Page 29 - Trump University Commercial Real Estate 101

Commercial Real Esta te Investing

How You Can Make Money from Commercial Investing

With some investments you simply try to buy low and sell high.
Commercial real estate gives you a whole rainbow of opportunities to

profi t. Let ’ s briefly look at some of them.

Equity Build - Up

This is where the real money is. Equity build - up happens in two ways.
The first is through paying down the mortgage principal. You ’ ll

have your tenants to thank for that, whether it ’ s a multi - family, offi ce,
retail space, or another type of property.
Each month they will give you a big slice of their income in the
form of rent checks. You use a portion of that money to make the mort-
gage payment. In one sense, your tenants go to work each morning to
buy the building for you. What a country!

I remember when I first heard of this concept. I was watching a
television documentary on the life of Harry Helmsley. When asked
why he began investing in commercial properties, Harry said, “ I always
liked the idea that a group of people would pool their money together
to pay off the mortgage on my building. I also liked the idea that they
would give me extra money at the end of the month that I could use to
reinvest, put into a savings account, or just have some fun with. ”
That was enough inspiration for me!
The second way to get equity build - up is through appreciation.
Over time, real estate values in most areas go up. Yes, appreciation is
subject to cycles, but over the long term, the line on the graph trends
upward. Some markets appreciate faster than others. The markets on
the East and West coasts tend to appreciate higher and faster than
markets in the Midwest.
Cash flow may be the vital lubricant of your real estate machine,

but appreciation is the giant engine. Cash flow allows you to run your

properties, quit your job, and start enjoying the finer things in life.
Appreciation comes more slowly, but has the potential to add many
zeros to your bank account.

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