You can still buy real estate, including property, homes, condos, even though you don’t have sufficient trade available to pay for it. Trade exchange members have recently purchased a condo in Vermont, 14 building lots in Riverhead, building lots in the Poconos, a 30,000 square foot office building, a 10,000 square foot warehouse and a condo in Pennsylvania. These transactions ranged from $60,000 to over $1 million. Typically, the buyer paid a 20-30% down payment in Trade Dollars. The balance was financed with a barter mortgage, just like in the cash world. A mortgage with Barter Rewards is at 0% interest.

Barter Rewards makes mortgages available to qualified buyers of real estate, where the monthly principal is paid in Trade Dollars. You provide your product or service to exchange members and deposit the Trade Dollars into your account. A set amount is deducted from your account each month to cover the mortgage payment. Even better, Barter Rewards brokers refer the new business you need to make the payments, and online sales can enable you to pay off the property even faster. It’s that simple.

A recent offering was a beautiful house in New Jersey. The owner wasn’t able to sell it in the year it was listed with a realtor. Because he had a need for Trade Dollars, he was willing to take 100% of his equity in the home in Trade Dollars. The asking price was $450,000. The equity of $225,000 was paid in Trade Dollars, the balance of $225,000 was paid by obtaining financing with a bank mortgage.

An example of creative trading would be for the buyer to apply for 60% financing of the $450,000 and get a $270,000 mortgage to purchase the house. The seller only requires $225,000 in cash to pay off his indebtedness, leaving an excess of $45,000 cash that the buyer keeps. The buyer also makes a down payment of 25% of the barter mortgage, $56,250 in trade, leaving a barter mortgage of $168,750. This can be paid in product or service of approximately $4,000/month for five years. The house needs approximately $25,000 in cosmetic interior renovation, most of which can be done on trade.

Bottom line is, the house can be bought for trade and cash, the buyer walks away with $45,000 in cash and lives in or rents the house for five years. The house can then be sold for at least $425,000. Pay off the remaining cash mortgage of approximately $225,000, and walk away with another $200,000 in cash.

If you are interested in creative trading that turns Trade Dollars into cash, let us know. Then the next time a deal comes along, you’ll be the first to know.

Barter Rewards is an online retail barter exchange for members to facilitate multi-party trades between any business in the network.

Small business owners conduct barter transactions through membership in commercial trade exchanges. Most members do business within a 35-mile radius. Their business revolves around services – everything from chiropractors, attorneys, graphic designers, and plastic surgeons to mom-and-pop businesses like dry cleaners and auto repair.

There are 400 commercial barter exchanges in the U.S. and another 200 worldwide. The number of members per exchange ranges from about 200 to about 10,000, with most under 1,000. In total, the business-to-business network of barter exchanges represents over 450,000 companies.

Under the Tax Equity & Fiscal Responsibility Act of 1982 (TEFRA), trade exchanges are classified as third-party record-keepers with the same fiduciary responsibilities as bankers and securities brokers.

Larger companies trade goods and services through accounts receivable (AR) trading, relying on a corporate barter company to purchase inventory offered for sale with trade credits and subsequently to fulfill the credits by providing goods and services requested by the seller. The corporate barter company acts as a principal in the barter transaction, buying and selling for its own account and becoming the purchasing agent for clients with regard to the use of their trade dollars. About seven to ten corporate barter companies do about 95 percent of the corporate trade business.

Corporate barter as it is practiced today originated in the late 1960’s. At that time, corporate barter was primarily a financial tool – a way for companies with excess or obsolete inventories to recover costs and even full wholesale value for their inventories. Today, corporate barter both remains a profitable alternative to markdowns or liquidation and provides a valuable way to expand a company’s advertising and marketing plan using the leverage of a barter transaction. Corporate barter also facilitates foreign trade with countries that have goods and services to exchange but no hard currency.

Examples of corporate trade are numerous: unfilled trucking on return trips, idle plant equipment, excess maintenance inventory, years on a lease when a company moves, and even stock in a firm. Privately held companies sell restricted stock for trade dollars to offset marketing costs that will help build name recognition and market share, to build trade dollar reserves or to purchase hard assets such as real estate. Only our most experienced Trade Brokers are authorized to operate as Corporate Trade Brokers.

Real estate provides excellent opportunities to invest Trade Dollars that will generate cash profits. Real estate isn’t a particularly liquid asset, but real estate becomes more valuable over time and provides an excellent inflation hedge and tax shelter.

Since Trade Dollars come from selling surplus or from additional new business and have a low incremental cash cost, many investors find that they can be more aggressive in pursuing investments such as real estate. Because Barter Rewards members can earn Trade Dollars without significantly affecting cash flow, investors can buy speculative properties and wait for values to go up. In some cases, it’s even possible to walk away with a pocket full of cash.

Even if the investor is forced to sell at a paper loss, the sale can still represent a cash profit. Here’s how it works....

Let’s say a business has an incremental cost of 35 percent in its Trade Dollars.

The business owner buys a piece of property for $100,000 trade, so the cash cost in the property is $35,000. If he sells it for $70,000 cash, he has still doubled his cash investment while reporting a $30,000 loss on his taxes. The IRS doesn’t care whether you pay for the property in cash or Trade Dollars. The reportable loss is still the same.

Investing Trade Dollars in improvements to a hard asset like real estate is another way to generate cash profits on Trade Dollars, since the investment enhances the cash value of the property. For example, a doctor has paid for re-plastering and painting of a house, had a new sidewalk put in, has renovated a garage, and made other improvements using Trade Dollars. Since the doctor’s cost of a Trade Dollar is only his unsold time, the actual cost of the improvements is negligible.

Even when a contractor isn’t a Barter Rewards member, members are still able to finance improvements with trade. Vacations, vehicles and building materials can be bought with Trade Dollars, which can be traded to contractors.

Where electricians, re-modelers, plumbers or other contractors are exchange members, owners can easily upgrade the cash value their property. If the real estate is income producing property like rentals, the improvements can generate immediate cash through rent increases.