Book Review: “How to Finance Any Real Estate,” by James A. Misko

Book Review: “How to Finance Any Real Estate,” by James A. Misko

The book “How to Finance Any Real Estate” by James A. Misko provides real estate novices a wide ranging introduction to strategies to help finance their investments. The book was originally published in 2004. Given the upheaval in the real estate, mortgage market and overall financial system during and since the 2007-2008 financial crisis, we view many of the strategies outlined in the book as impractical.

Some additional observations:

* There is not much in the book that we found practical for self directed IRA investors. Misko dedicated a mere three (3) pages to real estate IRA investing (pps. 145-147).

* A section on “Tax Strategies” (pps. 21-24) includes basic advice and pointers that mortgage interest and points are tax deductible, and how investors should allocate basis in real estate to building and not so much to land. We find that to be an aggressive suggestion, given that a good rule of thumb seems to be 20% land and 80% building (this can vary by region, so consulting with a tax attorney or CPA is your best bet). Misko did provide a nice overview of a Section 1031 “Starker exchange.”

* Many of the chapters describe seemingly aggressive tactics, “turning dwindling stocks into real estate equities,” “postdating a sale to secure one property while selling another,” “supporting a small down payment with collateral security,” “using a certificate of deposit (ed: at 0.50% APR!) to obtain a loan,” and so on. Personally, we believe that self directed IRA investing deserves a degree of straight forward simplicity to avoid many of the pitfalls and downsides related to prohibited transactions and investments.

Overall, the book is overly ambitious. It tries to explain too many topics in a “mile wide, inch deep” style. For our preference, it was just too high level on too many topics. This book could benefit from an update and rewrite to reflect the realities of the current real estate and mortgage environment, post financial crisis.

Bottom line: this is a beginner level book that, to us, seems obsolete and written in large part for a bygone era of real estate investing. Self directed IRA experts and experienced real estate investors should look at other books to advance their expertise. In this day and age of freely available information found on websites dedicated to real estate investing, we think you would be better served spending time researching the articles and invaluable comment sections of sites like biggerpockets.com.

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