Page 171 - Trump University Commercial Real Estate 101

Take Onl y Intelligent Risks

Another great way to get yourself into trouble is by being cheap
with your property. When repairs arise, do them . When tenants have
maintenance problems, mandate that your property manager jump on
the matter.
The number - one reason for tenants to leave your building is a
lack of response to maintenance problems. They won ’ t be leaving
because of the rent.
I ’ m not only advocating that you react quickly, but recommending
that you become proactive. Have a program to identify deferred main-
tenance on your property regularly. When you continuously correct
wear and tear, your property will always look good and your tenants
will notice the care that you demonstrate, in comparison with your
cheapskate competition.

Once your retail or office tenants start getting remarks about the
property from outside sources, you ’ re in trouble. Now you ’ ve affected
the image of other businesses as well, and you will pay dearly for that.
Not only will the tenants move out as soon as is practical, but leasing
the space will become much harder.
Then the downward spiral picks up speed. You hold on for a couple
of months without anyone filling that vacant space, and then you lower

the lease rate. You ’ re also deferring more maintenance because cash

flow has dried up. You eventually get a tenant who is willing to pay the
lower rate, but it ’ s not a tenant that adds to the image of your property.
That drives out more tenants, and so on.
You try to bail out by selling, and are shocked to discover that the
value of your property has dropped so far that it has fallen out of bed , as
they say on Wall Street. The cure for this slippery slope? Keep that
property well - maintained at all costs.

Doing Marginal Deals

There ’ s nothing exactly wrong with a marginal deal. You might be
working off actual numbers, with a property that ’ s well maintained in
an acceptable area. The only problem is that it ’ s a squeaker of a deal.

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