Page 168 - Trump University Commercial Real Estate 101

TRUMP UNIVERSITY COMMERCIAL REAL ESTATE 101

A MATEUR M ISTAKE (CONTINUED)

You do the deal.
Right off the bat, your management company is not able to hit that
best - month level of income. They do come close at times, but they
miss on other months, and the shortfalls happen more frequently.
When you prepare to submeter the property, you realize that you
can ’ t require the tenants to pay utilities until their leases expire. This
results in another income gap.

When you finally start to raise the rents, you notice something:
Some tenants decide to move out instead of paying the higher utility
bills. You come to learn that your main competition pays the utilities,
and their properties are younger.
You ’ re now not only losing tenants, but new ones are not attracted
to your property, which has that competitive disadvantage. Your cash

flow drops because you have lower occupancy. Your property value
goes down with it.

One day the floodgates in your mind open and you wonder why
you ever decided to invest in commercial property in the fi rst place.
You wonder if that accounting job is still open down at the plant.
It could all have been avoided. A deal must work based on actual

numbers . . . period. As soon as you find yourself rationalizing how
you can “ make this deal work, ” you need to dump it and move on to
the next one. The only thing that you “ gotta ” make is rational buying

decisions to increase your wealth.

Know Where You Are in the Real Estate Cycle

You must always know this when buying a property. Remember, you ’ re
not just buying into a property, but also into a market.
How is the local market doing?
Are new jobs coming in, and are even more projected to come in?
How is the supply?
How many permits were pulled in the past couple of years for the
same type of property you are buying?

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