All Forum Posts by: Harley Hunter

John Hawkins really hit on a great subject & all the comments that followed are very valid (used most of them in my early investing days) & worth considering. However, there were 2 things that enabled me & those I assisted to expand faster & a heck of a lot more efficiently.

1) We all know that our RE equity earns nothing cuz RE is totally market value driven; it could care less how much money you have in it. Also, our RE equity reduces in purchasing power every year just due to inflation. On top of that, we lose liquidity, use & control of our RE equity & the only way to get is via a sale or refi where we need the permission of the lender. Being a finance guy, this really bugged me until I learned how to always finance 100%. Obviously the largest chunk comes from RE lenders at negotiated rates & the rest from my Private Reserve Strategy.

This is a method that allows us to make our down payment/improvement/large repairs in such a way so our cash never stopped compounding interest tax free even tho we have made use of the dollars. Down the road, we then have a tax free source of retirement income. The strategy is so much more efficient so we & the investors we assist can 100% finance their purchases/improvements, etc.

2) Upon sale & upgrading to bigger & more profitable units, we normally employ 1031 exchanges but it is not the typical echg of one fee simple property for another. Rather, in 2004 DSTs replaced TICs as the preferred way to echg out of our fee simple property into multiple properties & thereby increase our diversification & safety.

@Brian Gibbons & Nick Grisanti - I agree w/ Brian w/ his explanation of creative financing from the conventional point of view & all real estate investors should try to do so on every deal. But over & above that, unconventional creative financing is when the investor can 100% finance - why?

Real estate, like a stock, does not care how much you paid for it. Laying aside that both may have a yield, only the market determines if real estate will appreciate or depreciate in value. Since that is the case, when you put cash into real estate, 3 things happen - 1) the cash earns nothing, 2) the cash depreciates in purchasing power every day just due to inflation, & 3) you lose liquidity, use & control of that cash as you give up the ability for that cash to continue to compound uninterrupted on a tax fee basis.

Geremy C & Joel Owens - even if the seller is willing to carry the paper, like Joel said, in most cases they still want a down payment. So, can you still 100% finance? Absolutely yes but you must structure yourself in such a fashion so you always can & it must be done in advance. Once you have done so, the structure is available all the time on future purchases & yet your down payment continues to earn constant uninterrupted compound interest. As you have an interest in CSpgs, my son-in-law & I are close.

Nick, what do you mean by creative financing? Does it mean that you are able to 100% finance the property you are purchasing?

My extensive real estate investing got a significant boost years ago when my company, now called Global Strategies Group Ltd, syndicated the old Smith-Reynolds Ranch, Summit County, Colorado which then became the Ponderosa Ranch. Later, it was sold to Ralston Purina & developed into the Keystone Ski & Golf Resort. From there, we have been involved in many real estate investments including retirement centers, apartments, hotels, etc..

All this evolved to a strategy we use to consistently finance income producing real estate purchases 100% without ever interrupting the safe compounding of our money.