The real estate challenges of Donald Trump seem to be front and centre of the news most days at the moment as he tries to use his property portfolio to secure the bonds he needs, in order to fight his other legal woes.
Now I’m sure the bond companies he has approached have read the small print on his proposals very carefully for something, let’s say ‘unfavourable’, (as if he would), but here’s what can happen when you don’t examine the document as thoroughly as you should.
Wichita Falls, Texas was founded on the site of a large native American settlement by cattle ranchers and people who were drawn to the waterfall on the Wichita River.
It grew to become a small town built on industries including food processing, flour milling and railroads.
Then, in 1912, a large petroleum reservoir was discovered just north of the town, and as a result a significant number of new settlers moved in. Over the next 6 years the town’s population increased from 8,000 to 40,000, with some of these people becoming instant millionaires because of this oil boom.
In addition to new homes going up everywhere, there was a severe need for office space. In fact, people were so desperate to make a quick buck that they were even conducting business in tents pitched on street corners.
So it was clear that Wichita Falls needed something to improve the situation.
There was a one story office building in Wichita Falls called the Newby Building, ideally located near to the railway depot on the corner of Seventh Street and LaSalle Street that was built by Oklahoma businessman Augustus Newby in 1906, the owner of the land in that immediate area.
Enter J.D. McMahon, a contractor from Amarillo, some 200 miles west of Wichita Falls, who was one of the tenants in Newby Building.
According to government documents, in 1919 McMahon submitted a proposal for a new building project next door to the Newby Building that would bring a state-of-the-art 480 foot skyscraper to Wichita Falls.
Given that the world’s tallest structure at the time was the Eiffel Tower at 984 feet, and the tallest building in 1919 was the Woolworth Building in New York City, which was 792 feet - And that there were only five buildings in the world that were taller than 500 feet - McMahon’s skyscraper would be the 6th tallest building in the world, and a very important addition to the booming Wichita Falls and the state of Texas.
Sounded like a good idea, yes? That’s what Wichita Falls leaders thought, too.
So McMahon drew up impressive looking blueprints (even though he wasn’t an architect) and showed them to potential investors, who quickly coughed up over $200,000 in capital to start the building’s construction - That’s the equivalent of $3.4 million today.
McMahon proceeded with the construction of the skyscraper, using his own construction crews and equipment to build it. It’s a neoclassical style red brick and cast stone building that looked very similar to the original plans the investors saw.
However, there was one major difference.
When it was completed, the skyscraper wasn’t 480 feet - It was 40 feet and just 4 floors high.
The brick embarrassment was only eighteen feet deep, ten feet wide and each of the four floors contained only 118 square feet of space.
Not only that, but the only way to access the upper floors was by an external ladder (until an interior staircase was built years later, making the useable building space 25% smaller).
As you would expect, infuriated investors took McMahon to court, sure that they would find justice for the con. But there were two more surprises in store for them.
Firstly, they found out that McMahon had never obtained permission to build from the previously mentioned land owner (who, at that time, lived quite far away in Oklahoma).
Secondly, even though the judge was sympathetic to their complaints, he had no choice but to rule in favour of McMahon.
Why? Because none of the financers had noticed in their excitement and rush to sign off on the project, that the blueprints listed the building’s dimensions in inches - not feet.
The building was constructed exactly to the specifications proposed - 480” not 480’.
Of course, in the meantime, McMahon had pocketed the profit and skipped town. The world’s smallest skyscraper had been built without getting permission from the actual owner of the land and a lot of people lost a lot of money.
This tiny, and pretty useless, new building, immediately known as the “Newby-McMahon Building”, was boarded up and became vacant for years. It survived a fire, multiple tornados, and even part of its wall caving in.
However, today, the Newby-McMahon Building still stands tall - 40 feet tall of course. It has changed hands multiple times and has been bought and sold for much less than the money that was raised to build it. It was restored in 2005 and now houses a used furniture store.
It has also been recognised as the “World’s Littlest Skyscraper” and is listed in America’s National Register of Historic Places, having been declared an official Texas Historic Landmark.
So, when you next hear the word skyscraper, the first thing that comes to mind will probably not be a massively tall structure such as The Shard in London or Empire State Building in New York, but something that is more ‘sky’ than ‘scraper’ due to the investors making rash decisions and not thoroughly reading the legal documentation.
As you can see, making rash decisions when it comes to money, and not having a complete understanding of every aspect of a contract when a deal seems to be too good to be true can be somewhat significant - My advice is to check every apostrophe!
For personal advice about this article, or any other financial subject, please do not hesitate to contact me
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