Mid-Year Reflection, The Big Beautiful Bill, & More

release edition [027]

read time [7 minutes]

Welcome to The Multifamily Download, a weekly newsletter where I provide institutional insights to help you build an exceptional Multifamily career.

Today at a Glance:

OBBB: Implications
TMD Pro: Feedback Request
Mid-Year: Reflection Questions
Weekly Listen: Walker Webcast

My go-to for CRE research:

The Big Beautiful Bill

President Trump's controversial "One Big Beautiful Bill" has now been signed into law.

Like it or not, this bill is now law, so it's time to explore the potential implications for Multifamily.

First, a few caveats. One, I'm not an economist, nor am I an attorney, nor am I a financial advisor, nor am I a CPA, so the following is just my opinion. Please do your own research.

Two, the bill was just passed a few days ago, so this is just what I know so far and new information may emerge.

That said, I am a market participant, and as such, I am eager to unpack how this new bill will impact our Multifamily sector.

This is my first take. Let's dive in.

The Good

Bonus Depreciation

The OBBB reinstates 100% bonus depreciation for qualifying renovations, property improvements, and certain building components, allowing immediate full deductions instead of spreading costs over years. This can significantly reduce taxable income for multifamily owners undertaking capital improvements.

Success Strategies:

1. Accelerate renovation plans to occur during 2025-2028 to maximize deductions while the provision is active and available.

2. Consult tax advisors to fully understand and maximize the reinstated 100% bonus depreciation along with a cost-segregation analysis.

1031 Exchanges

The bill preserves Section 1031 exchanges, allowing multifamily owners to defer capital gains taxes when swapping one investment property for another, fueling reinvestment and portfolio growth.

Success Strategies:

1. Conduct ROE, or Return-on-Equity, analyses for your portfolio to understand how the ROE compares to alternatives, such as a 1031 exchange. (Bonus: Brokers, do this for every single client and couple it with a 1031 exchange scenario. Thank me later).

2. Consider consolidating and/or modernizing your portfolio into a more concentrated geographic area and/or into newer built properties via 1031 exchanges. Yes, this creates concentration risk, but the upside could be worth it if the properties are closer, newer, or have stronger ROE.

LIHTC Expansion

The OBBB expands the LIHTC program by reducing the bond requirement from 50% to 25%, making it easier for developers to finance affordable housing projects. This incentivizes multifamily owners to develop or convert properties for low-income tenants.

Success Strategies:

1. Explore adding LIHTC to your portfolio, particularly if you already invest in high-demand urban areas that are expediting LIHTC development or conversion opportunities.

2. Partner with a LIHTC expert to add complimentary strengths to your team as you grow or recalibrate your portfolio.

The Bad

Medicaid / SNAP Cuts

The OBBB has significant cuts to both Medicaid and SNAP programs that many rely on for healthcare and other everyday necessities. (Though I'm not going to comment on the specific or individual implications or impact of these cuts).

Success Strategies:

1. Revisit screening process to ensure only qualified applicants are being accepted as future residents at your properties based on the criteria that you, your management team, and/or your attorneys deem objective and fair according to Fair Housing.

2. Offer resources to residents to empower them with respect to budgeting, job training, job fairs, or other practical resources, particularly if those residents may be at higher risk of financial hardship due to higher (~40%+) rent-to-income ratios.

Sticky Interest Rates

The bill includes tremendous new spending measures that will have implications for many years to come. Continued fiscal pressure on the U.S. Government and the associated debts may reduce confidence in U.S. Bonds, thus raising the market's expectation for the interest rates that those bonds must pay to make them attractive. The resulting higher interest rates would make loans less affordable, increase debt service, and challenge property valuations.

Success Strategies:

1. Locking in fixed rates today could serve as a hedge against future higher rates if you believe rates will be higher.

2. Focus on buying and holding properties that provide sufficient cash flow and can be stressed at higher interest rates in the event that you must refinance in the future before there's an opportune time to sell (i.e. an in-place DSCR of 1.35x or more).

The Future

For now, there are largely two camps when it comes to the One Big Beautiful Bill: Those that think it will be the death spiral that leads to America's fiscal demise and insolvency, and those that think it will rejuvenate a top-heavy service and tech economy into the globally dominant economy with abundant foreign direct investment and tremendous GDP growth.

Regardless of which camp you find yourself in today, my biggest reminder is this:

Focus on what you can control. Study the market, learn from others, and execute. It's that simple.

TMD Pro

As you probably saw in last week's newsletter, I plan to launch a paid newsletter that includes things like:

The Multifamily Download Pro
Access to exclusive Office Hours
Invites to future in-person events
Discounts on products & services
...and more in the future!

That said, I've been thinking more about how I'd like to roll out this paid newsletter.

The short answer is that I'm not 100% sure yet.

I know that I wrote "starting in July, The Multifamily Download will only be available weekly to TMD Pro members".

But, as I consider the future of this newsletter, I'm not sure exactly how I'd like to approach it.

So I'm opening it up to your feedback.

What would you like to see?

Hit reply and let me know, and please vote below.

P.S. did you miss seeing The Multifamily Download in your inbox yesterday morning?!

This is the first non-Saturday weekly edition that I've published since I began writing 100+ weeks ago.

Lastly, if you'd like to financially support this weekly newsletter then you can do so by clicking here.

I appreciate you reading The Multifamily Download!

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Mid-Year

Can you believe that 2025 is halfway over?!

As we enter Q3 and the back half of 2025, I would encourage you to spend time reflecting on the first half of your year.

In case it's helpful, here are some of the questions that I'll be pondering in the coming weeks.

1. What did I do well that I should do more?

2. What did I do poorly that I should improve?

3. What did I do just okay that I should avoid?

4. What did I not do that I should do?

5. What activities gave me more energy?

6. What activities were an energy drain?

7. How do I feel about what I accomplished?

8. What could I do more or differently to feel more fulfilled?

9. What is the quality of the people around me?

10. What can I automate, delegate, or eliminate?

Questions like these are powerful introspective questions because they can unlock hidden insights that have a tendency of getting buried amid the busyness of life.

Taking time to slow down, reflect, and recalibrate a few times per year can be incredibly powerful. There's no better ROI on time than investing 1 hour that could potentially change the trajectory of the next 6 months or more.

Weekly Listen

This week's listen is a special episode of the Walker Webcast with Willy Walker.

It's a compilation of guests that embody values that define the American spirit: service, courage, resilience, and a commitment to the common good. This is the perfect episode to conclude this Independence Day weekend.

You can listen to the full episode here.