Page 164 - Trump University Commercial Real Estate 101

TRUMP UNIVERSITY COMMERCIAL REAL ESTATE 101

The owner is saying, in effect, “ I didn ’ t run my business effi ciently.
If I had, I would be able to show you actual numbers this good. But
don ’ t let that stop you from paying me as if I had performed this well! ”
How crazy is that? Yet you will hear this argument from seller
after seller.
Pro forma numbers are fine; just don ’ t base your price on them. If

you go for bank financing, the lender will not finance you based on
those made - up numbers.
Want a blazing red flag? When the seller will not give you actual

numbers until you put in an offer based only on the pro forma num-
bers. Perhaps he thinks you ’ ll fall for that swindle, but I know you
won ’ t.

Bad Property

The numbers may actually look good, but they also may be hiding a
real headache of a property.
Perhaps the numbers are great for a good reason: The property
may have a large amount of deferred maintenance. If all the mechani-
cal and other systems are old, it may be prohibitively expensive to
maintain it.
Such properties can work, but I recommend that you stay away
from them until you ’ ve done many deals. At that point, you will have
the experience and resources to take on a really big challenge, for a
correspondingly big reward.

Wrong Area

There ’ s an old - but - good principle in real estate: Your house should be
the worst one in the neighborhood. If it ’ s the best one, then the neigh-
borhood will drag down the value of your house. You want those
neighbors bringing up your value instead.
The same is true with commercial property. Are you considering
a strip mall that has mid - level stores while the property down the

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