Ever wonder how The Donald grew his wealth to $4 billion? Read on to learn all the secrets of the Donald Trump Real Estate Investment Strategy, in this Donald Trump Series: Part #1.
Donald Trump, the 45th president of the United States, has been out of the public eye since he lost his presidential seat to Joe Biden in the 2020 election.
To many, Trump’s presidency was a mess of controversies…
But while he may not have been a ‘great’ president, his business life can surely be a lesson (or at least a fun read!) for aspiring real estate investors.
That’s because, with an estimated net worth of 2.5 billion USD, Trump has made it to where many of us would only dream of reaching with our real estate strategy.
So, politics aside, would you like to know the “Donald Trump Real Estate Investment Strategy”?
I promise it won’t disappoint!
LEARN MORE: Read Part 2 to learn more about the Donald Trump real estate failures!
It All Started with a “Small” Loan (Of A Million Dollars)
Donald Trump didn’t start from scratch. He’s not a self-made man. He’s more of a self-improved man.
Yes, he has real estate and general business acumen in abundance…
But he never started off from zero.
He got a “small” loan of $1 million from his dad, Fred Trump, a real estate tycoon himself, to begin his career.
At the age of 25, Donald Trump was put in charge of the family business, which he renamed “The Trump Organization.”
Trump shifted the business’s focus from middle-class housing projects in Queens and Brooklyn to high-end, luxury real estate in the more upscale areas of NYC.
Since then, he’s been extremely successful (though not always, yikes).
He developed upscale buildings all over the world, including Grand Hyatt, the Plaza Hotel, and numerous Trump Towers.
So what has been the Donald Trump real estate investment strategy for success?
He Has Thrived on Other People’s Money!
Unlike most entrepreneurs, Donald Trump had the advantage of having a rich and influential father.
And, Trump very often cashed in on that…
The single biggest Donald Trump real estate investment strategy has been to use other people’s money (OPM) to develop his empire.
And, since his rich dad had his back, Trump could get lots of money easily, mostly as massive loans from banks and other rich investors.
In fact, even his father personally loaned him hundreds of millions of dollars from time to time, as some say. That’s in addition to millions of dollars of family gifts to his son.
The banking and political connections of the Trump family also played a huge role in helping the younger Trump climb up the ladder.
So, what can you learn from this, even if your father isn’t a real estate tycoon?
The biggest lesson of the Donald Trump real estate investment strategy is Other People’s Money (OPM).
Even if you aren’t rich, you can still use bank loans, partner with experienced investors, and start building a network of support to rely on for your investments.
And it’s never too early to start!
Branding Is Trump’s Secret Sauce!
Thanks to OPM, Trump jumped from the initial $1 million investment from his dad, to a net worth of $1 billion in 1988, and then $4 billion in 2015.
That’s a big leap!
And whatever you think about Trump, that clearly shows real hard work and smart thinking behind the scenes.
How did he achieve that? Through the second Donald Trump real estate investment strategy: branding.
Trump is a big-time HYPE creator! He’s admitted to it many times, saying that he uses ‘exaggeration’ to sell himself.
The man has openly used his TV fame, and later his presidency, to leverage his real estate business.
So much of his fortune today comes from his brand name only, Trump this, Trump that, you know…
Many businesses that have no connection to Donald Trump still jump at the chance to use the ‘Trump’ tag with his license, for example, the Trump Ocean Club, Trump Fine Foods, etc.
So what can you learn from this as an aspiring real estate investor?
Brand yourself well, and make your presence known in your area!
Yup, He’s an Ace Negotiator…
Donald Trump also has the skill of leaving a lasting impression on people’s minds.
He’s a good talker, a fine marketer, and an excellent negotiator.
He has the reputation of a straight-talker from his TV series The Apprentice, in which he came across as a ‘no-nonsense’ sort of negotiator.
One great example of his negotiation power is when he won over NYC to give one of his hotels a 40-year tax break.
He saved 160 million USD on that property!
Negotiating is a crucial skill to building personal wealth in any job or industry.
So, if you want to succeed, join a negotiating class, or start negotiating for yourself in daily life to develop your skill.
It will start small, but you can also become a master negotiator and a master at selling yourself in time!
He’s Penny-Wise But Not Pound Foolish
Trump has described himself as someone who ‘fights like hell to pay as little as possible.’
And, that is very true.
Donald Trump, just like his dad, seems to hold money in the highest regard.
Fred Trump was known to go under budget on government projects and pocket the difference as profit for himself.
He was questioned about it many times, but never got caught though…
Also, senior Trump had the habit of getting around tax laws, which junior Trump picked too.
So, what is the lesson for an aspiring real estate investor?
Do your research into all the potential loopholes that exist in your favor, and use them to grow your real estate wealth.
From tax breaks to grants, to items you can write off as business expenses…
The list is endless, and well worth your time spent looking into it.
Speaking of which…
Exploiting Loopholes in Tax Laws
Donald Trump has been accused of having evaded tax multiple times.
According to the Times, Trump paid a minuscule $750 in federal income taxes in 2015 and 2016.
That’s not $750 million… just $750!
And, that goes to show how sharp and shrewd accounting can help real estate investors save huge amounts of money.
Accountants who can make (as if with a magic wand) millions of dollars of Trump’s operating income to appear as just a few thousand on paper.
Tim O’Brien, an American journalist, points out that this art of avoiding taxes runs in the Trump family.
He said when Fred Trump passed part of his wealth to his children, he missed inheritance taxes of about $500 million easily.
And, that’s exactly how Donald Trump likes to play the game too.
So, Is Trump a Real Estate Mogul?
Donald J. Trump does not make it to the top 10 lists of the New York City property developers.
But, with a fleet of NY skyscrapers, golf courses, deluxe towers, shopping plazas, and much more in his name, Donald Trump IS a real estate mogul.
He has accumulated enormous wealth in the past 40 years, and he’s definitely a BIG FISH in American real estate.
However, he’s not infallible!
Trump has also made some terrible mistakes in his business career, including his much-talked-about flop: the downfall of his hotel and casino empire.
Following this, he lost much of his money and too much of his creditworthiness!
Would you like to know (& be warned of) the “Donald Trump Real Estate Failures“?
Yes?
That’s great! Then read the second part of our Donald Trump Series!
And if you want to read more articles for young real estate investors, check out our AQRE Home blog!
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Sources:
https://www.thesun.co.uk/news/2036838/donald-trump-age-coronavirus-children-net-worth/
https://www.washingtonpost.com/news/wonk/wp/2015/09/03/if-donald-trump-followed-this-really-basic-advice-hed-be-a-lot-richer/
https://www.forbes.com/sites/danalexander/2020/09/28/yes-donald-trump-is-still-a-billionaire-that-makes-his-750-tax-payment-even-more-scandalous/?sh=210c84be2885
https://www.npr.org/2018/10/06/655121335/how-trump-got-his-fortune
https://www.bbc.com/news/business-35836623
https://www.washingtonpost.com/news/wonk/wp/2016/02/29/the-myth-and-the-reality-of-donald-trumps-business-empire/
https://www.politico.com/story/2016/09/donald-trump-other-peoples-money-228434