Page 228 - Trump University Commercial Real Estate 101

TRUMP UNIVERSITY COMMERCIAL REAL ESTATE 101

• You run the risk of depleting your reserves in order to pay
distributions. That has the effect of making things look great — right
up to the point that you ’ ve exhausted your reserves and are sud-
denly in deep trouble.
• It masks underperformance of the deal, and thus delays the
delivery of that bad news to investors. When you delay bad
news, you give an opening to a litigation attorney for investors
to claim that you deceived the investors.

Let distributions mirror the actual performance of the property.
You will thank me later.

Your Property Team

The deal team handles the potential investment as it is described on

paper, by reviewing financials, market information, and so on.
In contrast, the property team is more hands - on with the actual
property. You will not only use them after you own the property, but
will rely heavily on them during the due diligence period.

Property Manager

Let ’ s say you put a property under contract in an emerging market that
is 200 miles away. The numbers seem to work and pictures of the
property look good. Your next step is to call the management company
that you plan on using and ask them to shop the property .
I want them to go over to that property, pretending to be a poten-
tial new lease applicant. They will walk through the property and
mentally note everything that I should be concerned about.

After all, those nice pictures might have been taken five years ago.
They may also have conveniently avoided showing a roof in need of
major repair. I will negotiate such big issues before I spend time and
money on a property inspection and a trip to see it myself.

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