Donald Trump’s no investor. He may well be a smart businessman. He’s a great self-promoter. You may or may not like him as a reality TV host. He’s got a lot going for him. Granted: Lots of skill. Lots of knowledge. Lots of talent. Great name recognition. Lots of money.
But Donald Trump’s no investor.
I heard him interviewed on MSNBC’s Morning Joe today. He debated and defended his offer to buy the plot of land near Ground Zero on which a proposed mosque would be built.
If you haven’t heard the latest developments: The investor who now owns the land bought it less than a year ago for $4.8 million. Donald Trump made an offer to purchase the land for the original purchase price plus 25%–which works out to $6 million, though Trump said it was closer to $6.2 million. Trump said he was making the offer “as a resident of New York and a citizen of the United States, not because I think the location is a spectacular one (because it is not), but because it will end a very serious, inflammatory and highly divisive situation that is destined, in my opinion, only to get worse.” The investor made a counter-offer, saying that he wanted $25 million for it.
Trump said on Morning Joe that he wouldn’t pay $25 million because: (1) he wasn’t going to be bludgeoned into paying such a high amount, especially in the name of religion, and (2) because he didn’t want the current owner to be able to say afterwards that Trump was stupid for paying so much.
- There was discussion on whether Trump was making the offer just to gain publicity. He denied it.
- There was discussion about whether moving the mosque another 5 or so blocks would defuse the situation. Trump thought it would–that it would make a psychological difference.
- Trump was asked whether he’d (like the current owner/investor hope to) had ever made 5 times the amount of his investment on a deal. Trump said he had.
- Trump was asked whether he’d be willing to pay $25 million, with $6 million going to the investor and the rest to charity. He said he would.
Those are all interesting and valid points of discussion.
But Trump’s no investor.
At no point was Trump asked–or did he give his own estimate of–what the land was actually worth. How much is it worth? An investor would put that question at the top of his list. If, hypothetically, the land is worth $40 million, then Trump the investor should have no problem paying $25 million. He’d pick up an instant $15 million in equity. On the other hand, if it’s worth only $20 million, then it’s overpriced at $25 million. Just say so.
I’ve known plenty of investors who’ve put a property under contract for just a few dollars–$10 or $100 in many cases–then sold that contract for $5,000-$25,000. The person who’s bought the contract–often a rehabber–doesn’t complain about the profit the initial investor is making. The person who buys the contract is concerned with whether it’s a profitable deal for him.
I’ve known other investors who’ve bought properties for $175,000 and sold them to other investors for $250,000. Is the second investor “stupid”–to use Trump’s language? No way, if the property is really worth $450,000.
The entire mosque situation is complex and highly inflammatory. There are many competing arguments about how it might be resolved. And there are perfectly valid reasons why Trump might not want to pay $25 million for the land. But to reject a higher counter-offer not on the basis of value but on the basis of emotion (he doesn’t want the other investor to call him “stupid” or to be “bludgeoned into the deal”) suggests that–for all his many strengths–Trump is no investor.