Page 136 - Trump University Commercial Real Estate 101

TRUMP UNIVERSITY COMMERCIAL REAL ESTATE 101

Insider Tip

From my experience, if the information comes in quickly, the deal
usually will go smoothly. If the information comes in slowly, in little
clumps, or past the 14 - day deadline, you may still have a winner, but
it ’ s more likely to be a dog. It ’ s not a reason to dump the deal yet, but a

warning flag should go up in your brain.
Let ’ s look at each of these due diligence documents:

Past Two Years of Monthly Operating Statements

These reports must show each individual month of profi t - and - loss
history. The months should be arranged side - by - side for a given year.
This trend report will tell you a story. If you compare the months
and years, you ’ ll undoubtedly see dips and spikes. Some of them might
simply be seasonal effects. For instance, many commercial properties

in a college town will reflect the ebb and flow of students and faculty

during the school year.
At this point, you should simply observe and write down ques-
tions. Ideally, you ’ ll see smooth trends in the right direction, setting
aside seasonality.

Do not accept a financial statement for the past two years that is
not broken down monthly. Sellers will attempt to give this to prospec-
tive buyers to hide defi ciencies.

Year - to - Date Operating Statement

The past two years of operating statements will give you the most
recent history of that property, but the current - year statement will tell
you the present situation.
The past six months of history is the most important. This is also
what the lender will focus on when deciding whether to give you the
loan, how much to lend you, and at what interest rate.
This six - month period will also reveal what type of property you
will be taking over. Does it have momentum, and are the numbers

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