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

your contractor and all subcontractors working on the job if it’s at all
possible. If, however, you find that you hired a bad apple, line up a
suitable replacement before the need arises.
If a contractor gives Trump a bid of $100,000, Trump may say
“no way, but I will give you $60,000,” and they will argue over the
amount, and maybe ultimately agree on $70,000. Then Trump will
say, “I’ll tell you what I’ll do, if you complete the work early, I’ll give
you an additional $500 for every day you finish before the 90 days we
agreed on. But the maximum I’ll pay you is $85,000.” Initially the
guy wanted $100,000, agreed to $70,000, but now has a chance to
earn $85,000. He will work his tail off to earn as much of the extra
$15,000 as he can.

Construction Speed Is Valuable

When you’re dealing with contractors, you want them to finish
ASAP. Every property has fixed expenses such as taxes, insurance,
interest on loans, and other items, and these costs don’t go away dur-
ing the time of construction when your building is non-income pro-
ducing. The sooner your project is completed and you are able to
start receiving income, either by renting or selling the property, or
part of it, the better off you are. If you compute how much it costs
per diem to carry the property you can offer contractors an early-
completion bonus based on this figure, but the total is still less than
you would have paid if they adhered to a regular construction sched-
ule. This creates a win-win situation that Trump has used success-
fully over and over again. For example, on Trump World Tower, the
daily carrying cost for invested or borrowed money, taxes, insurance,
and other expenses exceeded $80,000 a day! By creating incentive
arrangements on negotiated contracts, Trump started closing the
sale of units more than 90 days ahead of schedule, a saving in excess
of $10 million. While the projects a small real estate investor under-
takes involve much less money, the potential savings are still signifi-

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