Everyone believes they know Donald Trump—the real estate mogul, the reality TV personality, the politician. But do you know how it all began? How Trump actually became who he is today? Here’s the real story behind how Donald Trump acquired his wealth, his successes, and his failures.
The tale traces back over a century ago to Donald's grandfather, Frederick Trump. Real estate runs deep in the Trump family's blood, and Frederick was the first Trump to own a hotel during the famous Klondike Gold Rush in Canada. He owned an inn and restaurant that catered to gold miners. Upon his death, he left an estate worth just under $500,000 in today’s dollars to his heirs.
His eldest son, Fred Trump, continued the family legacy by going into business with his mother, using his inheritance as seed money. Fred became a highly successful builder in New York City's outer boroughs. In the 1920s, he built single-family homes in Queens and helped pioneer the supermarket concept with a store called Trump Market. During the Great Depression, he even constructed barracks for the Navy during World War II.
Fred Trump’s real cash cow emerged in 1949 when he secured a government loan to build Shore Haven Apartments in Brooklyn. The Federal Housing Administration provided him with $10.3 million, but he managed to construct the apartments for significantly less. The government consistently overpaid for houses in Brooklyn and Queens, allowing Fred to keep building. By the time of his death in 1999, Fred Trump was allegedly worth between $250 million and $300 million, and according to Donald, he was one of the largest landlords in New York's outer boroughs.
Born in Queens, Donald Trump joined his father's company early in his career. However, he had a different vision for the Trump name. He aimed to make the Trump brand synonymous with luxury worldwide. Utilizing his father’s business connections and creditworthiness, Donald ventured into real estate in Manhattan during the mid-1970s, borrowing a modest sum of $1 million to get started.
One of Donald Trump's first significant moves—and biggest successes—occurred in 1976 when he partnered with Hyatt to purchase the rundown Commodore Hotel near Grand Central Station. At that time, the neighborhood was in disarray, with many nearby buildings facing foreclosure. Trump negotiated contracts with banks and the city to fund the hotel and revitalize the area. The result was the Grand Hyatt, a 25-story hotel, which Trump sold his share of for $142 million in 1996.
Another major win for Trump was the acquisition of 40 Wall Street, which was once the tallest building in the world. He bought it for $1 million after years of vacancy. Today, it is prime real estate in the financial district, worth over $500 million. Additionally, "The Apprentice," where Trump served as host and executive producer, was a financial home run, bringing in $1 million per show across 185 episodes.
However, like many businessmen, Trump's career has also faced significant failures. His most notable failure may be his ill-fated venture into casinos in Atlantic City. The troubles began in 1988 when he acquired the Taj Mahal Casino, primarily funded by junk bonds. The massive casino racked up $3 billion in debt within just a year of opening. Trump, who incurred $900 million in personal liabilities, had to declare bankruptcy to stay afloat, disposing of many personal assets, including his airline, a 282-foot mega yacht, and half of his stake in the company. In dire circumstances, Trump's father stepped in with a $3.5 million loan in the form of casino chips to help make a debt payment.
Trump's casino holding company entered bankruptcy two additional times—once in 1992 after accruing $1.8 billion in debt, and again in 2009 after missing a bond payment during the financial crisis. Each time, Trump's stake in the company diminished. While three of Trump's four bankruptcies involved Atlantic City casinos, he has also struggled with other ventures outside of real estate. Trump Airlines, Trump Vodka, Trump: The Game, Trump Magazine, Trump Steaks, and Trump University were all destined for failure. Trump Mortgages, launched in 2006 right before the real estate crash, also collapsed.
According to Trump's campaign, he is worth over $10 billion; however, he has been accused of artificially inflating his net worth. Forbes and Bloomberg News have drastically different estimates of his wealth. Using a moderate figure from Forbes, here is a breakdown of Trump's wealth: approximately 7% is in cash and liquid assets like investments, 8% is in golf courses, and 4% is in personal items such as his helicopters, penthouse, and Boeing 757. The majority, however, lies in real estate, with Manhattan properties alone accounting for about half of his total portfolio value.
Now that you know the real story behind Donald Trump's wealth, his successes, failures, and the support he received along the way, it’s time to evaluate how he performed as an investor. Visit the Money Project or our YouTube channel to subscribe and catch our next video, where we will assess Trump’s investment returns over the years. Is he a great investor, or did he simply get lucky? Maybe you can now come to your own conclusions...right?
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