Take Inspiration From Donald Trump … But Carefully

trumpOK so you’ve read The Art Of The Deal.

Have you ever found yourself in quiet moments alone, pondering the Trump story, thinking you’re going to do what he did? Whatever liquid motivation Donald Trump was channeling from the gods, you’re going to get some of that and do what he did?

Alright, so now twelve months have gone by and you are looking back, trying to reconcile the gap between your humble output and the record of the early Trump years.

Don’t beat yourself up.

As with the legend of Bill Gates, there is more to the story than just other worldly will, and “brilliance”. Gate’s case is documented in Outliers by Malcom Gladwell. But Trump’s story has remained as a touchstone for real estate investors over the decades, when really, he should have been one of Gladwell’s ‘Outlier’ subjects as well.

Gladwell’s premise for Outliers was extraordinary success is no accident, however it is not repeatable due to the extraordinary circumstances that contribute to it occurring.

First, Trump got his 10,000 hours at the knee of his father, Fred Trump. Fred Trump built his first house in 1923 at the age of 18, and by 1945 when Donald was born, he had a thriving construction company building houses and apartment buildings for returning GIs. Donald began accompanying his father to the construction site at age five. Throughout his childhood Donald had a front row seat, watching Dad negotiate with vendors and contractors in the living room of his home in Queens.

In his teens Donald got more involved in his father’s company. By his early twenties, when he located and partnered with his father on the 1,154 unit Swifton Village Apartments (a foreclosure) in Cincinnati, the business of real estate is all Donald Trump had ever done.

Second, he had the financial backing of his father, Fred Trump. By the mid 1970s Fred Trump had been in business for 50 years and accumulated 100,000 units. His financial statement was significant, around $40 million. He introduced Donald to his private and institutional banking relationships, Manufacturers Hanover Trust, and the Equitable Life Insurance Company. Read more…

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Posted by Ben - September 4, 2016 at 4:32 pm

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Posted by Ben - October 9, 2015 at 7:36 am

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The New Rules Of Work

value based on performanceperformanceAlmost every day now there is a news item about “the 1%”, talking about their increasing incomes. And right below the “1%” story there’ll be another news item about unemployment, and persistent wage stagnation in other job sectors.

Inequality is becoming a front burner issue for politicians, because so many voters are being affected. On a regular basis now the President talks about the need to “address inequality”.

Clearly inequality is asserting itself in the US, and other countries around the world, but what’s behind it?

It’s not the narrative in the Press about rich people being selfish and greedy. Greed and myopic focus have always been a part of making a lot of money, going back centuries. It is just more out in the open now that those generating wealth are doing it so easily.

It is also not outsourcing, although this has played a part. In the last ten years outsourcing is responsible for roughly two million jobs going overseas. The business owners and managers responsible for those decisions didn’t make them because they are heartless, or unpatriotic people. They made them because the level of productivity produced by the US based workers was available in another country at lower cost, and if those jobs weren’t outsourced now to keep the business alive, the jobs would be gone in the not too distant future anyway, when the business filed bankruptcy, unable to compete in the global marketplace.

Outsourcing has definitely put people out of their existing jobs, but it hasn’t stopped them from re-educating themselves, or acquiring new skills that are in higher demand.

These two issues have currency with the Press because they make for good news stories, and there are easily identifiable “good guys” and “bad guys”. But as usual with the Press, they are just whipping up fervor so you go to their pages and click on their ads.

The inequality of income that is reshaping Society today is not caused by Greed, or by Outsourcing. It is being caused by machine technology entering the workplace, and the increased ability of business owners to measure the performance of their employees.

Namely, how they measure value.

                  Inequality Is Being Driven By Machine Technology Entering The Workplace, And         Employee Performance Being Precisely Measured

To get a fast track understanding of this, think about the world of professional sports. In 2015, John Lester of the Chicago Cubs, and Clayton Kershaw of the L.A. Dodgers, will each be paid $30 million for their services. The average MLB salary in 2015 is $3.8 million, and the lowest paid player this year will receive $58,237.

If you look at the NBA and the NFL the situation is basically the same.

The reason there is such a huge yawning gap between the very top and the very bottom, and why the average is closer numerically to the bottom than to the top, is that every single aspect of these athletes’ performance is being measured.

If you are a major league baseball player there are 16 individual statistics being generated by your performance on the field. Over time, taking into account streaks and slumps, your overall value to the team, and the contribution you make to the team winning games, will be revealed. There will be no way to spin it, it will all be in the numbers. And it is from those numbers the player’s “value”, what a club is willing to pay to acquire the player’s performance to help them win games, is derived.

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Posted by Ben - September 15, 2015 at 12:16 pm

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The U.S. Economy Is Sick. Problem, Or Opportunity?

apartment investing opportunityA couple of weeks ago President Obama was on one of the last Jon Stewart shows. John Stewart gave him a bit of stick about inadequate VA services, but he let the POTUS get away with saying, “… the Economy, by every metric is better than when I came into Office, and so, the reason I can sleep at night is I say to myself, ‘you know what, it’s better.’”

Most people hate statistics, which is why comments like this can be let slip by.

There is a “metric” though the President either missed, wasn’t made available to him, or if it was he chose not to look at.

That is, the labor participation rate.

According to the US Bureau of Labor Statistics labor participation has been in decline since February of 2000, when it reached a high of 67.3%. Today labor participation is at a new low, not seen since the 1970’s, of 62.6%.

Of the 250 million people of working age in the U.S., 149 million of that total number have a job. 8 million people want a job, but don’t have one. However, there are 93 million people who don’t work, and don’t want to work.

That last figure should cause an Apartment entrepreneur pause.

Despite all the Federal Reserve huffing and puffing about its dual mandate and 5% unemployment, about 30% of the entire U.S. population, who are of working age, do not consider themselves part of the work force.

This is a staggering number.

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Posted by Ben - August 24, 2015 at 12:42 pm

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