Page 257 - Trump University Commercial Real Estate 101

The Right W a y to Sell for Maximum Profit

You should have been on the lookout for these revenue
opportunities all along, but better now than never.
Next, focus on decreasing expenses. Begin to judge expenses
against your projected sales date. Is it a necessary expense, or can it be
put off until after the sale without affecting it?
What about your vendor contracts? Now is a good time to rebid
them and see if you can get lower prices. For every dollar you decrease

expenses, you add a dollar to cash flow and multiple dollars to your
property value.
Take a look at utilities from a different perspective: Have they been
trending at the same level or slowly increasing? If it ’ s the latter, fi nd
out why. Water leaks are especially common. When you see unex-
plained patches of greener grass, you may have a cracked pipe. Don ’ t
stop looking until you have the answer to the jump in utilities. Even
something like repairing leaky faucets and toilets can save as much as
30 percent in monthly water bills. That ’ s huge.
When you do incur expenses, look to see whether you can put
them below the line. In other words, you may be able to turn them into
a capital expense .
Operating expenses are good while you own a property, because
these regular expenses lower your NOI and your taxable income. On
the other hand, capital expenses are depreciated over the life of the
property and do not decrease your NOI.
Each time you have an expense, you have a decision: Is it an oper-
ating or capital expense? Where you are in the ownership cycle will
determine how you answer that question.
If you still have a couple of years or more of ownership, claim as
much as you can as operating expenses in order to save on taxes. If
you ’ re close to a sale, then claim as much as you can as capital expendi-
tures so that you can keep your NOI higher and thus maintain a higher
selling price.
Your accountant will be a crucial team member for these decisions.
The IRS has pretty strict rules about how expenses are classifi ed.

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