Page 197 - Trump University Commercial Real Estate 101

Use a Money Multiplier

Equity partnerships are the fastest way to fund your deals because
partners get an attractive chunk of any profit for investing their money.

Another benefit to you is that because they are equity partners, there ’ s
no obligation of a return to them, as there is with debt.
In a debt partnership, investors lend you money in exchange for a
good interest rate. Debt partnerships are the cheapest way to fund
your deals. You don ’ t give up a chunk of equity, but it will take you
longer to raise the funds. In addition, that debt must be paid off before
you or any equity partners share in the profi ts.

How to Deal with Investors

I ’ ve raised tens of millions of dollars to fund my real estate deals. Along
the way I ’ ve discovered two key principles: Constantly communicate
with your investors, and be conservative with your projections.
When investors don ’ t hear from you, their imaginations will fi ll
that vacuum, and it won ’ t be with positive images. Communicate with
them at least monthly in writing or on a conference call.
Even if you don ’ t have good news to share, keep them current
about their investment. Part of your responsibility is to educate
them about the ups and downs of the deal. When they ’ re regularly
informed and have an opportunity to ask questions, they ’ ll be far more
patient when times are bad, and delighted when times are good.
Always be conservative with your numbers. The last thing you
need is to be stressed - out all the time about hitting your numbers.
You ’ re much better off attracting fewer investors but exceeding their
expectations. Besides, disgruntled investors have a way of hiring attor-
neys to get them out of what they consider to be under - performing
deals. It would be a shame if your deal was doing okay, but your lofty
initial projections led investors to be disappointed nonetheless.
Handle investors correctly and they ’ ll not only want to invest in
deal after deal with you, but they ’ ll brag to their rich friends about their
great investments with you. Pretty soon you ’ ll have a waiting list of
people with money in hand, ready to lend to you. How great is that!

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