Donald: Thank you for posting, I appreciate it.

Charlie: I will try to find out as much information from them as I can and will update everyone as we go along. I'm looking forward to our next meeting this upcoming Sunday. She has already introduced me to another participant (her brother) in our upcoming deal and he may or may not work with me. Will keep you posted on that as well. The Trump Seminars have been hosted in numerous states so my assumption is that it is good throughout the USA.

Bryce: Cool outline. Thank you for the information. I will definitely have to look into that scenario. I was speaking with a mortgage broker on behalf of my investor and he stated sometimes builders or other entities (like real estate investment trusts) will want to make more than the 1-2.88% the bank is paying in interest, so they will pool funds into an account and give mortgages out based upon the investment property being able to sustain itself. The founders will create a bylaw as to what the criteria is for approving a loan and if an applicant can meet the check list, then the loan is funded at 5-8%. 

For example, lets say an eight family building has an annual rent roll at full capacity of $80,000 and an operating expense of $25,000. It is considered a self sustaining investment property if the mortgage, taxes, insurance and PMI come in at less that the balance of revenue generated. If the mortgage et al is $35,000 annually, the purchaser is generating a positive cash flow of $20,000 above costs (to save for repairs and other building maintenance operating expenses). If a building's cash reserves grows to a comfortable amount ($50K -$100K) then the purchaser will start to take out a small percentage of the revenue for personal use (like drawing a salary for managing their investment or using some funds to make a down payment on another building not qualifying for 100% financing).

Pat: They are considering 2-4%. I wont know until the weekend.

Linda: I was pretty surprised and happy to hear that as well. Hats off to them! 

Regards, C.   

Pat: The questions to and from the mentor were interesting. For example, in New York there is a law regarding the theft of homeowners' equity (e.g. pre-foreclosure or other distressed properties with liens attached that are a matter of public record) that makes it illegal for investors to offer less than 82% of the assessed property's value unless the property meets several exclusions like (a) family members and friends purchasing, (b) personal home purchase where the investor is going to live, (c) a purchase made with seller concessions for repairs or funds expended on their behalf for other debts, etc.

It appears when you suggest scenarios about why something may be a purchase price to offer, you have to be aware of what you can and can't do regarding pricing advice in the state where the property is located.

Another example has to do with rent stabilization, section 8, etc. In New York state every building with six or more residential units falls under the Department of Housing and Community Renewal and there are reporting requirements and rent registration rolls that must be certified and submitted. An owner of a commercial residential unit is restricted in how they can apply for rent increases or what percentage to implement until the unit is deregulated ($2000+ per month). Depending upon what your client wishes to buy, one may have to do quite a bit of reading to advise the buyer just how complicated their choice of property may become. If they just want a commercial or mixed use building without a lot of restrictions, then suggesting a 5 family with a store or two would be a better option (no DHCR reporting to the government, rent price restrictions, etc).

A third example concerned questions about what type of "value" I as a REALTOR would bring to the table. What services do I bring to Trump U customers? How much research was I willing to do to look out for their best interests? Although we are not required to pull the certificates of occupancy to check on the legal use of a property, would I if it would help my clients make up their mind?

They brought up a true story about Trump finding a multi million dollar building to purchase and getting a price reduction because when Trump pulled the public information from the department of buildings (online at NYC.gov, drop down table on the left hand side for all city agencies), it turns out the building was very old, under three former building codes which would require serious renovation to bring it up to today's standards.

I knew the C of O and permit history is online as well as building complaints and violations. I also knew that ACRIS under the Finance Dept's cite on NYC.gov gives you PDF files of the mortgages, deeds, etc because it is the City Registrar's database, so I answered how I would have helped her discover what Trump did and I was basically grilled about how much I knew about discovering the other possible facts that could make or break a purchase for my client. 

The fact that I was willing to tell my client how to find this free information (to look it up on their own) appeared to be the litmus test I passed with flying colors. It was important to know whether I was going to work transparently with them, help continue to educate the buyer, or try and be mysterious so the client would lean more on me than they had to. 

Who knows what a different mentor would use as a knowledge test. I was fortunate I knew enough about free government resources to help my client work independently from me, in addition to the specialty databases we use as real estate professionals, to answer the scenarios correctly and opine about real world choices. Providing a rational basis for why I would and would not suggest considering a property to purchase (regardless of commissions) is the key.

The client always has the final say, and everything is subject to inspection, appraisal and mortgage.  

Regards, C. 

Tony: They also explain  VA, FHA and Conventional mortgages.  It is not restricted to 100% financing. My  client is interested in that route so I posted asking my blog asking about it. I apologize to everyone if anyone is under the impression it is the only way to go. It is not. Trump U lays out all available options and the seminar participants are free to subscribe to which ever combination of options they choose.

Regards, C. 

Matthew: You may be right. They teach by sharing various developer's investment strategies and mistakes while introducing the realities of the real estate market from both the buyer and seller perspective. It's interesting how they illustrate their points. I'm looking forward to my next set of conversations with these people. I'm actually considering signing up for a class/course the next time my kids school schedules line up with their seminar dates. 

Regards, C. 

Hi Josef,

Thank you for such a lovely invitation to help me arrange to attend a Trump seminar one day, I appreciate your kindness in offering. It really made my day!

Regards, C. 

UPDATE:

Two T-U students investors have placed bids, one on a commercial property and the other on a foreclosure, both for 3% for the buyer's agent. Cool. I signed up for the free foreclosure training class for May 19th and am still hoping to work out my schedule to do the investment course. Will let you know how the short sale and commercial bids progress.

Regards, C.