Page 195 - Trump University Commercial Real Estate 101

Use a Money Multiplier

of people who do in your town! This is one of the great untapped
sources of real estate financing in America.

I ’ m just scraping the surface of the creative options available to

you. Want to guess how to find out which approach will work best for
your property? That ’ s right — work with your mortgage broker, who
eats and sleeps creative loan terms.

Master Lease Options

This is a good option for sellers who will not or cannot sell their prop-
erty for a variety of reasons. The seller may have a high prepayment
penalty that prohibits a sale for another year or two. In this case, the
seller could lease the entire property to you in return for a monthly
payment. You run the property, collect rents, and pay operating
expenses. It may include the option for you to buy the property at a
future date at a pre - negotiated price.
Imagine that you increase the value of the property through higher
net operating income while you ’ re running the property. At the end of
the lease period, you buy the property at a lower price and it is instantly
worth more, because you ’ ve added value during the lease.
Another reason to arrange a master lease option is if you couldn ’ t
get a loan because of lack of experience. The master lease option allows
you to run the property for a couple of years and then go back to the
bank with a successful track record in hand.

Straight Option

This simply gives you the right to buy the property within a certain
period. Donald Trump made millions of dollars with his options on
the railroad yards in New York City. He bought the option and waited
until the time was right to develop the property. There was a good
chance the deal could not be done. If that happened, he would be
under no obligation to buy the land. An option that is not exercised
only costs the purchaser of the option the amount of the option fee.

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