Page 169 - 2

TR U M P STR A TEGI ES FO R R E A L ESTA TE

•Include incentives. Give investors something to peak their in-
terest. You have to assess the appetite of any party putting in
money. Find out what they want. Is it primarily a guaranteed
minimum fixed return, coupled with some additional return in
the future when a sale or refinancing occurs? Or do they want
a percentage of the upside instead?
• If you have already obtained a bank loan, your in-
vestors will be impressed that a bank looks favorably on the
project and that makes it easier for them to part with some
money.
•Be sure there’s some reasonable divorce method if some
partner wants out. The last thing anyone wants is to be forced to
live with an unhappy partner. The most equitable solution I have
used is one where at a given time any partner may solicit an offer
for purchase of the entire project. If that partner has received an
offer that he or she is willing to accept, that offer is submitted to
the other partners who can either accept the offer and consent to
the sale of the property or buy the interest of the partner who
wants out by paying him or her what they would have received if
the offer were accepted and the entire project sold.
•Write a business plan that explains the source of the expertise
necessary to make the investment a winner. If you don’t have a
skill needed, specify who does and what it will cost. As part of
the business plan, you can offer the silent investing partners
several options such as a fixed percentage of the profits, or a
guarantee of a minimum rate of return in lieu of a piece of the
action, or any combination you wish to present.
•There has to be a significant incentive for the developer or
managing partner to make the deal successful, and make him
want to work for it. If you cut his interest down to a point where
it’s not worth his considerable effort, he will likely just say “It’s
not worth the time and aggravation.”

148