The Trump Blog

There’s too much oil in the world to justify the current high market prices. I’ve heard there are tankers all over the world that are loaded up to the gills with oil. They have so much oil they don’t know what to do with it. It’s ridiculous what’s going on with OPEC and all of that.

I blame the major oil producing countries for the current recession and I think the large oil companies are doing a major number on everyone.  The price of oil has dropped recently, but it should drop a lot more. The price of oil should be no more than $50 or $60 a barrel or perhaps even lower.

There are a lot of problems with the world’s economy, but oil is what is killing it. I think it’s time people became aware of what’s going on. It’s affecting all of us and in ways that aren’t great. Heating costs will eat away at everyone’s pockets this winter and that’s just the tip of the iceberg. This situation could and should have been avoided. I think it’s time we all started paying attention to what is really going on.

In the beginning and certainly if you just own a couple of homes as rentals, the sole proprietor approach should be sufficient. It is an inexpensive way to organize but offers you no protection to the exposure of liabilities. No need to fear! You can insure against this risk with the proper insurance policy which will offer you around $300k in liability coverage in case you lease to “Mr. Slip and fall” and get sued. As you grow your business, you may find that the basic “dwelling” policy gets expensive as you need and want to increase to $1 million. 

For example, your needs for protection could change drastically as you purchase commercial properties. You are at risk for much higher liability claims so not only would you want to have more insurance, the time is now for you to change the style of your business organization to one in which can offer you a “shield” of personal protection in the event of a lawsuit or financial crisis. Both the corporation and LLC (offered in most states) can accomplish this layer of protection for your business. Generically speaking and since each State has its own particular rules, it costs less than one thousand dollars to form a corporation. A corporation is treated like an individual person in terms of liability and therefore if the Corporation owns a property or properties and a suit arises, it’s the Corp that gets sued and not the shareholders. 

Have any of the readers experienced a situation where they have seen the corporate shield in action?

Every time you turn around, another expert has an opinion about what’s wrong with our schools. Sometimes it makes more sense to ask the parents. After all, they see what their children are learning - or not learning - so they see where the schools are succeeding and failing.

Recently, a major survey of adults and parents found that a large majority of Americans think schools are placing too much emphasis on the wrong subjects. More than half of those polled think that educators are doing just a fair job in preparing children for the eventual work force or giving them the practical skills they will need to survive as adults. That’s not a ringing endorsement.

Since parents are unhappy with the current educational emphasis, where do they think the focus should be? More than one-third said math with English a distant second, followed by other subjects such as arts and sciences.

Personally, I think it’s important to get a well-rounded education but I can certainly understand the emphasis on math. There’s very little that we do in life - from our personal encounters to the business world - that doesn’t seem to involve numbers in some sense. So it’s critical that kids grow up with a good, solid understanding of all mathematic concepts.

Also as part of the poll, parents ranked education as the third most important issue facing the country, following only the economy and gas prices and tied with health care. It was rated slightly ahead of the Iraq war. Most think the United States is just keeping up with or falling behind the rest of the world in education and nearly all those surveyed agreed that the quality of a country’s education system has a big impact on a country’s overall economic prosperity.

Are you listening, government leaders? There are few things more important than education and there are a million reasons why. There’s just no excuse not to make our schools better.

In the summer, many offices have problems with how employees dress. When the temperature soars, it’s as if common sense disappears. People stop wearing appropriate clothes and out come the flip-flops and the skimpy attire that’s certainly at home on the beach or on the weekends, but not in most businesses.

I hear from employers that this is particularly true of young people who are working at their first jobs. They just have no idea how to dress for work, so it’s an employer’s place to either tell them or to put a dress code in writing.

I’ve always been fairly outspoken about the importance of a professional appearance. How you present yourself speaks volumes about you before you ever open yourself. I’ve been unable to believe in even the strongest job candidates with the most unbelievable resumes when they come into my office dressed like utter slobs. Presentation is critical.

For employers who have to deal with inappropriately dressed staffers, the point is simple. Explain to them that how they dress sends a message not only to you (their boss), but also to coworkers, customers and clients. There’s a certain image you need to convey and they are the messengers of that image.

Of course, many companies have a creative or very casual atmosphere and that’s reflected in the way their employees dress. I think there’s a way to dress creatively and even casually while still looking professional. Then everybody wins.

As an investor, it’s easy to get blinded by the fancy window dressing that a particular agent or seller is putting on when presenting a property. I want to encourage you to evaluate each property on a standalone basis much like you would if you were buying a business...because you ARE. Whether you own one property or one hundred, the recipe for its success is virtually the same. You will need to create a business plan complete with earnings/expense pro-formas while projecting rates of return and contingencies for cost overruns. 

There are many different ways to approach this plan and Trump U offers courses and mini-courses on the subject. Fundamentally it all boils down to cash flow. After you have carefully diagrammed the expenses associated with owning the property such as maintenance, utilities, taxes, interest carry, advertising/signage to market, commissions to procuring brokers (if any), vacancy period etc., you will need to figure out the ongoing demand and projected hold time before either leasing out the property or selling it. These days, figuring out the projected hold time can be tricky  due to the cycle we are in, so always be conservative and make sure you have deep enough pockets to carry the debt service twice as long as you think you might need. If you succeed sooner, then that is just a bonus. Use your conservative cash flow estimates versus your total cash infusion to get a rate of return on your money. If you think you can make more on a 12 month CD at your local bank, then you should probably pass on the deal and wait for the next one to come along. Your time is too valuable to waste by just breaking even.

What was the best deal you have ever gotten done or heard of someone getting done in terms of cash flow?

Another politician, another scandal. Former presidential candidate John Edwards admitted he had an affair several years ago - a relationship he vehemently denied when he was campaigning. There are, of course, all sorts of issues here.

Some people question whether a candidate’s personal life really matters. They think what he does in his personal life doesn’t affect his ability to lead. Still others question whether the media pursued this story as diligently as they should have.

But you can also look at it from a business viewpoint. What happens when one of an organization’s most visible members is caught up in a situation that threatens the stability of the institution as a whole? How those circumstances are handled could signal the demise or the continued health of the organization.

In this case, we’re talking the Democratic Party. Even though John Edwards isn’t a presidential candidate, like it or not, the party will suffer by association. His name had been mentioned as a vice-presidential candidate. The American people are a forgiving lot, but a very remorseful Edwards would have to do a lot of public atoning very quickly for that to happen.

More importantly, the Democrats have to do damage control. Like any business in a tough spot, they’ll have to figure out a way to make the spotlight’s glare not so harsh. The party had some serious momentum and this was one quick slamming-on of the brakes.

Smart managers would find a way to diffuse the situation somehow and that’s what the Democrats have to do if they want to survive unscathed.

I grew up watching Ed McMahon on the Johnny Carson show and I watched him every night while I was at Wharton. I always thought he was terrific and that he brought a warm and very memorable quality to the Tonight Show. 

When I heard what was happening to him and his house, I couldn’t believe it because I didn’t want to believe it. That shouldn’t be happening to him--but it was--so my first instinct was just to help him out.

My primary motivation in this situation is not a real estate deal--it’s a way to help a great American icon and a very nice man.

Since then, someone else got interested in buying the house. The only reason anybody other than me would be interested in this house is because I showed an interest in it first. If somebody else should buy it, I wish them good luck but I hope they take good care of Ed McMahon because he deserves it. I just heard that the person negotiating doesn’t have financing and the deal would be subject to getting financing, something which I, obviously, don’t need.

Let’s just hope Ed McMahon is taken care of in the best way possible. It’s the least we can do after what he’s given to us.