Page 169 - Trump University Commercial Real Estate 101

Take Onl y Intelligent Risks

How many of those properties are being built near your property?
If the number is higher than average, you now have another question
to answer: Is the market becoming oversupplied, or is it growing so
fast that the absorption far exceeds supply?
Is there any vacant land near your property that could be built on?
Have there been any recent announcements that jobs were leaving
the area?
What have rents been doing for the past couple of years? Have
they been stagnant or rising, or are they just starting to rise after years
of weakness?
These are all important questions to ask about a market before you
enter it. The answers will determine your exit strategy and your buy-
ing parameters.
If you ’ ve been in a market that ’ s had a long run - up , or increase, you
know that it will soon be oversupplied. In that case, your exit strategy
should be to hold nothing in this market. Instead, you should buy the
property and quickly sell to another buyer so that you get into a cash
position. Cash will be king in the coming down-market in that area.
What if you have a killer deal , and you hate the thought of just fl ip-
ping it? Consider flipping it and when the market rolls over, pick up

the same killer deal for less, six to eight months later.
If you do buy that deal at the peak of the market, get ready for it to
look not so killer for a while. You ’ re going to have to hold it while the
market declines and eventually rebounds. It ’ s generally not a good idea
to do this, because your money will be tied up for a long time. During
that period you will have missed the opportunity to make faster, more
profitable plays elsewhere.

Don ’ t Let Yourself Be the Cause of Failure

This usually happens in one of three ways:

1. Not taking action
2. Being cheap
3. Doing marginal deals

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