Buying Trump’s: J. Michael Goodson is no slouch. Remember that when you hear his claim of being duped by a Donald Trump condo project in Fort Lauderdale.
February 23, 2016
Buying Trump’s: J. Michael Goodson is no slouch. Remember that when you hear his claim of being duped by a Donald Trump condo project in Fort Lauderdale, Florida.
It started back in 2005 when Goodson, who lives outside Princeton, New Jersey, was looking for a part-time home to live in while doing business near Miami. He admits he was enamored with the Trump Tower in Manhattan and with the developer who built it. Trump was a brand he could buy into, both for the prestige and his belief that a Trump property, no matter where it was, was bound to return a huge financial reward.
So in 2005, when Trump announced he was building a new Trump Tower in Fort Lauderdale, Goodson put down $345,000 to secure a sixth-floor unit right near the pool.
“We were given a brochure that said this was the best property he had ever developed,” Goodson told CNN.
The brochure for the Trump International Hotel and Tower was actually a glossy picture book depicting the artists’ rendering of a seaside tower with astounding ocean views, magnificent amenities and the Trump name throughout.
The book even includes a personally signed letter from Trump himself, which read, “It is with great pleasure that I present my latest development, Trump International Hotel and Tower, Fort Lauderdale.”
Goodson still has that glossy book, but nothing else. Trump International Hotel and Tower was a failure.
The project fell victim to the property slump that hit South Florida in 2008. Two years later, the failed tower was in foreclosure and no longer bore the signature name. Donald J. Trump, it turns out, was not the developer. He had licensed his name and signed on to manage the hotel. When the project developer ran out of money, Trump took his name and walked away.
Goodson walked away with nothing to show for his $345,000 deposit and a lesson in Trump properties: When purchasing a Trump development, you better read the fine print.
In luxury real estate, few brands compete with Trump
It turns out all Donald J. Trump properties are not the same. Trump has become hugely successful building a worldwide brand synonymous with the very best in luxury living. Though Trump does in fact build many of his signature properties, he and his family have made a fortune simply licensing his name.
Developers pay money to put Trump on their buildings; they use Donald Trump and his family to sell multimillion dollar units; and in some cases, the Trump Organization manages the properties. When it all works, it’s a hugely profitable arrangement for the actual developers and an almost risk-free arrangement for Trump.
Daniel Lebensohn is one of those developers. He took over a separate project the Trump Organization was developing in Hollywood, Florida. He decided to keep the Trump name on the building and pay Trump a fee every time a condominium was sold.
“They (Trump) made millions of dollars on the project by having their name associated with it,” Lebensohn explained from his South Florida office. “And every time there was a transaction, a condominium closed, they got paid as well.”
The Trump organization would help design, market, price and even attend launch parties to potential buyers. The one thing the Trumps did not do was put up any of their own money. And they still got a huge return.
Trump Hollywood sold out in 18 months. Two hundred luxury condos priced between $2 million and $6 million apiece. Trump got a cut of every sale just for the use of his name.
Lebensohn calls it a brilliant business model. And one very few names in the real estate business can get away with.
“In the luxury residential sector, there are very few brands that compete.”
When asked whether his buyers, especially those who came to sales events and met Trump, thought they were buying an actual Trump Property, Lebensohn seemed unashamed to have created that illusion.
“I guess beauty is in the eye of the beholder,” Lebensohn explained. “I don’t know what each of the buyers is thinking, but I imagine there is an association tied to it that Trump is involved, and they are.”