Big Tech Is Spending Billions On Real Estate During Pandemic, While Artificial Intelligence Takes Over Real Estate Investing
Apple Spends $1 Billion Dollars
Apple has plans to spend upwards of one billion dollars to build a new Raleigh, North Carolina campus that will employ 3,000 people.
In addition to Apple’s 1 billion dollar Austin, Texas campus opening some time in 2022, the new campus plans, located in North Carolina’s Research Triangle area, is, quoting Kif Leswing, CNBC “a sign of Apple’s continued expansion beyond its headquarters in Cupertino, California, where most of its engineering has been based.”
As the need for housing located outside of the top tier real estate market of Silicon Valley increases, Apple is not alone in making similar real estate moves as other tech juggernauts like Oracle, Google, and Amazon.
Previous to our current times, even though on a steady decline, commercial office space was utilized in many American’s daily work routines. Since the pandemic began, many office space real estate investment trusts have seen their value descend as remote work from home has become a necessity more than ever before. But, there are some signs of slowly reviving commercial real estate life. Amidst the viral conditions of the world today, companies like WeWork, widely considered as the world’s biggest landlord, are still pushing forward in attracting investment interest by way of SPAC (Special Purpose Acquisition Company) with a new valuation of 9 billion dollars, much lower than it’s January 2019 valuation of 47 billion dollars.
President Biden Goes After Real Estate Investors
President Biden seeks to potentially raise taxes on real estate investment moves.
As home prices increase steadily, mostly due to current all-time inventory lows, the hike has currently caused the most concern to the real estate investing community only to be piggybacked by Biden’s plan to eventually increase tax rates on real estate investing transactions and capital gains, therefore putting a future squeeze on investor pockets.
President Biden is requesting higher taxes on real estate transactions with gains of more than $500,000. The tax plan aims to help cover the $1.8 trillion American Families Plan, which will supply funds into child care, paid family leave, and education programs.
One of the main sticking points for the REI community is the current administration’s focus on the 1031 exchange transaction, which allows investors to defer paying taxes on real estate by rolling profits into their next property. The congressional Joint Committee on Taxation estimated that 1031 exchanges may save investors 41.4 billion dollars in taxes from 2020 to 2024. For investors who are interested in truly building generational wealth with the option to pass property on to their heirs, this has been an industry staple, but now may possibly become much more difficult to navigate if the Biden administration succeeds.
Grant Cardone Wins Lawsuit
Grant Cardone tramples lawsuit of an investor who accused him of misleading investors by misstating monthly profits.
Despite the utilization of the prosecution’s display of Cardone’s occasionally considered brash approach to teaching sales, financial education, and real estate investing on social media, U..S. District Judge John F. Walter dismissed a lawsuit filed by dissatisfied investor Luis Pino in Los Angeles against the real estate crowdfunding guru and his Aventura-based company Cardone Capital.
After Judge Walter’s decision, Cardone stated “It is a shame that in our society, ambulance seeking, vampiric blood-drinking litigation attorneys attempt to threaten people like me who are trying to build businesses. The case was completely baseless. There was zero truth to the allegations.”
Quoting The Real Deal, “The lawsuit cited a Sept. 17, 2019 Instagram video post in which Cardone said a $220,000 investment could net a $660,000 position in one of the funds, and could also earn about $12,000 to $15,000 in distributions to investors. Pino also claimed, among other allegations, that Cardone’s statements about the funds making monthly distributions were misleading because Cardone suspended payments in April and May 20, at the beginning of the Covid-19 pandemic.” Cardone also said, “We created Cardone Capital to help the little guy, and we were validated. We have continued to buy about one billion dollars’ worth of real estate while this was going on. They saw that I have a following on Youtube and Instagram, and that I have a big mouth,” he said. “I knew we wouldn’t lose because we didn’t do anything wrong.”
Rehabbers Face Unusual Stiff Competition
Rehabbers are currently facing out of the ordinary circumstances. As the US residential markets tighten further, the average, traditional home buyer seems to be making it more difficult for real estate investors to acquire properties for fix and flip.
Within the case of rehabbing in our current market temperament of high supply costs and limited inventory, it’s not atypical for bidding wars to emerge even for run-of-the-mill homes. Quoting RealtyTrac executive vice president, Rick Sharga, “It’s interesting that they’re having a harder time competing with traditional home buyers than bigger investors, considering that typically those homeowners are at a disadvantage compared to investors, who can often transact more quickly using cash or non-traditional financing.”
Surveyed investors don’t foresee many foreclosures coming to market any time soon, but do continue to see ongoing frustrations with traditional home buyers combined with the lack of inventory and rising home prices. When asked about the ending of this unusual property competition, investors predict that this will endure for at least the next six months.
Artificial Intelligence Is Impacting Real Estate
AI (artificial intelligence) is making major impacts to the real estate industry that some are eager to implement and others are fearful that AI will put them out of business all together.
With sales, leasing, marketing, and property management, coupled with big data, AI is proving to be a powerful tool to assist the real estate industry in many positive ways.
AI is also showing to be an important mechanism when it comes to development and investing. Quoting The American Genius, “With its ability to quickly analyze a staggering amount of data, AI lets investors and developers make better data-driven decisions. More responsive financial modeling helps identify ideal use cases and project ROI under multiple scenarios using real-time data. Pulling in alternative data — say, environmental changes or infrastructure improvements — goes beyond traditional data points and can identify investment opportunities, such as neighborhoods beginning to gentrify. In fact, alternative, hyper-local data has become even more important as COVID-19 continues to upend property valuation models.
AI’s crystal ball comes from recognizing patterns in the data and continuing to learn from new information. It can forecast risk, market fluctuations, property values, demographic trends, occupancy rates and other considerations that can make or break a deal.
And it does all of this more efficiently, more accurately and less expensively than manual methods.”
To research farther, see links and more from this report in the news notes.
https://unitedstatesrealestateinvestor.com/blog/united-states-real-estate-investor-news-may-10-2021/
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