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T HINK B IG

PRINCIPLE 5: WRITE A BUSINESS PLAN BEFORE YOU BUY

Once Trump intends to purchase a property, he has his associates
prepare a projected business plan containing the following items:

•Anticipated costs of various items,
•Nature and cost of available financing,
• Estimates of income,
•A projected timeline indicating when expenses will be incurred
and when income will be received.

Creating a preliminary business plan is an important discipline
for you to adopt because it forces you to think through the most im-
portant elements of owning a particular piece of property. It also
forces you to think of your future plans for the property, and the tim-
ing of an eventual sale. Are you looking for a safe or speculative re-
turn on your money, or are you looking for a situation in which
you’re going to buy and do something to it, dramatically increasing
the value based on your creative vision and then sell all or part of it to
make a profit? (Obviously, Trump prefers the latter approach.) The
key to buying or not buying is the answer to the following question,
“Does the purchase achieve the intended goal as part of your invest-
ment portfolio.” Ask yourself, “Am I looking to make a capital gain?
Will it be short term or long term? Am I looking to buy and hold this
property as part of my estate? Am I looking for a transaction that has
great tax benefits, at the expense of other monetary benefits?” It de-
pends on the nature of your goals at that time as to whether or not a
particular purchase is consistent with that goal. It’s very possible, log-
ical, and desirable for a small investor to purchase different properties
with different goals.
For example, you might buy a piece of land on the outskirts of
town, build it up, and plan that in three years you’ll sell it and double

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