Yahoo Finance Donald Trump Made Billions Off Real Estate, But His Father Got Him Started By Building A Billion-Dollar Empire From Absolutely Nothing
Before his presidency, Donald Trump was renowned for his real estate fortune. However, the Trump family's wealth began with his father, Fred Trump, who built a billion-dollar empire from scratch.
During President Franklin D. Roosevelt's New Deal era, Fred Trump entered the construction business, which boosted residential construction through accessible loans and government support. He capitalized on these opportunities, securing a $26 million loan from the Federal Housing Administration (FHA) in 1949 to build the Shore Haven and Beach Haven residential complexes in Brooklyn, New York.
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Fred Trump strategically transferred wealth to his children, including Donald, by setting up trusts and endowing land to these trusts. This created a consistent income stream while navigating around hefty gift taxes. For instance, he acquired Steeplechase Park in Coney Island in 1965 for $2.3 million, with plans to develop luxury apartments.
Donald Trump joined the family business in 1968. By 1972, Fred and Donald Trump formed a partnership and secured an $8 million loan to construct Prospect Tower. Despite Fred's significant involvement, Donald reaped most of the profits, including consultancy and management fees and tenant revenue. By the age of 30, Donald Trump had amassed $9 million.
Donald Trump's journey in real estate saw him transform the Commodore Hotel into the Grand Hyatt and acquire high-profile properties like the Plaza Hotel and Eastern Airlines' Trump Shuttle. Fred Trump continued transferring wealth to his children through various techniques, such as purchasing stakes in Donald's ventures and selling them back at a loss.
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Upon Fred's death in 1999, his real estate holdings were passed to his children, who sold the portfolio for $700 million in 2004. This sale secured their wealth and allowed Donald Trump to expand his ventures further in various sectors, notably in real estate, entertainment, and branding.
Today, the Trump Organization encompasses a diverse range of businesses. It manages luxury residential properties, hotels, golf courses, and commercial real estate worldwide. Key properties include the Trump Tower in New York, the Trump International Hotel and Tower in Chicago, and numerous high-end golf courses in the United States and abroad.
The organization also expanded into brand licensing, allowing the Trump name to be used on various products and properties without direct ownership. This strategy included international developments in cities like Istanbul and Manila, further increasing the brand's global footprint.
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Despite controversies and legal challenges, the Trump Organization remains a significant player in the real estate industry. It continues to manage and develop properties while leveraging the Trump brand's recognition for various ventures, ranging from hospitality to residential real estate
For those looking to invest in real estate, here are some tips:
•Start small: Begin with a manageable property.
•Location matters: Choose properties in areas with growth potential.
•Rental properties: Consider investing in rental properties for a consistent income stream.
•Refinancing opportunities: Keep an eye on interest rates and consider refinancing when rates are lower.
•Leverage wisely: Use leverage to optimize your returns.
Alternative investment avenues include crowdfunding ventures and real estate investment trusts (REITs), which offer a convenient way to invest in income-producing real estate without individual property management.
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