Page 256 - Trump University Commercial Real Estate 101

TRUMP UNIVERSITY COMMERCIAL REAL ESTATE 101

Of course, you should also determine what needs fixing and updating

in each unit. Not only get that current list of work orders down to zero,
but actively look for what will add value at a reasonable cost.

How to Get Your Financials Ready for Sale

The first thing to do when you decide to sell is to create a target net
operating income. You must know where you need that NOI to be in
order to get the sale price that you want.
Determine this by taking a look at recent sales in the area for prop-
erties like yours. If you don ’ t already know, ask your broker network
for the current cap rate for properties like yours. Remember, you take
the NOI and divide it by the cap rate to determine value.
If properties like yours are trading between an 8 and 9 cap, so will
yours. Don ’ t kid yourself. Prepare your property to get the highest
dollar for it, but also be realistic. Again, it ’ s okay to go out initially
high, but then be prepared to drop that price if there are no takers at
the higher - than - market level.
Back to the NOI: Target what you want for a price and then fi gure
out what NOI will get you there. It goes without saying that only two
things will get you from where you are now in NOI, to that target
number — increased revenues or decreased expenses.
On the revenue side, you can raise rents as leases expire. If you are
paying for utilities now, you could institute a bill - back system. Keep in
mind that tenants under an existing lease will not be required to pay it.
Also, it could harm your competitive position in the market, depend-
ing on what other, similar properties are doing.
In my experience, if you send letters to all tenants about billing -
back the utilities, about 40 percent will voluntarily start paying. That
can be a nice, quick boost to your NOI and property value.
Take a look at your collections. Tighten the system if you are not get-
ting very close to 100 percent collections over the course of the month.
What about late fees? If you do not charge for late payments, start.

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