Trump Presidency – How Will It Affect Real Estate Crowdfunding

A very happy new year to all

The world was shaken (back in November last year) as Donald Trump triumphed in the Electoral College to become president elect and defeat his democratic opponent, Hillary Clinton who had been profoundly favoured. This has been one of the most shocking disappointments in American political history and what about the effect this could have on the peer to peer lending and crowdfunding sector?

Trump’s triumph also stunned the global markets straight after election day, with future markets hit especially hard. As the commercial world starts to make sense of this election and what it means for everyone’s future, how would people, especially those in the real estate crowdfunding market, react to this?

uJordan Fishfeld of CFX Markets in Chicago speculated that from a merely financial markets viewpoint, the new administration could be “…an opportunity for growth in this industry, albeit a costly one. One of Trump’s main platforms was that regulation is hurting business…I think we can expect to see a reduction in oversight and regulation, which should benefit the flow of capital to small and medium-sized businesses, which will be tremendously beneficial for crowdfunding.”

Co-founder and CEO of Groundfloor, Brian Dally agreed with the idea of Trump-as-opportunity but pointed to another reason: “This election result appears to be creating volatility in financial markets. Volatility tends to attract more investors into real assets, like real estate.”

Marty Coyne, CTO of Connected Investors, and the others are even more excited. Coyne recapped the idea that Trump and his Republican legislature would help commerce by scaling back regulation, specifically quoting Trump’s criticisms of the Dodd-Frank financial regulation law that was one of the greatest accomplishments of Barack Obama’s first term. He also uttered a sentiment shared by Jordan Uditsky, a real estate attorney with Gould and Ratner, about Trump’s plan to reconstruct the nation’s infrastructure and its positive effect on the real estate industry.

“Trump is legendary for his strategies and challenges in attracting capital to his projects. Because of his background, I think he will be favourable to anything that would help real estate investors find capital.”

“Now we have an entrepreneur in the White House, who’s going to want to foster other entrepreneurs…with his infrastructure projects, more people are going to be trying to do developments, which means more people trying to raise capital.”

Writer and crowd finance educator, Dara Albright reverberated this opinion and drew contrasts to the financial ramifications of the UK’s Brexit vote, which she argued was an “opportunity”, like a Trump presidency.

“A Trump presidency will help us return to investing into one another, community investing, peer to peer lending investing, etc. People have had it with the volatility of the markets, they feel like it’s a rigged system, and I feel that this is an opportunity for our industry to make a difference.”

But not everyone was optimistic. Mark Roderick, a shareholder of Flaster Greenberg PC who maintains a crowdfunding blog, was much more reserved in his evaluation of any welfares the new presidency might bring.

“My overarching concern, having seen the overseas markets and the futures on [election night]…is that the election of Trump and the policies that he and the Republican congress are about to enact are going to lead to a recession,” Roderick said.

And he added: “People are not going to choose real estate. If people are afraid, they’re going to put their money into the money markets, which is what they should do.”

With these different reactions and predictions, it’s evident that there’s a spectrum of ideas and expectations about what the new presidency can do for those in the real estate crowdfunding world, but the prevailing tone is one cautious optimism.

Perhaps the best reaction was Brian Dally’s when he said: “Because real estate crowdfunding is still new, still growing, it’s gonna grow no matter what happens. Real estate crowdfunding is on its way up.”

I believe that for the UK peer to peer lending and the crowdfunding market in general, it will cause a drag effect following on from what ever happens in the USA for 2017 and therefore have a small cushion of time to re-form and restructure any changes that may be deemed riskier or adverse to this already mixed opinion and alternative finance industry.

Either way, the Trump affect for now breathes a new wave of optimsim to the world stage and overall there will be many other political and economic distractions and events throughout this year making this seem just a minor irritation if Trump doesn’t perform and deliver as his successful campaign implied.