Page 137 - Trump University Commercial Real Estate 101

Ho w to Disco ver the Truth behind a Deal

trending upward? That ’ s usually the best type. Or is something
happening with the property that ’ s not allowing management to be
consistent? Perhaps it ’ s the current management itself.
Be careful of the miracle turn - around. Some properties will appear
to have been going badly for the past couple of years. Then suddenly,
within the past three to four months, the numbers start to look
really good.
The current owner almost always will attribute it to new manage-
ment. Though that may be the case, it may also be due to fl uffi ng the
numbers in preparation for a sale. For instance, there could be funny
business going on with new leases that seem to be at much higher rates
than usual. How could this happen?

There is a very well - known Texas retail and office developer who
had a great thing going. He was so big that many other companies
relied on him — an army of outside architectural, engineering, legal,

and accounting firms did business with his company.
He would build a shiny new office complex and suggest that a mixture

of these firms quickly sign leases at the new building. Buyers would think:

“ Wow — the developer was right about the prospects for that local
market! It was amazing how fast that building became fully leased! ”
He would then sell the property to some sucker at an extremely
high price for this fully - leased building with lots of solid tenants.
Three years later, that herd of tenants would all pull out and sign leases
at the developer ’ s next new property. Some scam, huh?
Be on the lookout both for problems and for situations that seem
too good to be true.

Rent Roll for Current and Past Two Years

The rent roll should tell you the following for each tenant:

• Who lives in which unit
• When they moved in
• When their lease expires

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