David Crown, CEO and Founder of L.A. Property Management Group and Crown Commercial Property Management.
President Donald Trump is now embarking on his second term, and several policy initiatives are poised to influence the national real estate landscape, as well as the local landscape here in Los Angeles.
I wanted to take some time to reflect on a few of the changes we could see in the coming year that property owners and investors should keep an eye on to maximize their property’s value.
Depreciation Benefits
Depreciation is a powerful tool for rental property owners, allowing them to recover the cost of a property over time. Commercial property can be depreciated over a 39-year straight line, and residential property can be depreciated over a 27.5-year straight line. But if you’re reading this, you’re likely a savvy investor, so I’m sure you already knew this.
What you may not have heard is that depreciation gained significant benefits during Trump’s first administration, and now that there’s a second administration, there might be stronger deductions in the first year.
Policies like bonus depreciation allow property owners to reduce their taxable income, which often leads to reinvestment. In Los Angeles, where property values are high, this could result in a significant annual deduction and stronger cash flow.
Trade Tariffs And Construction Costs
The administration’s imposition of tariffs on steel and aluminum imports is anticipated to escalate construction costs, particularly for mid- and high-rise developments that heavily rely on steel. Historically, similar tariffs have led to increased commodity prices and construction costs.
Developers can respond by stockpiling materials and expediting projects to mitigate the financial impact. If you can store product, this may be a good time to consider doing it. I’ve noticed some developers are even going out to lease storage space just for this purpose.
Privatization Of Mortgage Entities
The administration is exploring the privatization of government-sponsored enterprises (GSEs) like Fannie Mae and Freddie Mac. This move could reduce federal involvement in the mortgage market, potentially leading to changes in mortgage availability and terms.
Privatization could encourage more competition and innovation in mortgage lending, so staying in close contact with loan vendors regarding these changes could pay off in the near future.
Housing Agency Workforce Reductions
Proposed staffing cuts at the Department of Housing and Urban Development (HUD) and related agencies could disrupt services essential to affordable housing initiatives. The administration plans to eliminate approximately 4,000 positions, affecting programs related to disaster recovery, rental subsidies, discrimination investigations and support for first-time homebuyers. Such reductions may lead to delays in affordable housing projects, so if you’re an investor with a HUD-related project, keeping a close eye on the changes is probably going to be crucial to the success of the project.
The administration also halted at least $60 million in funding designated for affordable housing projects, affecting numerous initiatives nationwide. This decision stems from fund freezes, staff reductions and contract cancellations by the HUD.
Moving Forward
Real estate industry leaders must remain adaptable as they face shifts in federal policy. I’ve noticed successful investors are proactively managing risk by diversifying their portfolios, building strong public-private partnerships and staying engaged with national and local industry associations.
To stay informed, the smartest investors I know keep a close eye on resources like HUD’s Office of Policy Development and Research, the Urban Land Institute and trusted advisory firms. Tools like scenario planning and financial modeling can help you prepare for a range of policy and market outcomes.
A key lesson in long-term success is balancing optimism with caution—pursuing bold opportunities while maintaining disciplined risk management is essential for investors who want to remain resilient through both growth periods and downturns.
As the Trump administration implements its policy agenda, the U.S. real estate sector is poised for significant changes. Stakeholders will need to navigate these developments carefully, balancing optimism with caution as the administration’s policies unfold.
The information provided here is not investment, tax or financial advice. You should consult with a licensed professional for advice concerning your specific situation.
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