Page 33 - Trump University Commercial Real Estate 101

Commercial Real Esta te Investing

a discount department chain. Another store was even more discount: It
specialized in dinged - up furniture and flawed clothing. The mall

included other typical shops, such as a pizza joint and a Laundromat.
For years the mall had languished as a working - class shopping center.
In the meantime, the demographics in Hingham had changed.
The city could now support higher - end enterprise. The working - class
mall gained a new life and was repositioned as the nation ’ s fi rst lifestyle
center . In place of the blue - collar stores, high - end shops like Williams
Sonoma, Whole Foods, and Panera Bread moved into the refurbished
spaces. The place took off, and is now one of the most popular shop-
ping centers in the area.
Apartments are sometimes great candidates for repositioning. Let ’ s

say that you find a tired apartment building in a good area. This prop-
erty has not been kept up well, so it ’ s attracting tenants who are even
less well - kept.
To reposition the building, you first spruce up the exterior, focusing

on the siding, roofing, and parking lot. You upgrade the landscaping,
put new signage on the property, and create a nice leasing offi ce. You
then work on certain strategic improvements inside the property.
With the property now looking much better, it ’ s time to reposition
those tenants. You get rid of the tenants who pay slowly, never pay at
all, or are criminally inclined. Replace them with the tenant profi le that
you are targeting.
This is a process that can take several months, absorbing more
time and money than the simple value - play of raising rents. The
rewards can be quite spectacular, though. Not only can you fi ll your
vacant units, but soon all of the units are paying substantially more in
rent. Because your property value is calculated at a multiple of the net
operating income, you ’ ve just skyrocketed the worth of the property.

When you come across a property that fits the profile I just
described, you should definitely consider it for repositioning. I wrote

an entire book on the topic called Multi - Family Millions , published by
John Wiley & Sons. This concept of making low - cost, high - payoff
changes to both a property and its tenants is enormously powerful.

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