WATCH: "Mr. Wonderful" Warns Real Estate Investors, Avoid New York At All Costs

By Javier Sanchez | Wednesday, 21 February 2024 01:00 AM
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Views 3.2K

Kevin O'Leary, the head of O'Leary Ventures and a prominent figure on "Shark Tank," has issued a stern warning to real estate investors considering development in New York.

This cautionary advice follows a state judge's decision that former President Trump is required to pay $355 million in punitive damages in a civil fraud case.

Speaking on "Fox & Friends Weekend," O'Leary urged investors to disregard the "Trump factor" and view the situation as if it involved any other real estate developer with a significant presence in New York State. "Forget about the Trump factor," he emphasized. "It's not about that. What message does this send to anyone wanting to work in New York and willing to risk capital? … this judge arbitrarily decided on this amount. It's incomprehensible. No developer understands it."

O'Leary went on to describe the situation as an "atrocity," an "embarrassment," and an "assault on real estate." He reiterated these sentiments on "Cavuto: Coast to Coast" on FOX Business.

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"New York, like California, is already a losing state due to policy, high taxes, and competitive regulation," he stated. "I would never invest in New York now. And I'm not the only one expressing this sentiment."

According to O'Leary, very few business sectors generate the cash flow that real estate does. He argued that what Trump was found liable for is not much different from the typical negotiation that occurs between a potential debtor and a bank.

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He explained, "You approach a bank and request to borrow $200 million to construct a building. They ask, ‘What assets can we secure this loan against?’ You refer to a previously built building, and a negotiation ensues over the value of that building."

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With New York seemingly classifying some instances of this process as potentially fraudulent, O'Leary declared that New York has overtaken California as the top "loser state" for business.

He advised developers and investors to avoid the trend of incorporating on the coasts, with the exception of Florida, and instead consider North Dakota, West Virginia, Texas, or Oklahoma. "These are ‘winner states'," he asserted. "Why opt for a ’loser state' like New York?"

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"As investors, we vote with our capital," O'Leary added.

He also criticized California, previously at the top of his list, for "slowly but surely putting itself out of business" due to its unfavorable business climate. He also mentioned Massachusetts and high-tax New Jersey as problematic states.

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FOX Business host Charles Payne concurred with O'Leary's assessment, stating on Fox News that his advice to avoid New York for incorporation is "absolutely right." Payne noted that $1 trillion in business has already migrated from New York, primarily to Florida and Texas.

With Manhattan skyscrapers operating at around 50% capacity, a return to full use seems unlikely. He also cited New York's crime crisis and ever-increasing regulations as deterrents for businesses.

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