I'm currently reading Trumps 'Art of the Deal' and he said that he built the Trump Tower for 190 million, and selling the apartments alone brought in 250 million, so the thing must have been paid off instantly.
So what's stopping me from doing the same?
Getting the enough of the first 190 million to convince investors you're not full of shit.
i suppose the art in "the art of the deal" is not
a) getting 190 venture capital to invest or
b) getting the acutal thing built
the art is: getting the ground and the building permit before someone else does. Building a skyscraper in Manhatten is, i supoose, not really a risky investment but getting into the situation to acutally do this is the hard part, i think,
as in: seeing the oppotunities before everyone else.
>>1167358
What if I have a pretty respectable architecture company with a good history of developing small real estate and good connections to the banks?
>>1167361
So if I manage to get good property and permit I'm set? Guess it's all about being at the right place at the right time then..
I don't suppose projects like this are repeatable outside of huge hype megacities..
>>1167358
not true. if you have an objectively (?) good opportunity for an invest into housing, every bank will give you reasonable money.
source: bought a shitty small flat in 2007 in a west german city for renting out to students. Credit was 70% of the evaluated valued of the flat. i was still a student in this time. Got 70.000€ for 1,8% intrest for 10 years fix rest came from my grandmas death
>>1167373
translation: Get a project running which is so good that the bank would love to do it by herself (the bank). But you are the nontransferable opportunity, so the accapt you in the middle, i guess
>>1167383
So basically I'd just have to travel around looking for good sites, acquire them as cheap as possible and then convince everyone to finance my awesome projects there?
The only issue seems to be to acquire the sites in the first place..
>>1167393
in the reality i works this way.
e.g. a family inherits an old house on a (now) attrative property. they have no money nor experice of building so they hire an building agency which proposes the sum of X$ after they built and sold the planed buildings. the family trusts the agency. the agency is the only representative of the property torwards the banks. banks give the money b/c reasonable invest in the first place. If the family in the example would have went to the bank instead the would probably less money but instant money.
>>1167354
>get a job that pays you decently compared to the amount you spend
>have this job for more than six months
>have your parents cosign a car loan for you
>make your payments on time every month + extra
>after six months of paying this, snowball the fuck out of the car debt and pay off the car
>accumulate roughly 6000 dollars
>look for homes on the internet
>find repossessed homes sold by the bank for under the market value
>get a loan to buy the house
>immediately hire a decent contractor to fix what needs to be fixed in the repossessed house (sometimes when people get kicked out of a house, they take toilets, ovens, rip wires out of the walls, just because they're angry at being kicked out)
>once it is fixed start trying to sell the home for sale by owner, putting signs out, listing it on websites that you can list it on
>sell it at market value
>repeat
Let's say you have a home that is valued at 90k. The people who "own" the home can't make their payments, and they get kicked out by the bank who actually owns the home. The bank wants to get their money back quickly on a bad investment, so they price the home to sell, at 60k. You buy for 60k, putting 5% down on the loan, roughly 3k. You pay a contractor around 2k to fix what needs to be fixed, with 1k in reserve for fees and costs that are unforeseen. The mortgage payment for something like that is around 450. 3 months later, it sells for 90k.
450(3) + 3000 + 2000 + 1000 = 7500 (rounded up). 30k (difference in foreclosed vs market value) - 7500 = 22500, your rough estimation of profit for a property you held for 3 months.
>>1167415
i agree with your greentext but the reason why not many people doing this is because it a high rist investment. - Why should a 90k house be sold for 60k? if its a good invest and worth the 90k, shouldnt the marketprice be somewhere around 80-85k (reduced because risk of repairs). This and i think you underestemate the cost of acutally rising the value of a property by improvments: 1k repairs dont make 10k in value. Why should the bank sell it for 60& when the could do this by themselfs and sell it for 90k? - serious question from eurocuck
>>1167393
And the issue is also to get people to finance your "awesome projects" in the lot you bought.
It is much easier, and much more viable in the real world, to get a loan for a property that already has something on it, like a house. Even better if the bank thinks you will tie your livelihood to that house and live in it. Even better if the price you get the bank to loan you money for is below market price, as in the case of a foreclosure.
Then, you turn around and sell the house at market value, immediately paying back the bank for the loan they gave you. Your bank is happy, you are happy. In this case, they are much more likely to finance your next venture. After doing this for a long time, they would be much more happy to finance your "awesome projects", much more happier than to finance some random guy off the street's "awesome projects".
The reason why Donald Trump has so much success is because he was raised learning from a man who did this for his whole adult life. He went to Wharton to learn how to do this, and he got his father's help to start doing it himself.
I'm not knocking Donald Trump, he is an excellent negotiator. This is a man who used his overwhelming debt as leverage in negotiation with the banks to get them to renegotiate the terms of his loan and come out of a bad situation on top.
>>1167437
>Why should a 90k house be sold for 60k?
Because the bank is losing money on it every second they hold it and they want someone to buy it as fast as possible so they can start earning money on it again.
>shouldn't the market price be somewhere around 80-85k?
Not every home in the market loses 15k off its price just because someone forecloses. For it to drop that dramatically in value, every home like it would have to drop as well. The home in question does not occupy 100% of the market. This did actually happen after the 2008 thing because the amount of foreclosures were so huge. The actual market value of houses plummeted. The house in question is not being sold at market value, it is being sold under market value so it sells quickly.
>I think you underestimate the cost of actually rising the value of a property by improvements
I'm not proposing that the price of the home rises because of improvements. The actual market value of the home is 90k. It is being sold for under market value at 60k. The improvements are so people will actually buy it at 90k and not try to negotiate the price down or add stupid things to the contract. Some people will not buy a house if certain things in the house are destroyed. It is just to get it to sell faster, not raise the value of the house.
>Why should the bank sell at 60k when they can do this themselves and get 90k?
The bank is not in this business. The bank is in the business of earning the check from someone who lives there. The bank doesn't even know what is wrong with the house. Find out what is wrong with it will cost them money, fixing what is wrong with it will cost them money, holding the house for a long time will cost them money.
If the person paid 70k off the 90k mortgage and didn't make enough payments after that, the bank will take the house back. It doesn't pay them 70k. If the bank sells at 60k, they will have made 130k on a 90k house, so they're more than happy to do this.
>>1167451
>Why would the banks sell for below market value instead of just putting their own contactors ont eh job etc?
>>1167466
See final question.
I can't believe there are some people who don't know about this. I grew up in a real estate family, my mother was an agent and my father was a drafter. They've made money on almost every home they've lived in. A lot of people do this for quick money, some buy property and put renters in there, some buy foreclosed homes to live in just because they get a good deal. My parents told me bed-time stories about making all kinds of money off of awesome real estate deals. Its only going to get better under the tax plan and regulatory changes of a Trump presidency. He is going to make real estate great again.
>>1167354
Prices are way higher. He was already somewhat established at that point. You don't have investors, or start-up capital.
>>1167479
That makes a lot of sense.
So best thing to do would be to find a good way to find and acquire said real estate before someone else does.
>>1167539
But I do. My family already owns some housing, but we usually build it ourselves and don't sell, so the initial cost is higher and it takes longer to pay off, but then generates better rent because it's top quality.
But since we now have a bunch of capital saved and a good relationship with the bank, it seems possible to ramp up / escalate the business.
>>1167354
>So what's stopping me from doing the same?
$190 million is stopping you from doing the same, anon.
>>1167376
Yeah, in Germany. Good luck doing that in the US with fucking retarded lending policies and regulations.
Wow this is a great business with 98% chance of success. Sorry your credit doesn't meet the lenders requirements, your income doesn't meet the lender requirements, we need you to put down 50% and get a life insurance plan worth atleast 1.5 times the asking price of the loan.
>>1168330
Funny enough I am in germany.
But is it really that bad in the US?
Alone from the whole student debt issue I had thought the banks would dish out loans left and right.
I can't imagine they would deny a loan for a highly profitable low risk deal unless you are a criminal or total hobo..
>>1167354
Why do that when you can just buy Trumpcoins?
>>1168421
>making 60 mil profits with Trump coins
Please
Or, you know, why not both?
>>1168330
But i tought that in the US you get a far easier credit on a property compared to europe?
>>1168341
I guess, as the huge vaste space the US mainland has, you can more easily invest in a deadend property (see: niggerquarter in detroit-meme) which will actually sink in value and so is a higher risk for the bank.
In europe, execpt for some real shitty places, property prices are more stable and they always newer totally sink. They maybe stagnate on a level but not to a total failure-level.
Question: Is there a reason why banks who do need to sell a repossessed property, do it by offering it to the public? As in europe, it seems much better to startup a daugter.company whichs purpose is to do the renovate/lease/sell the house stuff (compare the 60k vs. 90k example)? Is it to guarantee a non-manipulated selling price since the delta between the open credit and the selling price goes to the former ower of the house? You get my point?
note ot myself: my english is shit.
>>1168853
>Is there a reason why banks who do need to sell a repossessed property, do it by offering it to the public?
I think the banks do exactly that for the most part, or maybe the market is really fast, but I've never heard of a property being sold at below market value by a bank. But who knows how convoluted it all really is..
Could also be that there are laws against this, because similar laws exist elsewhere. For example architects are often required to ask for offers from many contractors instead of just giving the job to their friends, so maybe banks are required to put the property up for public sale before their daughter company comes in to buy it. Idk
>>1168853
The banks can write off the loses on loans against their taxes. So they ultimately don't lose too much except for opportunity costs of not having full performance and higher temporary administrative burden. They really don't want the liability and costs of managing real estate. Most banks hire outside contractors for basic maintenance until properties are sold at auction or sold by firms that offer full service clearing of bank owned properties.
So this is why in the US 'flipping' (renovation) houses is a business. People or companies will buy previously bank owned property with the expectation they can do all the work to bring a house to sell at market value. The risk is that the work costs more than the profit made by selling at market value. The margins are also far too small for banks to be interested.
Where I live banks are selling many properties below the previous selling prices circa 2005. There are properties you can buy from the bank that instantly appreciate in value because they do sell below market value because banks will not finance them (property is too damaged or sale price is too small). Cash buyers or non traditional financing can get you some great deals.
>>1169963
Where would I look for these properties tho?
>>1167354
because he did that in the junk bond era of the 80's when everyone was doing that
>>1167373
>What if I have a pretty respectable architecture company with a good history of developing small real estate and good connections to the banks?
yup you totally could have done that if this was the 80's
>>1170217
>yup you totally could have done that if this was the 80's
Damn
Guess I'll have to find a CURRENT YEAR way of doing it
