Page 196 - Trump University Commercial Real Estate 101

TRUMP UNIVERSITY COMMERCIAL REAL ESTATE 101

That fee can range from a few dollars to $1 million or more, depending
on the magnitude of the deal.

Blanket Mortgages

Sometimes lenders or sellers will allow you to have 100 percent fi nanc-
ing, or close to it, but require that you put up additional collateral.
This is called a blanket mortgage . You wrap other properties in the same
mortgage for the benefit of the lender. If you default on the primary

property, the lender gets all the properties.
Avoid doing this if you possibly can. That ’ s just too much risk for
you to take in most situations. Not only might you lose big if some-
thing happens, but you ’ ve now encumbered your other properties. Even

if things work out well with the new property, you may find it diffi cult

to resell or refinance the collateral properties when you want to.

Private Money

This is my very favorite financing method. I ’ ve already mentioned it
briefl y, but let ’ s talk more about two forms of private money — equity
partnerships and debt partnerships.
When you structure a private - money equity partnership, your job

is to bring the deal to the table. Your partner finances the down pay-

ment and closing costs. You split the cash flow and profi ts.
Sometimes the split is 50 - 50, but it could be 60 - 40 or 30 - 70. You
do what you must to make the deal appealing, without giving away the
farm. In my book, it ’ s better to have only 25 percent of a $10 million
deal than it is to have 100 percent of no deal.
When you have multiple partners, it ’ s called a syndication . There

are a number of very specific rules you must follow to syndicate deals.
That ’ s because you most likely will have created a security with your
syndication, and now the boys down at the Securities and Exchange
Commission will take an interest in what you ’ re doing. And they have
no sense of humor.

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