Image courtesy of Flickr, Donkey Hotey
Real estate has been the foundation on which Donald Trump has built a successful business empire. Learn strategies you can use that have made Donald Trump a successful real estate investor.
The money, the hair, his tabloid-selling marriage and divorce from Ivana Trump, the catch phrase "You're fired" from his show The Apprentice, and now his second run for the U.S. presidency have kept Donald Trump in the public eye for decades.
What we sometimes forget is how Donald Trump perfected the "art of the deal" to build a multi-billion dollar empire with real estate as its foundation. The strategies he used to build his real estate fortune can be applied by any investor to real estate investments of any size.
We will discuss several topics in this article, including some of the following:
5 Personal Qualities You Need to Succeed in Real Estate
How to Choose Properties to Invest In
Real Estate Negotiation Techniques and Tactics
How to get Higher than Market Prices for Your Properties
Tactics for Lenders and Investors
Managing Properties is a Customer Service Business
Holding and Exiting Strategies
One of the secrets to Donald Trump's success is his ability to inspire confidence in others and make them want to invest in his real estate projects. Here are five of Donald Trump's personal qualities you should adopt to become a successful real estate investor.
1. Use Your Enthusiasm for the Project to Inspire Others
Be enthusiastic about your real estate project to capture the imagination and secure the backing of key players - buyers, sellers, lenders, investors and others. Enthusiasm is contagious and creates interest.
2. Build Relationships with Everyone Involved in the Deal
Establish rapport and mutual trust with everyone involved in the deal to make negotiations easier, faster and resolve problems that may arise in a friendly and pleasant way. People tend to go the extra mile and show favoritism when they like you.
Develop creative ways to share your dream with potential partners and clients to get them interested. Dress sharp and show off a little bit so your potential partners see how great you and your project are.
4. Be Better Prepared than Anyone Else
Anticipate questions others will ask and concerns they will have about your real estate project. Be ready to answer these questions clearly and confidently. It helps to address some of the questions and concerns you think others will have in your presentation before they even ask. No one will know you have been practicing, and all that matters is how you will perform the day of presentation or negotiation.
5. Be Tenacious
Don't give up - keep plugging away until you turn your idea into reality. If objections are brought up or roadblocks are put up, don't walk away because everything worth doing is difficult. Find out what the specific concerns with your plans are and do everything in your powers to address these issues. You'll find that many problems will have a solution.
Another key to Donald Trump's success is knowing in which properties to invest. Here are some things to keep in mind when choosing investment properties.
Be willing to pay a premium for a prime location
Don't buy without a creative vision for adding value to the property
Remember that solving problems with properties leads to big profits
Write a preliminary business plan before buying any property
Look for these four things in a location:
The following list of properties are a collection of real estate assets in Donald Trump's real estate portfolio, according to his own website.
Being a skilled negotiator is critical to getting the deal you want. Here are Donald Trump's five principles of negotiation.
1. Create the Aura of Exclusivity
People want something that everyone else wants or no one else has. Talk up the great features of your property with flair and attention to detail - embellish them to create excitement and get tenants or investors to say "It's a deal."
2. Don't Be Misled by the Aura of Legitimacy
Don't believe something because you see it in print or it's stated by the media or another authoritative source. Conduct your own research and due diligence to verify the facts and uncover information that may have been previously unknown. By doing so you will be more confident in the decisions you make and tactics you formulate going forward.
3. Every Negotiation Requires Preplanning
Donald Trump found that most people make very little effort to conclude any transactions, meaning that very few people actually preplan before entering into a negotiation. He used that to his benefit. Anticipate questions and decide on answers that favor your position.
4. Avoid a Quick Deal
Most mistakes are a result from being in a rush. Quick deals result in one party forgetting something important which only becomes apparent after the deal has closed and it's too late to anything about. If you're up against a skilled negotiator, you're likely to come out on the short end if you rush into or agree to a quick deal.
5. The Invested Time Principle
The more time someone has invested in a deal, the less likely he or she will give up or walk away. Use that to your advantage in your negotiations by getting the opposing party to spend as much time on the deal as possible, within reason. For example, you can do this by asking for more information and slowing down the negotiation process.
Here are a few tactics for driving a negotiation to the conclusion you want.
Take it or Leave it
We've all heard this phrase before, but what this does is it shortens the final negotiations and shows the determination of the opposing party. Be calculated when using this tactic. You can take some of the difficulties out of this tactic by saying, "I have other offers" when you are trying to sell a property or "Here's a comparable building at a much lower price," when you are trying to buy a property.
When using this tactic, you should either be ready to walk away from the deal, or leave yourself some room to save face and return to the negotiation if the opposing party doesn't take it.
You've Got to Do Better Than That
Donald Trump's experience in saying "You've got to do better than that" results in someone changing their position more in your favor. Saying it again makes them go even further. After saying this, don't show any indication that you will accept their modified position. You're fishing to see if you can get a better deal.
The Change of Pace
This tactic involves changing a positive atmosphere to a negative one. Use this if you're intent on closing the deal and you think the other party may be backing out. By stirring things up, you can always retreat back and appear friendlier by doing so.
Every real estate investor's goal is to make a profit on his or her properties. To maximize your profits requires careful research and consideration into your potential buyers and tenants. Here are a few tips for getting higher than market prices for your properties.
Be distinctive, add prestige to your property and add signature features that will "wow" potential buyers and tenants.
Give your potential buyers and tenants the ultimate in perceived quality, they will pay more for it.
Understand your potential buyers' and tenants' lifestyles and what they expect. Deliver on their expectations as much as possible.
Know what your potential buyers and tenants will pay extra for and what they won't. Focus your money and energy on the things they are willing to pay more for.
Most small investors need backing from lenders and other investors to build their real estate investment business. The main point behind attracting investors and lenders to give you money for your project is to alleviate as many concerns over risk as possible so they feel comfortable taking the journey with you. Here are some recommendations for attracting lenders and investors.
Borrow from a lender with whom you already have a relationship with.
Establish a track record for borrowing and paying back loans repeatedly. Request an increase in loan amounts each time you borrow.
Borrow at lower rates while keeping cash on hand to snap up available bargains.
Put your money where your mouth is when attracting investors - show them you've already invested money in the project and they're more likely to join you.
Consider the following mortgage and property ownership types with no down payment or low down payment possibilities:
One mistake small investors make is trying to do everything themselves to increase their profit potential. You need the help of the best people to help you do the best work. When you partner or hire notable specialists to help you, you are also hiring their reputation and network of contacts as well as their expertise. Here are some tips on who to hire and how to find them.
Hire local, full-time professionals. When it comes to real estate, you don't want people who dabble or work part-time in their specialty area. You're likely to find that part-time people will only give you a part-time effort. Local specialists know the area best and have the connections you need to get things done. Only hire outside your area when you know you're getting the very best.
Start by hiring an experienced, local real estate agent who can use his or her extensive network to guide you to other real estate specialists you'll need.
Be willing to pay a premium to get the best people, and then play up the prestige of the professionals involved when marketing your property for sale or attracting investors.
Ask these questions before hiring someone:
What other jobs are you working on at this time?
When can you start and finish the project?
What other builders have you worked for recently?
How long have you been in business and how many people do you employ?
Small investors who educate themselves about all aspects of construction and who closely monitor the progress of their building projects can find opportunities to make unexpected improvements to increase value or save money on construction costs. Here are some tips to help you bring your projects in on time and under budget.
Act as your own general contractor (GC) and hire a construction manager (CM) instead. The GC is responsible for hiring the subcontractors and negotiating their contracts. If you do this, then the CM you hire can be responsible for the rest.
"Use the carrot instead of the stick" by paying incentives for being early rather than assessing penalties for being late. Penalty clauses in contracts usually result in contractors giving you a lengthy list of excuses beyond their control that resulted in the late work.
Motivate your contractors by praising them publicly while they're still working on the project and after they complete the work. People who like you will go the extra mile.
Your potential customers have a lot of properties to choose from and many of your property's features are similar to that of your competition. So, you need to be like Donald Trump and use showmanship to create "sizzle" and excitement for your property. Find what is unique about your property and talk it up.
Hire an interior decorator to prepare a property for showing.
Don't skimp on the presentation, whether it's printed materials or something more elaborate like a fancy open house for potential tenants. Do something different.
Hire a professional to create presentations that show the rooms and outside views from different angles and use them as a selling point, especially for potential tenants who are shopping online for a place to buy or rent.
Use knowledgeable and well connected sales agents to market your property to potential buyers or renters. Make sure the agent knows why your property is the best.
Once you invest in a property that you rent to tenants, you have to take care of both the property and your tenants. To ensure your tenants remain for a long time, remember the following key points.
Develop an eye for detail - many tenants are willing to pay higher rent and stay there longer for a building that has a reputation for immaculate maintenance and service.
Treat tenants as treasured customers, not as problems and necessary evils.
Be vigilant about repairs and upkeep. Be sure you hire the best to do the best work.
Premium service means premium prices, and premium prices are what drives the value of your property higher more quickly than those who don't treat their tenants well.
Like Donald Trump, small investors need to estimate when their properties are likely to reach their maximum value to determine how long to hold or when to sell the property. Timing is one of the key elements of being a successful real estate investor. Here are a couple simple things to consider when creating the timetable estimate.
Is the property a short-term or long-term investment? Stable residential locations tend to be long-term, while strip malls without anchor tenants tend to be short-term.
Consider real estate cycles. As interest rates increase, demand for homes or rental units decrease. Selling at this point may not net you the biggest profit. Holding onto the property until the market is hot again will make more sense. Position yourself accordingly.
|Donald Trump’s income in 2014 (not including dividends, interest, capital gains, rents and royalties)||$362,000,000|
|Number of organizations in which Donald Trump holds a position||515|
|Number of organizations that bear Donald Trump’s name or initials||400|
|Total revenue from royalties for licensing the Trump brand to luxury hotels or products||$9,500,000|
|Annual pension received from the Screen Actors Guild||$110,000|
|Total value of Donald Trump’s stock, mutual fund, and hedge fund holdings||$78,000,000|
|Reported amount held in checking or savings accounts||$30,000,000|
|Amount earned during 14 seasons of "The Apprentice" on NBC||$213,000,000|
|Amount earned from direct-marketing company ACN Inc. for three separate speeches||$450,000|
|Amount earned from Samsung for a single speech||$150,000|
|Donald Trump’s reported net worth on his 2015 FEC disclosure||$10,000,000,000|
|Forbes reported net worth for Donald Trump||$4,000,000,000|
|Amount Donald Trump has donated to philanthropic and conservations from 2010-2014||$102,000,000|
There's no doubt that Donald Trump is one of the most successful and well known businessmen in the world, even though he did not make it to the top on his own. One of the major key's to Trump's success is his ability to find and surround himself with top talent and advisors. The collective knowledge and reputation of the people around him make them a strong force to be dealt with when coupled with Trump's leadership qualities, knowledge and experience.
You should find and consult with specialists who can help you find the best real estate investment properties and negotiate great opportunities on deals for you if you are not available for negotiations yourself. You are only as good as the company you keep.
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