New York Sees Investor Exodus Post-Trump Ruling

By: Alex Trent | Last updated: Mar 05, 2024

Prominent New York investors and real estate developers are starting to speak out in response to the recent Trump ruling in New York City. Some investors in the city are viewing the legal ruling, which found Trump liable for fraud, as a threat to future business dealings in the Empire State.

The investor speaking publically on the ruling, Kevin O’Leary, didn’t hold back on criticizing the judge and the government of New York.

What Was the Ruling?

A ruling in February against former President Donald Trump found him liable for fraud, with the court slapping him with a $454 million penalty, according to the BBC. Originally, the judgment was $355 million, but the amount that Trump needs to repay in the civil fraud case has ballooned with interest.

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Trump is reportedly accruing nearly $112,000 per day in interest if he does not pay the judgment.

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Mr. Wonderful Comments on the Case

Kevin O’Leary, famous for his role on the hit show “Shark Tank”, expressed his negative sentiments on the case in an interview with Fox Business.

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Kevin O’Leary, aka Mr. Wonderful, speaks with Andrew Scheer.

Source: Andrew Scheer/Wikimedia

“This award, I mean, just leaving the whole Trump thing out of it and seeing what occurred here … And I’m no different than any other investor, I’m shocked at this,” O’Leary said.

O’Leary Unable to Understand the Decision

During the Fox Business interview, O’Leary expressed his frustration with the decision, saying that it doesn’t make much sense.

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A photo of Kevin O’Leary walking down a hallway.

Source: Andrew Scheer/Wikimedia

“I can’t even understand or fathom the decision at all. There’s no rationale for it,” he said. O’Leary is the chairman of O’Leary Ventures, a venture capital firm based in Miami, Florida, that was founded in the year 2000.

New York Is a Loser State

O’Leary didn’t hold back in his criticism of the decision, citing this latest event as another reason why he considers New York a “loser state.” (via Fox Business)

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“It was already on the top of the list of being a loser state. I would never invest in New York now,” O’Leary said. “And I’m not the only person saying that.”

Other Businesses Are Moving Elsewhere

In the Fox Business interview, O’Leary claimed this move is just the latest in a series of bad moves that have encouraged big businesses and venture firms to look to other states for their business.

A box packed and ready to move.

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“So, they’ve got lots of work to do to find themselves getting out of this situation. This has all occurred post-pandemic … winner states versus loser states,” he said.

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Where’s the Victim?

One point that O’Leary brings up in the interview was the lack of a victim in the Trump case.

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“We’re very worried, every investor is worried because where is the victim? Who lost the money? This is some arbitrary decision a judge made,” O’Leary said. “This policy … what does this say about the bar? About the legal bar in New York? Aren’t they going to question this judge? What is this?” 

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Falling on Deaf Ears

O’Leary found the judge’s decision to enact such a harsh penalty a hard thing to justify and isn’t ultimately helping anyone.

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“I’m sorry her words fall on deaf ears to everybody,” he said. “There’s nothing she can say to justify this decision. And this has nothing to do with Trump, nothing to do with Trump. Forget about Trump, this is not a Trump situation, this is a New York problem.”

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Grant Cardone Also Exiting New York's Real Estate Market

Amid the evolving landscape of real estate investment, Grant Cardone, a notable figure in the sector, is making a significant move by withdrawing his investments from New York City. 

Composite image featuring a man, identified as Grant Cardone, in the foreground on the right. He has a salt-and-pepper beard, short hair, and is wearing a dark blue suit with a striped tie. In the background, there is a luxurious property with white balconies

Source: Grant Cardone/X

His decision comes in the wake of legal developments and signals a major shift towards markets in states like Florida and Texas, highlighting a new strategic direction for his firm, Cardone Capital.

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Cardone's Bold Reaction to NYC's Legal Landscape

In a follow-up to his initial statements, Cardone took to social media to express his concerns about the long-term impacts of a New York judge’s decision on the city’s real estate market.

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His post stated, “This NYC Judge will sell more real estate in Florida than all the real estate agents & brokers combined. His overreach in Trump case will cost NYC immeasurable amounts of revenue that will take decades to reverse.”

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Grant Cardone's New Strategy: Abandoning New York Investments

Grant Cardone’s decision to cease investment in New York marks a significant turn in his firm’s strategy. 

An image capturing a man in a business suit standing confidently in front of a private jet, with the stairway down, on an airport tarmac. To his right is a luxury black SUV

Source: Grant Cardone/X

Despite previously eyeing opportunities in New York, the outcome of the Trump trial prompted a swift reevaluation, pushing Cardone to declare an immediate shift away from the city’s real estate market.

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The Importance of Predictability in Investment Decisions

Cardone emphasizes the critical nature of predictability in investment, pointing to the challenges in New York as a key factor in his firm’s decision to exit. 

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The need to ensure stable cash flow and secure returns for his 14,000 investors is a priority that New York’s current climate can no longer satisfy.

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Cash Flow Concerns Drive Cardone Capital to New Horizons

Cardone emphasizes the critical role of predictable cash flow for his 14,000 investors.

Side-by-side images of the same man in contrasting real estate environments. On the left, he stands with arms outstretched in front of a single-story suburban house, wearing a cap and a casual black t-shirt. On the right, he stands confidently with clenched fists in front of a modern multi-story glass office building, dressed in a formal dark suit and white shirt

Source: Grant Cardone/X

He said “We invest for 14,000 investors at Cardone Capital that depend on cash flow,” Cardone said. “And if I can’t predict the cash flow because of some ruling, or because of the migrants, or because I can’t evict people, New York City just keeps doing every single thing they can to sell real estate in Florida, not sell real estate in New York.”

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Financial Implications of New York's Legal Landscape

The Trump trial’s fallout is expected to ripple through New York’s financial ecosystem, affecting property values, loan conditions, and overall investor confidence. 

Former President Donald Trump is pictured speaking at a podium bearing the Presidential Seal, with a microphone in front of him. He's wearing a dark suit, white shirt, and red tie

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Cardone’s discussion of the challenges in property appraisal and underwriting in New York underscores the growing financial uncertainties in the state.

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A Billion-Dollar Change in Direction

Cardone’s revelation of redirecting planned billion-dollar investments away from New York demonstrates the magnitude of the shift.

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This reallocation of substantial capital to other states reflects a strategic pivot that could influence broader market trends and investment flows.

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Evaluating Risk vs. Reward in Real Estate Investment

Investors like Cardone are reassessing the balance of risk and reward in various markets, with New York’s current climate tipping the scales towards higher perceived risk. 

The photograph shows a busy New York City street lined with tall buildings of various architectural styles. The street is bustling with yellow taxis and other vehicles, while pedestrians cross the road

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This reassessment is driving capital towards markets that offer a more favorable balance, influencing broader investment patterns.

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Political Climate and Business Operations

The political and regulatory landscape is a pivotal consideration for real estate investors, with states perceived as business-unfriendly falling out of favor. 

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Political and regulatory stability are becoming key factors in deciding where to allocate resources.

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Adapting to a New Investment Reality

The focus on stable, growth-oriented markets is expected to continue as investors like Cardone seek environments that support predictable and favorable returns. 

Grant Cardone is superimposed in the foreground smiling towards the camera. He has short, gray hair, a beard, and is wearing a dark suit with a dotted tie. In the background, the multi-level Cardone Capital building is visible

Source: Grant Cardone/X

This strategic shift illustrates the evolving priorities and considerations shaping the future of real estate investment.

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Are Businesses Fleeing New York?

There has been a recent trend of big business and investors leaving the Empire State for better opportunities. In 2023, the New York Post reported that nearly 160 Wall Street firms have moved their headquarters out of New York since 2019. A move that cost the state nearly $1 trillion.

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As many as 56 of these firms have moved to Florida and warmer states like Texas, North Carolina, and South Carolina.

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Texas and Florida: The New Real Estate Havens

The attractiveness of Texas and Florida for investors like Cardone stems from their stable, growth-oriented environments, contrasting sharply with the perceived unpredictability and political entanglements in New York.

The image features a vintage theater in Texas, with a large outline of the state on its facade and a retro marquee sign that reads "Texas" in cursive neon letters. Below the sign, there's a variety of small shops

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These states are now preferred destinations for investors seeking more favorable conditions.

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Why Are Firms Leaving New York?

In addition to the reasons O’Leary brought up in his Fox Business interview, another source of trouble for businesses comes from mass migration. A recent surge of boarder crossings in the United States has seen additional migrants being bussed to New York City, leading to some structural challenges in providing for them.

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CNBC recently reported that the immigration crisis threatens to bankrupt large cities like New York City and Chicago.

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Legal and Regulatory Concerns Deter Investors in New York

The politicization of New York’s legal and regulatory framework is also causing unease among investors, who view the recent legal outcomes as indicative of a broader trend of unpredictability. 

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This environment is seen as detrimental to the predictability and security necessary for sound real estate investment.

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Wall Street Is a Big Deal

According to a New York State Comptroller report in 2022, the business on Wall Street accounted for nearly 16% of New York City’s total economic activity. Wall Street firms make up around 7.3% of economic activity across the entire state as well.

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If these businesses leave, this will create further strain on the government as their tax revenue dries up at a time when migrant workers and immigration travelers are straining the system.

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Reform Is Needed

Given the trend that businesses are leaving New York, prominent investors and real estate developers like O’Leary are sounding the alarm. Reforms may be necessary to reverse this course.

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Investors need to be able to trust government officials and the court system to ensure their investments don’t blow up in their faces like what happened to Donald Trump. People should heed O’leary’s warning, as it could spell trouble for the developed Empire state in the future.

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