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Develop the Wisdom to Safeguard Your Success
by Donald J. Trump
It takes experience and wisdom to spot scams and opportunities that are truly too good to be true. Here’s some advice from the great Donald J. Trump about how to cultivate the kind of wisdom that can safeguard you from costly mistakes.
I realize now when I can assess a situation quickly that it’s a result of wisdom I’ve gained through a variety of experiences. It’s a bit like being able to trust your instincts because you’ve had a good record of successes. It’s very hard for me to just give you this wisdom--you have to get there yourself.
Another way to gain wisdom is to read about the greats in history and those in your specific field of interest. I learned a great deal by reading about Winston Churchill, Abraham Lincoln and people who had been in pivotal places in world history. They had to be very equipped to deal with what they were handed. Their situations may have been a matter of fate, destiny and timing, but they had the experience and wisdom to deal effectively with their circumstances. Imagine having many thousands, even millions of people affected by your actions and decisions, and you will have an inkling of the immense responsibility these people had. It can make our problems seem small in comparison, and it can enlarge our minds in order to comprehend a bigger picture of duty and competence.
One book that I would suggest to you, because it is valuable for business strategies, and managerial strategies, is The Art of War by Sun Tzu. This was apparently written in the 6th century BC, and is a study of military strategy. It has been influential to leaders for many centuries, and General Douglas MacArthur studied it, as did other famed military strategists throughout history. It may sound like an unusual business school recommendation, but believe me, it isn’t. It’s valuable and worth your time.
There are many roads to wisdom, and many wonderful books to educate us on our way. I’m sure you’ll discover your own favorites, but the first step is to take the time to read and learn in the first place. In the long term, this will save you time, because you will be learning from people who have already been faced with serious issues and who have been victorious. Remember, you need knowledge and experience first. Wisdom will come provided you give it a chance to develop.
First things first, and you will be pleased at what will follow. The achievement of wisdom will be all yours.
Donald J. Trump is Chairman of Trump University.
Defend Yourself from Scams and Flimflams
by Michael Sexton
"I went to a foreclosure auction the other day," said a woman who called our offices last week. "And do you know what? There was no point in bidding on any of the houses, because they were the same ones that I had already seen on realtors’ Websites and in newspapers. Other people didn't seem to realize that and they were overbidding. And the whole time, the auctioneers were pressuring everybody to bid immediately, sight-unseen, claiming it was the last chance to buy these foreclosed homes at rock-bottom prices."
Now, you might say that those auctions were not truly scams - just aggressive sales to help banks dispose of foreclosed property. And I suppose that it true. But the fact remains, buying a property in a rushed, impulsive way is unwise, especially when there are better ways to buy the same property at the same price.
Here are some pointers that our real estate faculty recommends for financial self-defense:
I wish you every success!
Michael Sexton is President of Trump University
Real Estate Investing: Beware of Red Flags
by Gary W. Eldred
“On this April Fool’s day, vow never to become the fool.†- Gary Eldred, PhD
Although I love real estate and believe it offers most people their best opportunity to become wealthy, no one should assume that every great-sounding offer actually represents a great deal. In fact, investors are well-advised to recognize and beware of numerous red flags that signal danger - or at least warn would-be buyers to slow down and examine cautiously before they proceed.
One such red flag that I continuously spot as I travel around the world looking at property offers involves “rent guarantees.†Although in the high-dollar commercial property field, rent guarantees sometimes make sense, the red flag rent guarantees are those offered by builders of new residential apartment projects - especially projects sold off-plan (preconstruction) to out-area-buyers. I’ve recently seen such offers in the U.K., Eastern Europe, the Middle East, and in much of Asia. (Timeshares, fractional ownership, and hotel room sales also have been making similar offers.)
Ads for such projects might promise something like, “8% rental guarantee for 3 years.†Why do I view that as a red flag? Because as with all “too good to be true†come-ons, it intends to dull your critical inquiries. Such a promise should cause you to question whether the market rent levels will actually support the project - and what is likely to happen to rents into the future. The promise implies (quite wrongly) that you need not worry about the true rental market.
Further, many naïve buyers fail to inquire whether the promised rental return yield refers to gross or net returns. (They are almost always gross--i.e., before operating expenses and amortization.) Moreover, the buyers fail to ask who is actually making the “guarantee†and what their financial capacity to honor such a commitment is. And in many instances, the “investment†units are rented out furnished, which could mean large out-of-pocket costs for furniture replacement in the not-too-distant future.
Although this “rent guarantee†example refers to just one specific type of hyped promotion, apply the general principle to all come-ons, promises, and “too good to be true†offers such as:
As many cities throughout the United States now experience the down part of the real estate cycle, I am receiving many e-mails from investors (using the term quite loosely) who now find themselves in the red. In every instance, these investors failed to adequately research and forecast the underlying supply/demand fundamentals of the markets where they were buying, and /or failed to understand the pitfalls of the financing terms they were agreeing to.
So, on this April Fool’s day, vow never to become the fool. No matter how appealing the sales promotion and promises, no matter how much a market is booming, no matter how certain the deal seems in terms of risk and reward - before you act, rely on multiple metrics of valuation, multiple data points, and multiple sources of information. Even with property, long-term wealth-building invites and encourages education and work.
:fastlane:
by Donald J. Trump
It takes experience and wisdom to spot scams and opportunities that are truly too good to be true. Here’s some advice from the great Donald J. Trump about how to cultivate the kind of wisdom that can safeguard you from costly mistakes.
I realize now when I can assess a situation quickly that it’s a result of wisdom I’ve gained through a variety of experiences. It’s a bit like being able to trust your instincts because you’ve had a good record of successes. It’s very hard for me to just give you this wisdom--you have to get there yourself.
Another way to gain wisdom is to read about the greats in history and those in your specific field of interest. I learned a great deal by reading about Winston Churchill, Abraham Lincoln and people who had been in pivotal places in world history. They had to be very equipped to deal with what they were handed. Their situations may have been a matter of fate, destiny and timing, but they had the experience and wisdom to deal effectively with their circumstances. Imagine having many thousands, even millions of people affected by your actions and decisions, and you will have an inkling of the immense responsibility these people had. It can make our problems seem small in comparison, and it can enlarge our minds in order to comprehend a bigger picture of duty and competence.
One book that I would suggest to you, because it is valuable for business strategies, and managerial strategies, is The Art of War by Sun Tzu. This was apparently written in the 6th century BC, and is a study of military strategy. It has been influential to leaders for many centuries, and General Douglas MacArthur studied it, as did other famed military strategists throughout history. It may sound like an unusual business school recommendation, but believe me, it isn’t. It’s valuable and worth your time.
There are many roads to wisdom, and many wonderful books to educate us on our way. I’m sure you’ll discover your own favorites, but the first step is to take the time to read and learn in the first place. In the long term, this will save you time, because you will be learning from people who have already been faced with serious issues and who have been victorious. Remember, you need knowledge and experience first. Wisdom will come provided you give it a chance to develop.
First things first, and you will be pleased at what will follow. The achievement of wisdom will be all yours.
Donald J. Trump is Chairman of Trump University.
Defend Yourself from Scams and Flimflams
by Michael Sexton
"I went to a foreclosure auction the other day," said a woman who called our offices last week. "And do you know what? There was no point in bidding on any of the houses, because they were the same ones that I had already seen on realtors’ Websites and in newspapers. Other people didn't seem to realize that and they were overbidding. And the whole time, the auctioneers were pressuring everybody to bid immediately, sight-unseen, claiming it was the last chance to buy these foreclosed homes at rock-bottom prices."
Now, you might say that those auctions were not truly scams - just aggressive sales to help banks dispose of foreclosed property. And I suppose that it true. But the fact remains, buying a property in a rushed, impulsive way is unwise, especially when there are better ways to buy the same property at the same price.
Here are some pointers that our real estate faculty recommends for financial self-defense:
- Always base your valuation on hard, current comparables - or on realistic estimates of future prices. An auctioneer might claim that a property was worth $350,000 only six months ago - and then claim that you can steal it now for $250,000. That is faulty figuring. The question is, what are current comparables like? You either have to be able to document the value of a property against current sales - or have some realistic idea of what you can really expect to sell it for in the future. As a rule of thumb, add up the price you are paying and cost of the repairs that the property will need; If that figure exceeds the value of current comparable sales, you just might be paying too much.
- Keep an eye on cash flow. Can you really rent out a property until the market turns around, for example? Look at other rental properties in the area. Are there a lot of vacacies? Even if you can rent it, will you be able to generate enough rental income to cover monthly expenses? Deficient cash flow can kill you - even if your properties have good long-term appreciation potential.
- Always get the help of an experienced real estate attorney if you are considering foreclosures or other properties with troubled pasts. Former owners or mortgage-lenders can appear out of thin air, claiming to have rights to your property. You need to be protected.
- Never shortchange property inspections, title searches and other fundamental steps that are part of all good real estate transactions. Should you move quickly to seize a great opportunity? Yes, if need be. But that is not the same thing as moving recklessly. In your gut, you know the difference.
I wish you every success!
Michael Sexton is President of Trump University
Real Estate Investing: Beware of Red Flags
by Gary W. Eldred
“On this April Fool’s day, vow never to become the fool.†- Gary Eldred, PhD
Although I love real estate and believe it offers most people their best opportunity to become wealthy, no one should assume that every great-sounding offer actually represents a great deal. In fact, investors are well-advised to recognize and beware of numerous red flags that signal danger - or at least warn would-be buyers to slow down and examine cautiously before they proceed.
One such red flag that I continuously spot as I travel around the world looking at property offers involves “rent guarantees.†Although in the high-dollar commercial property field, rent guarantees sometimes make sense, the red flag rent guarantees are those offered by builders of new residential apartment projects - especially projects sold off-plan (preconstruction) to out-area-buyers. I’ve recently seen such offers in the U.K., Eastern Europe, the Middle East, and in much of Asia. (Timeshares, fractional ownership, and hotel room sales also have been making similar offers.)
Ads for such projects might promise something like, “8% rental guarantee for 3 years.†Why do I view that as a red flag? Because as with all “too good to be true†come-ons, it intends to dull your critical inquiries. Such a promise should cause you to question whether the market rent levels will actually support the project - and what is likely to happen to rents into the future. The promise implies (quite wrongly) that you need not worry about the true rental market.
Further, many naïve buyers fail to inquire whether the promised rental return yield refers to gross or net returns. (They are almost always gross--i.e., before operating expenses and amortization.) Moreover, the buyers fail to ask who is actually making the “guarantee†and what their financial capacity to honor such a commitment is. And in many instances, the “investment†units are rented out furnished, which could mean large out-of-pocket costs for furniture replacement in the not-too-distant future.
Although this “rent guarantee†example refers to just one specific type of hyped promotion, apply the general principle to all come-ons, promises, and “too good to be true†offers such as:
- “These properties are bound to appreciate at least 10% to 20% a year - just as they have in the past.â€
- “You set the terms, I’ll set the price.â€
- “Nothing down - below-market financing.â€
- “Priced well below appraised value.â€
- “No need to worry - you can always refinance.â€
As many cities throughout the United States now experience the down part of the real estate cycle, I am receiving many e-mails from investors (using the term quite loosely) who now find themselves in the red. In every instance, these investors failed to adequately research and forecast the underlying supply/demand fundamentals of the markets where they were buying, and /or failed to understand the pitfalls of the financing terms they were agreeing to.
So, on this April Fool’s day, vow never to become the fool. No matter how appealing the sales promotion and promises, no matter how much a market is booming, no matter how certain the deal seems in terms of risk and reward - before you act, rely on multiple metrics of valuation, multiple data points, and multiple sources of information. Even with property, long-term wealth-building invites and encourages education and work.
:fastlane:
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