This Issue: In Real Estate, Fortune Favors the Brave

Just how bad is the current real estate investing market? It is difficult to say.

Last week, a story on Fox News reported that "The pace of U.S. home building unexpectedly strengthened in September as new housing starts rose 5.9 percent." However, a story in Mortgage News Daily emphasized that despite that uptick, new housing starts are still running 17.9 percent behind where they were one year ago.

So what is the best way to play the current market? Here's a summary of advice I'm hearing from the Trump University faculty.

• Take advantage of the strong buyer's market. There are many areas of the country where houses are sitting on the market. That means that it is a good time to buy properties for attractive prices, negotiate aggressively for owner financing or profit from foreclosed properties. But remember, you could be sitting on those properties until the market strengthens. That's why the words "buy and rent" have replaced "fix and flip" in many recent articles about real estate.
• Don't pay too much. For some focused advice on determining the highest figure you should pay for any property, see my blog post of September 27, Success Comes from Making the Numbers Work.
• Don't over-improve residential properties that you intend to sell. This is no time to build a family room or install new central air just to differentiate your property from others on the market. Do the essential fix-ups to make your properties competitive against similar properties on the market. But remember houses sell because of location, size and price as compared to comparables. In the current market, spending money on nice-to-haves can cut too far into your profit margins.
• Look for properties in communities that are relative tax bargains. Most first-time home buyers base their buying decisions on how much they can afford to pay monthly, not the selling price. That is why it is a good strategy to invest in communities with low real estate taxes. They could be rural communities, or towns where large tax-paying companies or shopping centers are located. By the way, a book that can help you find low-tax retirement communities is America's Best Low-Tax Retirement Towns: Where to Move To, and From, to Slash Your Taxes in Retirement! by Eve Evans.

Is this a confusing time? Of course. When you come down to it, most times are. Even in boom climates when houses are in short supply and prices are surging, you can still lose money or fail to get top dollar for the properties you sell.

So don't be an ostrich. Make investments, but smart ones. Our Real Estate Investor Training Program can teach you the up-to-date, confident outlook you need to make money in this, or any other, market.

Michael Sexton is President of Trump University.

Not that long ago I talked about a new study that found more and more women are becoming addicted to Botox. Now I read that men are fueling a boom in cosmetic surgery and other treatments.

Apparently, it's not just women who are vain.

The most popular procedures men request are getting ridding of the bags under their eyes, erasing wrinkles and getting treatments for baldness.

Men who have had cosmetic treatments say that in the workplace any advantage helps. And looking young, in many instances, makes them feel like they have an edge over their competition.

Surprisingly, it's men in their 30s who seem to be most likely to go in for cosmetic procedures because they are the most afraid of looking old. They want to go into the boardroom without wrinkles and bags . . . and with lots of hair.

But I think they've got their priorities out of whack. They need to worry more about their brains than their wrinkles. If they're good at making deals, no one's going to notice the bags under their eyes.

Donald J. Trump is chairman of Trump University. He shares his views in many courses, including The Art of Buying a Business.

The world is full of well-intentioned people who are eager to offer you advice about investing in real estate. But do they know what they are talking about? Do they possess the experience, expertise and current information needed to advise you intelligently? If not, their advice can do a lot of harm.

For example, if your lawyer sister hasn't seen a real estate contract since she took the Real Property 101 course in law school 10 years ago, she's not the person you need to review your purchase agreement.

So how do you find the best advice? You hire the best lawyer, accountant or other professional advisor you can find.

But then you need to face another thorny issue. Suppose the authority you hired gives you advice that turns out to be wrong? It happens. Some years back, I solicited legal advice on a property transaction. The lawyer I retained gave me advice that turned out to be based on a law that had changed six months prior to the date I consulted him. His slip-up cost me more than $100,000.

So even when you are dealing with experts, don't assume their advice is error-free. (Or free of conflicts of interest, dishonest intentions, etc.)

As I say in my book, Trump Real Estate 101, "I go over every detail with my experts. They're on my team, but I'm the General."

But I do something else too - and this is critical . . .

I put it in writing

During my conversations with experts, I take detailed notes. Then I follow up by writing a thank-you letter. In it, I set a tone of appreciation and thank the advisor for his or her advice. Then I restate that advice, repeat my understanding of the issues we discussed and describe the action I intend to take based on that advice.

This letter achieves three goals:

1. It helps me build the relationship I want to cultivate if that expert turns out to be brilliant.
2. It gives that advisor the chance to correct errors he or she made, or to correct my understanding of what was said.
3. It serves as documentation of the advice I was given, in case it turns out to be wrong.

This letter can be literally worth its weight in gold if a professional's advice results in a lawsuit, a regulatory complaint or one of the other situations that can turn a good investment into a nightmare.

I started this post by warning you not to take advice from well-intentioned people. But if you take the advice I give in this article and put it to good use, you will thank me. That's an opinion I am willing to stand by.

Gary Eldred, PhD is professor of real estate at Trump University, where he teaches The Real Estate Investor Training Program. Classes forming now.