If you are a serous real estate investor, or want to be, “Investing in Real Estate with Other People’s Money” by Jack Cummings will be challenging and profitable reading. But don’t be misled by the title.
The book is not about investing other people’s money in real estate for them. Instead, it is about investing in your real estate for nothing down. The definition of nothing down means little or no cash from the buyer’s pocket is put into purchasing the property.
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The advanced nothing-down techniques explained by longtime realty investor Jack Cummings can be used by home buyers, mom-and-pop investors, and even big-time professional investors. However, many of these 43 no-down-payment techniques are not easy to understand. Even after reading several chapters two or three times, I’m not sure I really understand.
For example, I had trouble understanding the “split-fund transaction” chapter, and the “grand pyramid” chapter. But after several readings, I think I understand these complex methods.
At times Cummings unnecessarily complicates his explanations of relatively simple nothing-down finance methods. But when I reached the “IRC 1031: The Greatest Loophole Left” chapter, it became obvious he sometimes makes the simple seem complicated.
To illustrate, the author explains the basic tax-deferred exchange concept for investment properties. But he then completely neglects to show how Starker IRC 1031(a)(3) delayed exchanges, which are now the most popular type of exchange, make exchanges easier than ever before.
Cummings gives some of the nothing-down techniques names that are difficult to understand. For example, the last chapter is called “The Sliding Mortgage Trick.” The basic idea is better know among realty investors as “moving the mortgage to another property.” Having used this method several times, I learned it was mostly a matter of terminology to understand the method.
The book is filled with lots of real-life and hypothetical examples. Without the examples, the book would be too technical and boring. But the examples make the nothing-down methods much easier to understand.
Many of the book’s chapter titles are difficult to understand. A good illustration is the “Promise the Moon” chapter. Even after several re-reads and trying to comprehend the examples, I think it’s something about offering future real estate benefits that might never occur.
This mind-stretching book is filled with creative real estate finance ideas that most real estate investors will never fully understand or put into practice. But using just one or two ideas is worth the extra effort required to be able to apply the innovative ideas.
One of my favorites is called “The Green Thumb Transaction” where a buyer of older properties, which have too many trees and plants, sells off the unneeded vegetation to landscapers and nurserymen who seek lush mature greenery. The resulting cash pays the down payment. But Cummings warns of the pitfalls and how to avoid them.
Not every chapter of this unique book will be practical for every reader. But understanding just one or two new techniques makes the few hours spent with this eye-opener new book very worthwhile.
Some of the creative names given to the finance techniques will drive seasoned real estate investors crazy. Halfway through the book I gave up trying to figure out what the next chapter was about. “The home loan caper” and “the distant pyramid” are especially challenging.
Chapter topics include “Set Higher Goals, Get Rich Quicker”; “Value: Where It Comes from and How to Make It”; “The Pivotal Person”; “Scrip: The Legal Money You Print”; “Watered Scrip”; “The 100 Percent Financing Trick”; “The Pre-Sale Refinance”; “Junk Versus Antiques”; “Soft Paper Option, Hard Paper Sale”; “The Discounted Paper Swap”; “The Big Shot Move”; and “Keep Some and Sell Some.”
Only very serious real estate investors will read and re-read this new, challenging, creative finance book. But all the investor-reader needs is one or two ideas, used at the appropriate moment, to gain control of a property for nothing down. On my scale of one to 10, this provocative new book rates a solid 10.
“Investing in Real Estate With Other People’s Money,” by Jack Cummings (McGraw-Hill, New York), 2004, $18.95, 360 pages; Available in stock or by special order at local bookstores, public libraries and www.amazon.com.
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