Becoming Donald Trump: How to Break Into Commercial Real Estate, Build an Empire, and Launch Your Own Reality TV Series

This is a guest post from Mike Moran, CFA, a portfolio manager at a long-only asset management firm. He started Life on the Buy Side to teach you what it’s like working in asset management, hedge funds, and more.

When it comes to commercial real estate, you’ve got 2 choices: do something extremely risky, or do something boring and conservative.

OK, you could also pick something middle of the spectrum – but what fun is that?

If you have your sights set on becoming the next Donald Trump and building a real estate empire, you’re going to have to take the leap and embrace the risk with open arms.

And if you want your own reality TV series on top of all that, you’ll have to become a real baller – so here’s how you do it:

From Cold Call to Closed Deal: How a Private Equity Investment Comes Together, Part 3 – The Dotted Line

“She thinks $60 million is a discounted price? Can someone shoot her with an animal tranquilizer gun until she snaps out of it?” John says, looking around in disbelief at all the other Partners.

David turns to you and his eyes light up as a new idea percolates to the top of his head, and then sputters out of his mouth.

“You do know about the special analyst bonus, right?”

Everyone else in the room laughs, as you contemplate whether or not they really want you to tranquilize the CEO.

$60 million would be 6x EBITDA – a reasonable price for a larger company – but significantly higher than what you’d pay for a small, Founder-dominated business in a niche market.

David speaks up once again as the laughter subsides.

“And let’s not forget about her other demands: she wants to roll over 20% of her ownership and put aside 5% in an options pool for the management team.”

“So we’re paying for an overpriced business and then giving up 25% for no apparent reason. This sounds like a better investment than finding Google in 1998,” John replies while rolling his eyes.

Everyone else sits there in silence as you weigh your options before speaking up.

“Well,” you say, “On a positive note, I think I could call in a few chips to get the financing in place.”

“What bank would even look at this? It’s too small for any of the usual suspects,” David points out.

“Right now everyone’s desperate for business – in normal times they’d say no, but beggars can’t be choosers.”

From Cold Call to Closed Deal: How a Private Equity Investment Comes Together, Part 2 – The Deal?

“No, no, and no again,” shouts John, the Founding Partner.

“This is a crap deal in a tiny market with a Founder who wants to leave in 12 months? She stays, or we don’t even take another look at this. This business is worth $0 without her.”

David jumps in before you can say anything.

“We don’t know how serious she is about leaving. And don’t you think the LPs might like seeing a new industry that we haven’t invested in before?”

“Are you crazy?” John blurts out, “The problem is that she doesn’t know what she’s doing, which is much riskier than if we knew for sure, either way. And there’s no way the new Limited Partners will get behind this – they know jack about technology and don’t feel comfortable with the industry.”

“You realize she’s willing to sell at a 50% discount, right? We could still get a solid return.”

“50% of $0 is $0.”

Everyone turns to David, waiting to see what his next retort will be.