controls and protections for tenants that may prevent them from being evicted. That dramatically increases risk for lenders on properties there, and could put buy and hold investors in the red for a very long time. Expect this to push more to investing in other states in 2020.
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