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TRUMP UNIVERSITY WEALTH BUILDING 101

institutions that deal heavily in mortgages. Countrywide, Fannie Mae, and
Freddy Mac represent three possibilities.
Because homebuilding and mortgage lending run in major up and down
cycles, the share prices of companies that operate in these businesses also
swing up and down widely. As a result, if through your research you decide
that a certain builder or lender shows great promise for long-term growth
and profitability, a big cyclical downturn opens the door for you to earn big

gains. Buy low (when negative feelings dominate). Sell high (when boom
times come back).

Portfolio Diversifi cation Revisited

The mainstream financial press often writes about asset allocation as if real
estate represents a single category. As you now know, this simplistic approach
badly misses the mark. Combine a variety of property and property-related
investments described in this chapter, (different types of properties in differ-

ent geographic areas, REITs), and you can achieve significant diversity yet
remain within the general category of real estate.

You can even profit with property in many ways that I have not had
space here to discuss (fi x and flip, land banking, land development, triple net

leases, low-income tax credits, discounted paper, and property tax lien/tax
deeds.). So when a financial writer or financial advisor tells you that you

should not hold more than 5 percent or 10 percent of your assets in real
estate, laugh at him.

You want diversification and the highest risk-adjusted returns you can
get. In today’s marketplace of investments, to a much larger degree than most
people realize, you can meet both of these objectives with real estate.

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