bleeding a project

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Bleeding a Project

In real estate, overstating expenses in a new construction or neglecting to pay normal operating expenses in an existing structure in order to extract the highest possible profit. For example, a landlord may refuse to pay for a new air conditioner in a building it is renting to a restaurant. Bleeding a project is considered unsustainable because it is difficult to maintain quality tenants or customers and leads to a reduction in the value of the property.
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bleeding a project

(1) In construction,charging excessive development and construction oversight fees,renting one's own equipment to the project at inflated prices,and perhaps putting family members on the payroll in order to bleed off as much money as possible.(2) In rental property management, refusing to make ordinary repairs and replacements in order to take as much cash flow as possible from the project, but with a resulting rapid deterioration of the property. In an area of limited consumer choices, such as communities with high concentrations of low-income housing,the landlord almost never suffers the consequences of this type of decision.

The Complete Real Estate Encyclopedia by Denise L. Evans, JD & O. William Evans, JD. Copyright © 2007 by The McGraw-Hill Companies, Inc.