President Donald J. Trump is the wealthiest president in history, mostly thanks to real estate. Love him or hate him, you can’t argue that he’s been tremendously successful in his field. Join us as we explore the Trump real estate empire and look at both his successes and failures.
Disclaimer: These are the author’s own personal opinions and in no way reflect the views of REthority or its partners.
1. Trump Hotels
One of the biggest portions of the Trump real estate empire is, of course, Trump Hotels. But what makes this brand stand out from the rest? Trump Hotels is a brand of five-star luxury hotels and resorts, promoted for delivering “extraordinary customer experiences” and “luxury accommodations.”
The core brand-wide philosophy is “Live life without boundaries.” The highest-ranking of them, according to a report in US News & World Report, is the Trump International Hotel & Tower Chicago.
Situated in the North Side neighborhood of the Windy City, it sports a view of the Wrigley Building and Tribune Tower that towers over Lake Michigan. It also has floor-to-ceiling windows, fully equipped kitchens, and a river view.
While Trump hotels are popular with guests, they score mixed reviews from employees who post on Glassdoor. Negative comments include:
- “Lots of hoops you need to jump through. It was slow at times but picks up the pace quickly. Lots of responsibility, chances are that you will be doing everything alone because of lack of staff. Cons short breaks.”
- “Management are sticklers. No room for mistakes. Everything has to be done in perfection. You’re only allowed to be 15% of yourself, the rest is what they train you to be.”
- “Advice to Management: Treat people as human beings. Acknowledge them, say hi, show appreciation when it’s due and not just when there are minor mistakes made.”
2. Trump’s Real Estate History
About a month before accepting the Republican nominee for president in 2016, Trump celebrated the grand reopening of Trump International Golf Links in Aberdeen, Scotland.
In the 9 years before his bid for the presidency, Trump’s company spent more than $400 million in cash on new properties including this one. Trump also had easy access to cash at this time, despite a string of commercial bankruptcies.
The cash purchases started with the $12.6 million estate in Scotland in 2006, followed by two homes in Beverly Hills, five golf clubs along the East Coast, and a winery in Virginia.
In 2014, Trump paid a combined $79.7 million for massive golf courses in Scotland and Ireland. It’s been reported that those clubs lost money while Trump renovated them, requiring him to pump in $164 million in cash to keep them running.
To fund this cash infusion, Trump leaned heavily on Deutsche Bank for new loans. The bank provided $295 million in financing for big Trump projects in Miami and Washington.
The Washington Post did a study that totaled Trump’s cash payments in real estate transactions by examining land records and corporate reports from six U.S. states, Ireland, and the United Kingdom.
“These records show purchase prices for Trump’s properties, details about any mortgages and — in the United Kingdom and Ireland — the amount of cash Trump plowed into his clubs after he bought them,” the newspaper reported.
Debt, Debt, Debt
“Documents tell the story — written in tiny type and in the lifeless prose of lawyers — of Trump’s flashy career in real estate. It was a career built on chutzpah, debt … and more debt.” A key to this, the Post reported, was Trump using other people’s money, finding investors or banks willing to put up the money.
In the 1990’s, Trump used borrowed money to buy an office building on Wall Street, golf courses in Florida and New York, and his $700,000 home in Palm Beach, Florida.
Golf Courses and More
It was in 2006 that Trump began buying up land near Aberdeen, ultimately paying $12.6 million for the property and later an additional $50 million to build a golf course there, which opened in 2012.
He would buy other properties with cash, including:
- $17.4 million for two neighboring Beverly Hills homes
- $6.7 million on two golf clubs, one outside New York City and another outside Philadelphia in 2009
- $16.2 million for the Virginia winery in 2011
Trump’s businesses experienced financial problems around this time, with his publicly traded casino and hotel company declared bankruptcy in 2009.
Despite this, Trump made the two most expensive all-cash purchases on record. In 2014, he spent $79.7 million for the golf resorts in Doonbeg, Ireland, and Turnberry, Scotland.
These international assets have reportedly underfunded expectations, as the clubs are remotely located. However, Trump’s other golf courses have done tremendously well, so there’s still plenty of time to shape them into successful investments.
3. Investigations Under Way
Right now, the origins of Trump‘s real estate empire is under investigation, especially since the New York Times published an article claiming the Trump family avoided more than half a billion dollars in taxes.
Their investigative report alleged that Trump participated in “dubious tax schemes” and “instances of outright fraud” throughout the 1990s and that Fred and Mary Trump had transferred more than $1 billion in wealth from their empire of more than 27,000 New York City apartments to their children, including Donald Trump.
While that kind of transfer would have created $550 million in gift and inheritance taxes, Fred Trump made his children stakeholders in a shell company, All County Building Supply & Maintenance, and marked up the price of purchases for Trump properties to channel the excess money as gifts.
James Gazzale, a spokesman for New York’s Department of Taxation and Finance, said in a statement to the press, “The Tax Department is reviewing the allegations in The New York Times article and is vigorously pursuing all appropriate avenues of investigation.”
4. The Trump Brand in Trouble
It’s also believed that because of political controversy since the 2016 presidential election, putting the Trump brand on your luxury hotel or apartment complex no longer quickly increases the property’s value by 25%, as it has in the past.
Even though licensing his name appeared to have increased Trump’s personal fortune over the years, previous 200 Riverside Boulevard tenants have reported that property prices have plummeted since Trump got involved in politics.
And a recent report by CityRealty, a real estate listings, and research service, noted that prices in the 11 Trump-branded condo buildings in Manhattan dropped below the borough average for the first time ever at the end of 2017.
The average price per square foot for all Manhattan condos fell by 1%, but the price per square foot for condos in Trump buildings fell 7% in the 12 months to November 2017.
Gabby Warshawer, director of research for CityRealty, reported that “Any building that chooses to end its association with the Trump brand is likely motivated by financial reasons.”
A hybrid hotel and condo building in downtown Manhattan opted to disassociate itself from the president, rebranding from Trump SoHo to the Dominick last December. The building’s owners bought out the Trump Organization’s management contract after the lousy press.
5. Still a Real Estate Mogul While in the White House
According to Forbes magazine, Trump’s work as a real estate mogul didn’t end when he became president. A Forbes analysis of local property records and federal filings showed that in 2018 alone, Trump sold an estimated $35 million worth of real estate while serving in the White House.
He can maintain ownership of his business by delegating management responsibility to sons Eric and Don Jr. Of that $35 million, about half came from a single deal, the disposition of a federally subsidized housing complex in Brooklyn, New York, for about $900 million.
The president earned $20 million from that sale since he had a 4% share in the property. He’s also sold 36 units for $11 million inside his 64-story Las Vegas tower, raking in $5.5 million before taxes.
6. Tax Troubles for Real Estate
The tax cut that was voted in by Congress in 2017 and signed by President Trump to provide a jolt to the economy may have done the opposite for the high-end market in Manhattan.
That luxury real estate market in Manhattan is sagging. Prices are now dropping; foreign buyers have vanished, and wealthy residents are leaving for lower-tax states, leading to additional softening in the market.
These Manhattan declines have been directly linked to that late-2017 tax law that capped the mortgage interest deduction and indirectly to the capping of the state and local tax deduction.
Under this law, individuals can no longer deduct more than $10,000 in state and local taxes from their federal returns. The bill also slashed the mortgage interest deduction from $1 million to $750,000.
It’s hurt the high-end real estate market, and markets are also suffering across the Northeast, where sales of new homes dropped 16.1 percent last December.
Data also indicates that as a result of that law, there is a growing number of people moving out of New York, California, Illinois, and New Jersey from July 2017 to July 2018.
The largest in-migration states over that period — Florida, Arizona, Texas, and North Carolina — being the ones with lower taxes or, in the case of Florida and Texas, no state income tax at all.
7. Business Successes
There are also plenty of reports that praise Trump for how he handled his real estate empire. Mashvisor Investor Blog notes that “Donald Trump came along to multiply his family’s net worth,” and also brought something else to the family business: an aggressive business attitude that led to a diversified investment portfolio “that anyone could only dream of.
Whether you agree with his views or not, the man understands business. He knows how to turn a profit and capitalize on any investment opportunities. He has found numerous ways of making money in real estate in addition to many other investment choices.”
Savvy Business Deals
Investing Answers notes that Donald Trump got a lot of help early on from his wealthy parents. But they also note that he’s made a lot of smart moves on his own that have helped to increase the family wealth.
“Through it all …. Donald Trump has shown that he knows what he’s doing. He’s been a wily businessman, and his real estate development projects have been, overall, fairly successful.”
Unusual Investments also suggested that regardless of what people may think of Trump’s political views, his business achievements have been solid — even highly noteworthy.
And despite criticism of his business deals by both Democrats and fellow Republicans during the 2016 presidential campaign, “It is quite clear that Donald Trump is a huge business success,” the site noted.
They also pointed out that over the years, Trump has made money through real estate development, golf clubs, and television, as well as becoming a luxury brand in real estate and golf.
When Trump first ran for president, Time Magazine objectively analyzed his business ventures. The successes, Time noted, include the Grand Hyatt Hotel, Trump Tower, 400 Wall Street, Trump Place, his TV show The Apprentice, and Trump International Tower Chicago.
To summarize these successes and failures, our friends at International Business Guide created a chart that shows where Trump’s biggest successes started and how much they’ve grown over the years.
What’s Next for Trump Real Estate?
Online time will tell what’s next for Trump’s real estate empire. However, the Teflon Don has successfully pivoted to avoid bankruptcy, lawsuits, and a recession before. So we can only imagine that he’ll leverage his notoriety to make even more successful real estate deals after he leaves the Oval Office.