Donald Trump built his wealth through estate investments and development. He inherited a portion of his father’s real estate business, which he then expanded through strategic property deals, hotel developments, and branding.
Trump also ventured into entertainment, including his popular show The Apprentice and his new social media app Truth Social, which recently went public via a SPAC merger and now trades as Trump Media & Technology Group Corp. (NASDAQ:DJT).
Investing in real estate is not as easy as it once was, especially with rates at elevated levels. However, investors can explore alternative routes to enter the real estate market, including investing in real estate investment trusts (REITs) or participating in real estate crowdfunding.
So, how can you invest like Donald Trump? Well, his portfolio is highly concentrated in two states – New York and Florida. Let’s focus on New York, which he is more known for.
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New York State of Mind
Alexander’s (NYSE:ALX) is a REIT that leases, manages, develops, and redevelops properties in New York, making it a great way to get exposure to the city where Donald Trump began building his portfolio. Alexander’s portfolio consists of five properties in greater New York City, including 731 Lexington Avenue, the Rego Center, and The Alexander apartment tower.
Alexander’s currently pays a quarterly dividend of $4.50 per share, equating to an annualized rate of $18.00 per share, which gives its stock a yield of about 8.1% at the time of this writing.
It’s important to note that Alexander’s has maintained its $18 annual dividend since 2018, making it a very reliable source of income to go with the potential price appreciation in its world-class assets.
Another way to invest like Trump
You can also get started in real estate like Donald Trump by using a real estate crowdfunding platform, like Bezos and Khosrowshahi-backed Arrived Homes or Marcus and Millichap-backed EquityMultiple. Real estate crowdfunding platforms allow you to connect with other investors and pool your money to purchase property for passive real estate income.
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The real estate industry is starting to undergo some dramatic changes, especially in light of the recent Sitzer/Burnett v. National Association of Realtors case ruling in October that found the real estate industry guilty of collusion to inflate commissions by forcing home sellers to pay a broker fee to the homebuyer’s agent in addition to their own listing agent. A federal jury awarded $1.8 billion in damages to home owners who brought the class action suit forward in Missouri.
More recently, the National Association of Realtors announced on March 15 an agreement to settle the above case, as well as other lawsuits regarding broker commissions by paying $418 million in damages and eliminating certain objectionable rules related to real estate commissions. The trade association also agreed to put in place a new set of rules, including one that would require a buyer’s agent (those who represent the buyer in the real estate process) to enter into written agreements with their clients to help them understand exactly what services and value will be provided, and for how much. These changes are scheduled to go into effect in mid-July, according to the association’s announcement.
Additionally, the U.S. Department of Justice has been scrutinizing the structure and elements of listing agreements, suggesting inevitable shifts in how real estate agents are compensated and by whom.
All of this will have far-reaching implications in the industry: It is now clear that sellers do not have to offer 2.5% commission to the buyer’s agent.
Even prior to the Sitzer verdict and the association’s pending settlement, brokerages could see the writing on the wall. Not surprisingly, they have been training agents to ask buyers to sign agreements committing them to work exclusively with a particular agent and compensating them for their services.
While these anticipated industry changes are expected to benefit both buyers and sellers in the long term, there are a number of details that buyers should consider before signing any agreement with an agent.
Tips for homebuyers
Choose the right agent
Many buyer’s agents will request that potential buyers sign buyer representation agreements – a contract between a homebuyer and a real estate agent that outlines the terms and conditions of their working partnership. While some agents will fully explain the terms and ramifications, others may attempt to gloss over its significance or slip it in unnoticed. It’s essential for buyers to understand the agreement fully to avoid unexpected commitments, such as how much commission they will be expected to pay. This is particularly important since it’s been the longstanding practice for sellers, rather than buyers, to have paid the commission fees for the buyer’s agent.
Although the notion of paying for their own agent might catch buyers off guard, this structure offers several benefits. It encourages competition among agents, which should enhance service levels and exert downward pressure on commissions. Further, compensation can be tailored to the agent’s level of competency and time invested, ensuring fair remuneration for their services. For instance, a buyer who finds a home independently and receives no advice on disclosures or financing options may pay a lower rate; whereas, a buyer from outside the area who requires extensive analysis and guidance over months of house hunting may find great value in an agent’s services, justifying higher compensation.
Finally, this structure also reduces the risk of agents steering buyers toward less-desirable properties solely because of higher commission.
The level of experience, expertise and quality of service, however, varies significantly among agents, making it crucial for buyers to conduct thorough interviews, akin to sellers interviewing listing agents.
Factors a buyer should consider include:
- Developing a list of priorities
- Researching and interviewing three to five qualified agents, making sure to ask detailed and specific questions
- Signing agreements with one or more of the chosen agents
Through this process, the buyer will be able to ascertain the pros and cons of each agent.
Limit the geographic scope of the representation agreement
Local expertise is very important in real estate. Nevertheless, some buyers sign agreements committing themselves to working with one agent despite considering various geographic areas.
Most buyers would be better off working with different specialists from different areas. For example, one agent could focus on the Los Altos to Atherton area; another on the Hillsborough, Burlingame and San Mateo area; and a third on the Saratoga and Los Gatos area. Agents who claim expertise across all areas probably lack true specialization in any particular locale.
Beyond localized knowledge, buyers benefit from agents who are aware of competing agents in different areas, motivating them to act diligently to secure the perfect property before their counterparts do.
Limit the duration of representation agreement
Buyer representation agreements should strike a balance between giving the agent adequate time to demonstrate their expertise, work ethic, responsiveness and value and not holding the buyer hostage if they’re dissatisfied.
Generally, contract periods of 90 and 120 days suffice. If the buyer is happy with the level of service provided, they can always extend the agreement.
Consider an agent’s access to off-market homes
Properties that are sold without being listed on the Multiple Listing Service (MLS) and without marketing through other channels, such as local newspapers, TV commercials, paid online ads and direct mail, tend to sell for less money than similar properties that receive extensive promotion. While this is generally very bad for sellers, it can result in a good buying opportunity. Therefore, an agent’s ability to access these off-market properties is a significant advantage to his or her buyers.
Typically, high-volume buyer’s agents are well-connected to off-market properties. Similarly, brokerages that handle substantial volume in specific cities or neighborhoods often possess valuable insights into these less-promoted properties.
This guest column was written by contributing writer Michael Repka. Repka, CEO and general counsel for DeLeon Realty, Palo Alto, formerly practiced real estate and tax law in Palo Alto. He formerly served on the Board of Directors of the California Association of Realtors. He can be reached at DeLeon Realty.
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The real estate sector has been one of the most significant drivers of economic strength and growth in India. As per the latest data outlook real estate demand is estimated to be around 15-18 million sq. ft by the year 2025. Reportedly, as per the IBEF, luxury home sales in India have advanced by a 130% rate through mid-2023.
In FY23, the value of home sales in India’s residential property market rose to an all-time high of Rs 3.47 lakh crore (US$ 42 billion) which had a remarkable increase to the tune of around 48% over last year’s figures. The number of units sold also increased by 36% to 379,095.
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However, the real estate sector is likely to encounter substantial hurdles in the future as a result of rising property costs, rental rates, and loan payments. As inflation is projected to rise more in the coming years, there is growing concern about how it will impact the real estate industry in 2024.
Before getting into the 2024 predictions, it’s crucial to understand how inflation affects the Indian real estate market.
Inflation and Property Prices:
Inflation has an important influence on property prices. When inflation increases, it also raises the costs of building houses due to higher expenses for materials and labourers. Resulting in the overall cost of a property. Additionally, inflation can impact people’s desire to buy property, as they may choose to delay or avoid making large purchases when they are uncertain about the future. This may result in a reduction of the demand for properties, which can also further fluctuate property prices.
When we look ahead to 2024, the influence of inflation on property prices will depend on mixed factors. One crucial issue will be how the government controls inflation and maintains economic stability. If the government takes significant steps to curb inflation in the Union Budget 2024-25, property prices may stabilise. The middle-income category drives a huge portion of property demand, and inflation has a significant impact on their purchasing power. If inflation remains under control, there may be increased demand for properties, thus raising property prices. However, if inflation continues to rise, people may have less money to buy homes, resulting in a drop in demand. This could result in decreased property prices, providing an excellent chance for purchasers to invest in real estate.
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Rental Rates and Inflation:
In the 2024 real estate forecast, inflation’s impact on rental prices is another key factor to consider. When the cost of living rises, landlords may be forced to raise rents to pay their costs. This makes it difficult for tenants, particularly middle-class families, to afford rental flats.
Furthermore, inflation can boost the cost of maintenance and utilities, which can be passed on to tenants in the form of higher rents. As rental rates rise, landlords may have trouble finding tenants, resulting in decreased demand for rental units.
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Inflation affects rental property investors in both positive and negative ways. On the one hand, they can increase earnings by raising rental rates. However, tenants may struggle to afford the increasing prices, resulting in abandoned rental units.
Loan EMIs and Inflation:
Inflation has a significant impact on the real estate market, increasing the cost of loan repayments. Borrowing money is often more expensive during periods of inflation. This may be a severe concern not just for current homeowners, but also for potential homebuyers because increased EMIs make it more difficult to repay loans or gain mortgage approval. If loan payments rise, consumers may find it more difficult to repay their loans or receive them in the first place. This could also affect the real estate business, as developers and builders may struggle to sell their properties, resulting in fewer new development projects.
Inflationary pressures in the real estate market are expected to influence all sectors, including residential, commercial, and retail. However, certain segments may experience a greater influence than others. For example, premium houses and prime business sites may see a greater price increase, but inexpensive housing and commercial spaces in the suburbs may see a mild increase. This can shift the current prices, especially in suburbs that are closer to tier 2 cities and restabilize the market
The real estate industry in India is likely to grow dramatically in the next few years, but inflation remains a concern. As we predict for 2024, inflation will have a variety of effects on the real estate market, depending on government policies, demand and supply, and overall economic stability. Inflation can raise property prices, rent rates, and loan payments, but the government can make policies to limit the effects. As a buyer or investor, one must stay current on economic trends to make informed real estate investment decisions in the years ahead.
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