This Issue: Leverage Huge Profits in Multi-Families and Multi-Units

With summer just around the corner, a lot of employees in a lot of businesses start dressing like it’s Casual Friday every day of the week. They utterly forget about professionalism and start dressing totally inappropriately for work.

In fact, Monster, an online job and recruiting site, conducted a poll about the biggest fashion faux pas in the office. Employers complained the most about employees who came in to work wearing tank tops and visible underwear. They also had a problem with employees who wear flip-flop sandals, Hawaiian print shirts, and shorts.

Of course...because none of that belongs in a professional environment. If you want people to take you seriously in the workplace, you have to dress the part.

When people come to me for a job interview, I expect them to look the part. If they’re not willing to wear a suit and tie, it’s probably not going to work. I’ve actually had people come to me in undershirts. They may be very talented but it’s impossible to get past that first impression.

Appearance really does matter. Whether you’re in the boardroom or a party or no matter what you’re doing, how you dress says a lot about your personality.

If you look successful, you’re going to be successful.

An article in today’s Wall Street Journal*, “Mortgage Woes Force Banks to Take Hits to Sell Homes,” alerts me to a trend you need to know about: a significant change in the way banks are disposing of foreclosed properties.

The article, by James R. Hagerty, reports that on Saturday, The Real Estate Disposition Corporation of Irvine, California, organized a property auction in San Diego where nearly 100 foreclosed homes were offered for sale at one time. More foreclosure auctions are planned for May 19^th in Los Angeles and for May 20^th in Riverside. Click here to visit The Real Estate Disposition Corporation’s Website to learn about more upcoming auction sales.oration

 To quote from the article:

"An auction of nearly 100 foreclosed homes here Saturday showed that mortgage lenders are having to accept huge discounts in some cases to unload such properties . . . A surge of foreclosures over the past year or so has left lenders struggling to sell a growing backlog of homes. Rather than relying on real-estate agents, the usual practice, some are turning to large-scale auctions to speed up the sale process.”

We are not talking about the come-on fantasy prices that you hear on those radio and late-night TV ads for foreclosed properties. These are realistic bargains. At Saturday’s sale, for example, a four-bedroom house in Oceanside, CA sold for $495,000. A nice price tag, but still about 30% below the property’s appraised value. And a condo in San Diego went for $120,000, less than half its appraised value.

By the way, there is a wealth of information on The Real Estate Disposition Corporation’s Website about how to buy properties at auction. Check out our Foreclosure and Rehab Real Estate Retreat too, to make sure you have the skills to quickly put together deals for foreclosed properties when good opportunities come along.

The Journal story also points up how dangerous it can be to believe the property values that you hear from appraisers. You apply for a mortgage, let’s say, and the bank sends out an appraiser who states that your property is worth $500,000. If you start believing that figure without benchmarking against current comparable sales in your area, you could pay too much, fall victim to the kind of “pie in the sky” thinking that leads you to over-improve the properties you buy - or worse. We all have to be sure to keep our heads on straight in this turbulent marketplace.

For still more coverage and perspective on auction activity in foreclosures, I'd urge you to visit Alexis McGhee's blog on Foreclosures.com.

Thank you for stopping by The Trump Blog this morning. Check in here often for updates on the housing market.

* If you are not an online subscriber to the Wall Street Journal, you may be asked to pay a fee before downloading this article.    

In response to my post of May 6, Trump University Member 8230 posed a question that will interest all our members:

“Three years ago I decided to expand a small one-room business into a four-room Day Spa in the No. VA area. I spent my own money with not much wiggle room financially. I have seven employees. Next door to the building my spa is located it in is a larger building with 11 rooms for sale. I want to own a building that my business can be located in and it's in the same town that is important to be in. I believe that this opportunity will pass me by because I do not have the capital to purchase this property. I know that I could apply for a loan, but . . . I believe that I would not be approved. Are there other options or ideas? I really want this, I can see it, feel it, I've already mentally renovated the place. I just don't have the financial means. I would appreciate any suggestions. . . .”

Member 8230 is asking a great question that opens up a lot of interesting topics for discussion. Because the fact is, multi-unit properties (be they apartment buildings, office buildings or mixed-use properties) offer many more ways to structure purchases than do one-family homes.

Here are some ideas for Member 8230 to consider. They’re only the tip of the iceberg, illustrating a few of the strategies that wise investors use to make money from multi-unit buildings, even when they doubt they have the financial resources to purchase them:

Find out whether the seller would like to get some continued use from the building. Would he or she like to have some of the space in the building, rent-free, in exchange for letting you purchase the property with no money down? Be flexible and be willing to offer concessions up to the point where they make financial sense for you. Work the numbers. The place to start is to determine what commercial space is renting for per square foot in your area. That's the benchmark. It tells you the dollar value on what you are offering the seller as a negotiating chip.

Consider different ways to configure the building for mixed use. Does local zoning allow you to convert the bottom floor into a store or an office? How about converting the property into a residential or office condominium with a store you rent out on the bottom floor? Multiple-unit means multiple opportunities. You just have to use your imagination and see all the configurations that exist in the building you are considering.

Use every part of the property to generate income. How about renting out parking spaces or storage area in the basement? Think like that legendary Eskimo who caught a seal and used every single part of it to advantage, without throwing any part of it away? With imagination, you can wring income from virtually every part of many multi-units.

Yes, there is gold to be found in multi-unit properties. With the right knowledge, could they be your path to real estate riches?

Contrary to what you might think, most successful entrepreneurs enjoy a sense of calm control over their own lives. Compared with people who spend their lives working for other people, subject to whims not remotely under their control, entrepreneurs have a much better shot at happiness and inner peace.

But starting a company doesn’t always work out so well.  It’s rare to find much joy in a business that fails, exhausts you, or makes you a stranger to your family.

Everyone has their own unique interests and objectives, but it makes sense to identify the common ground. Over the years, the happiest entrepreneurs I’ve known are those who really enjoy the process of getting something off the ground. For the right person, even overseeing a failure is a way to learn the right steps to get it better next time.

With this in mind, here are a few ways to evaluate if the path you’re thinking about is right for you:

Do what you love. When your passion and your enterprise are in sync, the effort feels more worthwhile.

Remember that size matters. You might want to grow into a vast enterprise - or you might not. To be successful, a company must generate sufficient and sustainable profits, not necessarily grow big. Sometimes, intentionally keeping your organization small can allow you to enjoy a better quality of life.

Satisfy your curiosity. Read everything you can get your hands on. Become a student of your industry, your enterprise and your life. Take professional courses, like those available at Trump University, to get the most relevant and actionable information.

Find ways to be unique. There are winning formulas in every business, and straying too far from these can get you into trouble.  But you can still experiment with ways to differentiate yourself from the pack, especially when they make your company’s offerings look more exciting and rewarding.

Make your work count. When you own a company, your time is scarce.  It’s energizing to roll up your sleeves, but balancing what’s urgent and what’s important is a crucial skill to develop.

Build something to last.  Done right, your business will generate value for today and tomorrow.  It always pays to do a great job for your customers and have them come back for more.  As discussed in the Entrepreneurship Mastery Program, there are crucial differences between just doing it and doing it right.

Don’t make family balance an afterthought. Think about it from day one. If you get it wrong in the early stages of being an entrepreneur, it will be a lot harder to repair later on.

You are invited to take part in Andrew Bein’s Microsoft Office Live "What's Your Motivation?" seminar, to be held on Thursday, May 17, 2007 from 9:00-10:00 AM Pacific Time. CLICK HERE to register for Office Live Event ID #1032337748. Or to register through Microsoft’s Live Event homepage, CLICK HERE.