Surprise, surprise; Trump overstated his wealth by even more than previously thought

[werepossum]

So...uh...did anyone read the article or did everyone just start frothing at the mouth based on the thread title and commentary?

Is it common to value real estate only on the income value and not the current market value?

So there are a number of areas that this valuation does not take into account because they don't know the value of the assets\entities. I mean I am no fan of Trump but to say he is lying because a valuation that specifically admits it doesn't have the entire picture turns out to be below what he says he has is a bit of a stretch

It is not common to value commercial real estate only on the income value and not the current market value, but it is extremely difficult to come up with a better way to value it. The three reasons to value commercial real estate (setting aside a dick-measuring contest) are to sell it, to take a loan against it as collateral, and to tax it. Obviously the first two favor inflating the value, but one has to convince a buyer or a financier that you could get significantly more income from it than you currently receive. That isn't easy, although I have seen it done and have had it attempted on us when we looked at buildings, but it is possible. Problem for Trump is that he obviously has the capital to do whatever needs to be done to realize those higher rents, and someone correct me if I'm wrong but I do not believe Mr. Trump has a particularly altruistic reputation.

For the third reason, usually it's the government wanting to value the building at more than formulaic value based on current income and the owner arguing against it. I don't know what percentage of Trump's value is commercial real estate but let's be generous and say all. To get from $3.9 billion to $10 billion requires us to believe that in some reasonably near future Trump can expect to earn an additional 150% rent. One can certainly argue that Trump knows which property he should hold because it's going to greatly appreciate as the economy improves and grows, but that doesn't mean it's worth that now, any more than a baseball card which one day might be worth a million dollars is worth a million dollars now. I also don't believe any of us believe that Trump would stand by and allow his buildings to be taxed at significantly higher rates than he absolutely had to accept.

Therefore Occam's Razor suggests that either Trump is lying to us, or Trump is paying someone to blow smoke up his skirt. I don't see that it matters; either way he is a very wealthy man and a very successful man. That doesn't necessarily mean he'd make a good President. Hell, he doesn't necessarily even make a good business partner.

Trump's success and business acumen are impressive, but frankly I'd be more impressed with the man who went from zero to $10 million than with the guy who went from $100 million to $10 billion.

 

[Exterous]

Therefore Occam's Razor suggests that either Trump is lying to us, or Trump is paying someone to blow smoke up his skirt.

FWIW I don't think Occam's razor applies to the contortions that people will do to avoid tax and litigation liability given the preponderance of options available to minimize those exposures.