Page 98 - Trump University Commercial Real Estate 101

TRUMP UNIVERSITY COMMERCIAL REAL ESTATE 101

Sellers and brokers classify properties in the same way. Class A
properties were typically built within the past ten years. They have the
trendiest amenities and are crisp and clean. They attract the highest -
quality tenants and command the highest lease rates.
Class B properties were built within the past 20 to 30 years. They
also attract high - grade tenants, but often the tenants don ’ t quite want
to pay for the Class - A space.
Class C properties were built within the last 25 to 35years. These
properties are usually in areas with lower - income demographics. They
often suffer from deferred maintenance, but there is still a semblance
of tenant service.
Class D properties are in the worst condition and are usually in the
worst part of town. Buying these properties is a real professional ’ s
game. It ’ s possible to make good money by buying D properties in B or
A areas and repairing them to B status. This is a form of repositioning .

Seeing Opportunity Where Others Walk Right By

When you invest in commercial properties, you ’ ll have the opportunity
to do two types of deals. The fi rst type — which we ’ ve been discussing
all along — is the momentum play . Those are the ones that generate cash

flow right from the time of closing. You close on the deal, hand the
property to the management company, and start collecting checks.
I suggest that you focus on these lovelies initially, because they
provide momentum to your real estate career in the form of check
after check.
The other type is a repositioning deal . You ’ re repositioning two
things — the property itself and the tenant base. The trick is to fi nd a
lower - grade property in a better area. It ’ s common to reposition a C
property in a B area, and turn it into a B property.
You do this by upgrading the exterior and interior of the complex.
Then you reposition the tenant base by getting in a better group of
people who are happy to pay B rents for a B property. There is a whole

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