TABLE OF CONTENTS
SECTION I – Real Estate Trade Secrets
Legacy Real Estate
First Time Buyers
Commercial Real Estate Business Cycles
Industrial and Manufacturing Properties
Bad Farm Years
REIT of REITS
Sweat Equity Trades
Real Estate Games
Converting Digital Credits (Barter Dollars) into Cash
Undivided Interest in Recreational Developments
SECTION II – Barter Techniques
Introduction to Barter
Choosing a Business
Make a List of Marketable Talents
Make a List of Things You Would like to Accomplish in your Life
Digital Credits and Barter Strategy
Links to Barter and Digital Credit Organizations
BBC – 3000
Restaurant Delivery Service Plus
Other Case Histories
SECTION III – Book of Solutions
ABOUT THE AUTHOR
Problem solving for a down market in the real estate world involves both the practical and the esoteric.
This ranges from simple tenant problems to space condo development. Creative solutions, outside the norm,
sometimes have incredible results. An attempt to illustrate some of the ways used to deal with any real or
perceived problems in this arena will be addressed within the pages of this book. An additional section is
included on how to start and run a business using digital credits and bartering techniques. All of the sections
in this book will be continually updated. Real estate professionals will be encouraged to contact the author
with suggestions and practical solutions that could contribute to the subject at hand. The question and answer
section will initially contain questions considered important to the author but other questions will be added.
The readers are encouraged to submit requested answers to valid inquiries. The author will attempt to give you
possible solutions. The best questions will be used in updated versions of this book and posted on our website.
(Web address) The questions answers may also be used on the author’s Pod cast.
Each example will include a ﬂow chart unless the solution is too simple to bother with this type of
information. Some of these deals have been done before by the author and some are in the process of being
tested to see how well they work. As each solution in progress develops, the author will update this book for
the readers enjoyment.
Included will be some background techniques in the art of barter using digital credits and barter dollars.
This tutorial will be more than just the basics. It will include tried and true methods of starting and running a
business with barter as a major tool for success. A separate bibliography on this subject will be placed at the
end of the chapter.
Political problems will also be addressed as a backdrop to both causing problems and
providing solutions. This subject will be the major thrust of our Pod cast. Each obstacle
will be clearly deﬁned including some political commentary from the author. All political
commentary will come from the point of view of a positive capitalist. The socialist/
communist inﬂuences perpetrated on private property owners will be exposed from every
angle to help the reader understand the hidden motives of “The American Power Triangle”.
SEE: The Evolution of the International Capitalist Party.
This ICON will be placed somewhere during any political discussion with a link to the subject on the
This ICON will be placed on all the other links.
Forms will be included with links to their usage in each of the example transactions.
LEGACY REAL ESTATE
The ride will start with a legacy deal that’s already in progress. My legacy deal should show how everything
in real estate isn’t set in stone. The solution is provided by combining existing methods of doing business with
some unusual goals and concepts.
• Land with extreme beauty and access
• Non proﬁt organization (Humanarium Project)
• A series of Limited Partnerships
• Form a Real Estate Investment Trust (REIT)
• Real Estate Brokers License
• Recreation Vehicles
• Solar and Wind Energy Company
• Web Portal and Pod cast
• Approximately two thousand ﬁve hundred genetic designs
• An international political party (www.plizzel.com)
• A personal legacy concept
• Animation and movie making skills
• “Internet Only” incorporation process (Cyber-corporations web site)
• Coach condo timeshares
Land with extreme beauty and access
There are currently two properties under consideration. Two hundred acres at Eagles Peak in San Diego
County in California is at the top of the list. It is next to large parcels currently owned by an environmental
group on one side and the Cleveland National Forest on another side. The view is spectacular of an area known
as “The Gorge”, with one waterfall in full view and another within close walking distance.
The initial purchase price will be a little over one million dollars. There are currently four parcels. A large
estate home can be built on each of the parcels. The largest parcel
should qualify for another lot split.
Personal Legacy Concept
As avid environmentalist and a positive capitalist, a plan that reconciles the current political factions will
be developed using problem solving efforts that satisfy both disciplines. I know exactly what I want to do
with my assets and future earnings. If you are interested in a legacy situation, this factor will enhance your
chances of success. The nature of my plan allows me to use all of my training in a variety of ﬁelds plus several
established real estate methods to optimize the project.
8 C r e a t i v e Re a l E state for a B ad Mar ke t
At the core of this solution is the proper establishment of the Humanarium Project. The initial paperwork
with state is fairly simple. (SEE: FORMS – Non- proﬁts) To fully qualify as a non-proﬁt with the IRS, it is
much more complicated. (SEE: FORMS – IRS) From the beginning, as a director, I’ll be the main donator of
assets. After the paperwork is approved, other individuals and groups can participate, if they so choose.
Limited Partnerships and REITS
To qualify as a real estate investment trust (REIT), there must be one hundred or more investors to start the
REIT. There are clear rules the originating Broker must follow that are outlined by State and Federal laws.
(SEE: FORMS – REITS) One way to do that is to have enough investors in limited partnerships to convert to
a REIT. There are many advantages for the investors to convert. Real estate equities are converted to shares.
This method increases the liquidity of the investor’s real estate holding and allows for partial withdrawal of
funds by selling shares on the open securities markets.
Two markets are slow right now. (2007) The housing market and the recreation vehicle market are both
down for different reasons. Over a reasonable period of time, most personal property goes down in value while
most real estate increases in value. By using RV’s at their full appraisal value as all or part of a down payment
on real estate, the owner of the recreation vehicle is able to reverse his losses and possibly get a better value in
the process. Buying in a down real estate market is usually where the best bargains are found.
In this case the broker agrees to take the RV’s as commissions on the various transactions. This effectively
cash converts the recreation vehicles for both the buyers and sellers and increases the choices for the RV
owners. It is best for the broker to present properties to the RV owners that want to purchase another property
larger than the one they have. This creates a three-way trade. This type of transaction traditionally has a
better chance of closing than a two-way trade. Larger more expensive RV’s can be traded using three way
trades instead of direct two-way transactions. This way of doing business is a way of discounting a real estate
commission and the broker takes on all the problems of recreation vehicle ownership. (SEE: DOM the movie)
To be able to absorb a large contingent of recreation vehicles, I’ve started a special business to handle as
many RV’s as I can manage to earn doing trades. (SEE: DOM the movie) Each of these real estate deals has the
potential of being set up as a limited partnership and then later converted to a REIT for liquidity.
The recreation vehicles come into play at the Eagle Peak Development. (SEE: Legacy Flow Chart) The
primary mission of the Humanarium Project is environmental enhancement. The local zoning ordinances
allow up to ﬁve homes built on the acreage. Our plan is to build only one structure above ground. The other
structures will be built
Cr e a tive Re a l Esta te f or a Ba d M a r k e t 9
underground to minimize the visual disturbance of the landscape. Enhancement features include the following:
• Underground coach condos leave the land above in its natural state. These coach condos are just large
rectangular steel rooms with huge doors that give the recreation vehicles drive through capabilities. The
building acts as a huge living room. There is a full bathroom and RV dump system.
• The coach condos will be timeshared and the proﬁts will be kept within the Humanarium Project to
enhance the property.
• Timeshare association fees will also be used to enhance the entire project with more indigenous plants
• The fees and proﬁts will also be used to improve the walking trails and educational programs made
available to the public.
• The association will have rules to prohibit above ground parking except at the entrance next to the main
• There will be deed restrictions that only allow small electric vehicles on the trails.
• Endangered species will be introduced and cared for, if it is determined possible and good for the
species. (Gnatcatchers, Kangaroo Rat, etc.)
• Water systems developed and maintained to increase the vegetation and create ponds for the local animal
Solar Company – Blackwind Energy, Inc
The one above ground building will be a multi-use structure. The placement of the building will be
right on Eagle Peak road with the best possible views to the northwest featuring spectacular views of
“The Gorge”. The building will be open to the public. The structure of the building will be rectangular
steel, two-story design with solar walls scientiﬁcally oriented to capture maximum solar exposure. Small
windmills will be strategically placed for cogeneration for the common use of the entire development.
Back-up generators will be installed to insure continuous power. The founder of the Humanarium Project
owns a solar and wind energy company (SEE: www.plizzel.com)
Genetic Art and Animated Art Movies
The co-generation public building will be a combination Art Gallery, Movie Studio and Educational
complex. The founder of the Humanarium Project is an artist that has already produced over two thousand
ﬁve hundred genetic designs. They will all be available for viewing by the general public. Each image has
both a ﬁrst and last name and a tax ID number. Each creature is also assigned an endangered species. All
income from the licensing of any image will be used to help save these species.
Animated movies will be produced using these characters on site by BWB Films, Inc. All of these movies
and any pre-released versions will be available for viewing and purchasing by visitors.
An educational program will be developed for the public use of the facility. The subject matter will
include the following:
10 Cr e a t i v e Real E state for a B ad Ma r ke t
• Drawing programs
• Movie making
• Endangered species awareness
• Alternate future housing
• International political awareness (ICP)
Some of the other tools available to help develop or promote the Humanarium
Project includes a barter organization that can make barter credits available for any number or reasons.
Another tool will be our websites and pod casts for promotional purposes. We even have a new Internet
incorporation site to generate income.
To help the reader understand this legacy structure, a ﬂow chart is included. A typical script synopsis and
budget for the movie travel packages follow.
The second property is a 50,000-acre parcel in Kern County, California with basically the same legacy
plan. The advantage of going with this property would be the almost endless supple of available land.
The combination of the Coach Condo concept and the Bad Farm solution could make this a very valuable
property for both the present owners and the developer.
As a mountainous area the underground Coach Condos could be designed with interesting views without
disturbing the eco-system or the general look of the property. A new group of underground designers could
be called into play. Some of these professional already exist and will be documented with links to their
presence on the Web.
The possible disadvantage would be the access and possible infrastructure costs of such a large remote
development. A joint venture between the current owners and the developer may be the best solution. The
other possibility would be bringing in outside investors using a limited partnership, corporate or LLC legal
My personal preference would be selling off small parcels with plans to raise the funds for the rest of the
development. This can be done with a series of options and release clauses based on performance by the
developer. All funds would be in a performance trust fund to assure the security of the funds raised for the
current land owners and any investors brought into the project.
Each section must ﬁrst be preplanned with the appropriate drawings and engineering reports. The whole
project should have a professional futuristic computer generated concept vision using the latest design
software to show anyone interested in the development the direction this land will be heading toward. The
ﬁnished images should be posted on the Web.
Cr e a tive Re a l Esta te f or a Ba d M a r k e t 11
12 Cr e a t i v e Real E state for a B ad Ma r ke t
The story is only an example of a script designed to be used as one of many that can be performed by tourists
while on a theme vacation package. Demographically, the baby boomers are the best market to target for travel.
Approximately ﬁfty percent of the boomers are currently single. This movie script is a tongue and cheek look
at the “dirty old men and dirty old women” situation that many of these boomers will ﬁnd themselves in at this
junction in time. (2007)
This is a motor home trip but most of the time the participants will be staying in hotels or motels. The
recreation vehicle is mostly for travel comfort and social interplay. Some of the RV’s will be converted to all
electric vehicles. All of them will have Internet and ofﬁce capabilities. This will help travelers keep in touch
with their work while on a long vacation. Most vacation packages will be thirty days or more. Each caravan
will consist of four or more recreation vehicles. One RV will be for the crew, the movie and sound equipment
and the director.
Each tourist will be instructed on how to become a storyboarder. A storyboarder is an amateur actor used to
storyboard a script for the possible use by professionals. The movie made during the trip will have three uses.
Each storyboarder will have a copy of the uncut version for their home movie collection. One edited version
will be submitted for possible use on a reality TV show. Another ﬁnal cut will be marketed for full production
using professionals that use our version as a guideline; hence the name “storyboarders”.
The groups will have new scripts custom designed for the individuals involved. This script will be archived
for possible re-use if the theme becomes popular. There will always be room for improvisation by the
storyboarders. Having fun will be more important than trying to go strictly by the script
The plot is fairly simple but has many twists and turns with a lot of surprises. Because the owner is both
one of the writers and animators, additional scenes will be edited beyond the raw footage. This technology will
allow for story and visual enhancement beyond the storyboarders performance.
Each older male will be traveling with two younger females. This is designed to set up the audience for
their negative prejudicial attitudes. It will be made to appear that these men are ﬁnancing the trip and taking
advantage of gullible younger women anxious to be rich and famous. To break this negative spell, an older
female storyboarder will be revealed to be the moneybags behind the whole trip. She will be traveling with two
young men perceived to be her gigolos.
The underlying soap opera will consist of all the younger all the younger storyboarders sneaking off to be
with each other. Several crew members will balance off this equation.
Gangsters, politicians and strange new species will be added to the mix. Even a few ET’s will be included
just to jazz up the story. All versions will include the added features.
Cr e a tive Re a l Esta te f or a Ba d M a r k e t 13
DISCRIPTION: Four motor homes traveling across the country and north to Baltimore and returning in
a thirty-day period. The trip starts in San Diego. Major stops include Phoenix, Houston, Atlanta and the
Baltimore area. There are twelve storyboarders being paid one hundred dollars per day plus basic expenses. At
each of the major stops, rooms will be rented and various side trips will be taken by plane, bus, train or boat by
everyone on the vacation.
*Motor home rental: 4 units @ $6,686 per unit $26,744
Motor home insurance: $16 per day per vehicle for 30 days $1,920
Gas: @ 10 miles per gal x 4 x $3 per gal x 3159 miles x 2 $7,582
Salaries: $100 per day x 12 x 30 $36,000
Per Diem: $50 per day x 12 x 30 $18,000
Room rental: $25 per day x 12 x 30 $9,000
Side trips: 2 per major area x 4 x 12 storyboarders
Tickets and extras @ $100 per day $9,600
Equipment: Canon Hi Def movie camera @ 24 fpm @ $300 per day $9,000
(Recommend purchase for approximately the same price)
Miscellaneous equipment, lights, sound, etc $5,000
Contingency fund: $10,000
TOTAL EXPENSES: $132,845
*Use $26,744 to purchase 2nd motor home; drive Betsy plus 2 autos as an alternate plan. Keep motor
homes in DOM Corporation.
Note: Main route driving time one way – 52 hours or 104 hours roundtrip
14 Cr e a t i v e Real E state for a B ad Ma r ke t
FIRST TIME BUYERS
PERSONAL PROPERTY TRADES FOR REAL ESTATE
The use of motor homes and luxury cars during a down turn in the real estate market offers several great
opportunities for buyers, sellers and brokers. The legacy transaction mentioned earlier includes several features
that will be outlined below.
One of the worst problems that will be facing most ﬁrst time buyers is the fact that home prices are way out
of their budget. A split equity solution can help potential homebuyers if they are sellers of recreation vehicles
and expensive automobiles. By structuring a Limited Partnership with the broker being the General Partner and
Trustee of the joint purchase solution, a qualiﬁed purchase of a home or condo can be arranged. The ownership
formula can be adjusted to ﬁt each individual purchase. A good example is a California home with average
price and ﬁnancing as follows:
• Purchase price: $500,000
• Commission @ 6%: $30,000
• Cash down payment/ﬁrst time buyer: $20,000
• First trust deed 80%: $400,000 ARM @ 4% - 5 year
• Second trust deed plus PMI: $50,000 @ current rate
Breakdown of Ownership
• Motor home or luxury vehicle owner - $20,000 value (accepted by broker for part or the
commission) 40% equity in the home
• New owner/resident - $20,000 cash – 40% equity in the home
• Broker equity retained - $10,000 – 20% equity in the home
Terms and Conditions
The ﬁrst time buyer has the right of occupancy and a ﬁve-year lease option to purchase the twenty percent
equity from the broker at appraised value. In the event the option isn’t exercised it is agreed that the property
will be sold or converted into a REIT with similar properties for liquidity for all the parties. Lease payments
include PITI and PMI if called for by the lender.
Another way with the owner of two homes
This is an actual account of an ongoing transaction to help a new home buyer get into a home that his family
would ordinarily not be able to afford in the pricy Southern California housing market.
The owner of the two homes was in a zero equity position on his newer home. There was a very good
chance that he would soon be upside down on this property if the San Diego market continued to decline at
its present pace. On his older home he needed to reﬁnance because of an existing loan with very unfavorable
terms. He does have a very solid equity in this home. His dilemma was how to qualify as an owner occupant
on this house to get the best rates available. It currently had tenants paying rent. He was afraid he would have
to let the newer home go into foreclosure because the loan on that house was also about to adjust. This would
double the payments. He couldn’t afford the new payments and didn’t want to continue throwing good money
after bad money. He knew the foreclosure would ruin his credit and make it impossible to reﬁnance his older
home. He planned to move his family back into the older home until the real estate market returned to a sellers
He told me about his situation while I was ordering a pizza at his restaurant. He is an old member of my
barter organization. I suggested the following solution.
The personal property in this case is digital credits or barter dollars that the developer uses to option the
newer home as follows on this form:
Cr e a tive Re a l Esta te f or a Ba d M a r k e t 15
16 Cr e a t i v e Real E state for a B ad Ma r ke t
Another good use for recreation vehicles and luxury cars as real estate investments is for the long-term
investment in land for future development. One of the ﬁrst types of real estate that goes into a buyers market
is land that was scheduled for development when the home market crashed. Simple supply and demand forces
dictate the timing. Many bargains are available from leveraged homebuilders that miss timed the market. These
builders are more knowledgeable than most sellers and are more apt to accept and understand a creative solution
in a bad market.
Every property has a ﬁre sale, wholesale and retail price. For this bad market solution to work the seller of the
land must be willing to sell at ﬁre sale prices or the property must be a “one of a kind” property like the example
given in the preceding legacy solution. In other words, a large margin must be available to take all the water out of
the personal property values but still give the investors a fair deal. While all numbers are adjustable to particular
situations, the following example can be used as a general template:
• Fire sale value/price - $1,000,000
• Wholesale value/price - $1,250,000
• Retail value/price - $1,750,000
Developer purchases land at wholesale price with a $250,000 down payment in vehicles. The purchase
price is $1,250,000 with a 10% commission of $125,000 taken in full in personal property. This is basically
a discounted commission structure that creates new buyers. The down payment of $250,000 is in the form of
recreation vehicles, cars, etc. The seller carries back $1,000,000 in value.
Terms and Conditions
A limited partnership or LLC is formed with the following ownership breakdown based on the retail value
with the seller having the entire markup and the broker holding ﬁve percent as general partner. The initial
limited partners will have a 14.28% equity position in the land. The seller carry back value is set initially at
$1,410,000 or 80.72% and is a combination of a trust deed and ownership in the limited partnership. The note
is for $1,000,000 @ 5% interest payable yearly backed by the 80.72% equity position. Seller agrees to take
acceptable personal property to accelerate the payback on the note and deliver percentage of their ownership
based on values agreed upon using a release clause based on that percentage. Should the total pay back be less
than $1,000,000 plus ﬁve percent interest per annum on a prorated basis not be paid, the residual balance after
the full percentage is sold, the remaining borrows in the limited partnership agree to borrow enough to complete
The limited partnerships’ goal is to own the land free and clear and then develop of sell when the market has
peaked again. Another option the partnership should consider is merging into a real estate investment trust for
In the event of a short fall, (residual balance) an interim loan will be placed on the property to pay off the
seller. It will then be necessary to dilute the percentage owned by each investor to bring in enough cash to pay
off this interim loan. By this time, cash buyers may be interested in the investment. If not, the same process of
taking personal property for equity can be used to complete the transaction.
Cr e a tive Re a l Esta te f or a Ba d M a r k e t 17
A monthly fee for taxes, insurance, management, etc will be assessed on a prorated basis to all the partners.
Management duties include annual reports, maintenance and bookkeeping. Commissions on the resale of the
seller’s equity shall be paid from the net sales of the recreation vehicles and automobiles by the seller as agreed
between broker and seller. Broker should be open to taking said commissions in the form of personal property
traded in for equity by buyers. While this is a way of discounting the commissions, it also greases the wheels
and is a way of showing the investors that you do the same type of business as you have recommended to them.
In this way you’ll be walking your talk. Remember, these investors will be your long-term clients if you show
them positive results.
As the market slows down, builders that didn’t anticipate a bad market are heading toward a ﬁnancial
abyss if they are undercapitalized. In most cases a ﬁnal map offers the option of selling a completed house or
individual lot sales to get rid of the inventory and pay off the underlying debt. It is also good to have a niche
market to beat the trend.
I’m currently working with a broker/owner on a subdivision that only has a tentative tract map. The city of
Perris, California acts like they are trying to be the most politically correct city in the country. Either they think
they are a branch ofﬁce of the Smithsonian museum or an ofﬁce of the Endangered Species Act. I thought they
were weird a few years ago when they tried to charge me ﬁve hundred dollars per house for a rat fund. It made
me wonder who the rats really were.
This new property, in the middle of town, still is subject to the rat fee but they added some almost
unbelievable condition. Now they have an assessment for burrowing owls that includes a full inspection by an
approved qualiﬁed biologist. For some reason this part of the planet has been chosen to retain both a trained
paleontologist to check for dinosaurs and certiﬁed archeologist to see if they can ﬁnd the mission link.
Another politically correct solution might work better with this local mind set than to choose butting heads
with these commucrats. I just happen to be working with one of the major home manufacturers to have an
assembly line process for photovoltaic shingles. By including a system that produces the entire electrical needs
of the home our carbon footprint should be negligible.
To offset the irritation factor that I’ll have to deal with, I’m preparing a special disclosure form that all new
buyers will be required to read and sign. The disclosure will be of all the incidental fees and costs the builder
has to pass on to the consumer because of government rules. A rebate request from the city will be included
in the package for those that want to take action against the city for abusive taxation. If there is any builder’s
proﬁt, it will go to the Humanarium Project. This way the bureaucrats can’t pass the buck. Hopefully, we will
be successful in irritating them and maybe even causing them some political embarrassment. It’s too bad we
can’t affect their pocket books like they do ours.
On the more positive side using solar manufactured housing allows a phased delivery system and a unique
market. Lots can be sold separately with CC&R’s or just simple deed restrictions requiring conformity with the
rest of the homes in the subdivision. Smaller builders would be a good market for lot sales. Pacing the market
properly will make all the difference. Using trades and barter organizations can also accelerate the marketing
18 Cr e a t i v e Real E state for a B ad Ma r ke t
Cr e a tive Re a l Esta te f or a Ba d M a r k e t 19
CONCEPT: Developer purchases high-end quality estates and quality furnishings. These homes must have at
least four areas that are or can be made private and clearly deﬁned. The property must already have a separate
guesthouse or one must be built to house an onsite management couple.
PURPOSE: Provide luxury housing at hotel prices with a more familiar home setting and individual service.
The time can be structured like an extended stay rental; yearly, monthly or weekly.
INITIAL STRUCTURE OF EXECOTEL’S FINANCIAL POSITION:
Development costs: $200,000
Developer resells each unit for $1,000,000 based on the income numbers as a hotel situation for a total of
(Prepare a typical hotel Performa)
There are several ways to purchase this home in a bad sellers market. If as a developer you can establish a
business relationship with a primary lender. Their REO department should be able to keep you supplied with
all the inventory you can handle during the current down turn in the market. Expensive homes are generally
the ﬁrst segment of the market to have foreclosures but that trend has been reversed due to technical corrections
concerning the sub-prime mortgage problems. There is still a lot of high-end inventory to work with for
A contract can be made with the lender that gives the lender a ﬂoating participation percentage based on
the time needed to market the four units at the projected prices. The lender must be covered against the losses
that they would have taken under normal foreclosure situations. They will need normal interest paid during
the marketing phase of development of the Execotel concept. The participation factor should be negotiated
on individual properties. Some properties will be easier to market that others and some lenders will be more
motivated to get relief from their REO inventory. In any case, the developer to insure a continued business
relationship with the lender should negotiate a win/win contract.
Going directly to owners before they loose their homes is another way to help them and create an Execotel
property. As a developer and being single; a unique opportunity for the mutual beneﬁt of both the seller and the
developer exists. A listing agreement that includes an onsite house sitting arrangement can be initiated during
the early stages of the marketing process. Many owners have moved on to another home and would appreciate
a responsible house sitter during the development and marketing of this excess home. The broker must be
nimble and careful to act in a proper ﬁduciary manner with his principal. Many lines are crossed with this
solution so the broker must keep the owner abreast of his every move and make sure there is full understanding
and agreement with the owner. From my experience this is best done with an owner that is also a real estate
professional that understands the subtleties of the solution. Otherwise, you might be heading for useless
lawsuits that just aggravate the problem instead of solving anything. It could be a monstrous waste of time if
attempted with a civilian. (General public)
Perhaps after a good enough track record is compiled by the broker/developer, the general public can be
brought into the loop. A disclaimer and or a disclosure as to the risk assessment in attempting this solution
should be standard practice by the developer. This should require signatures of all parties involved. A strong
recommendation that the principles should consult a qualiﬁed real estate attorney before proceeding should be
in BOLD FACE TYPE on the disclaimer/disclosure statement.
20 Cr e a t i v e Real E state for a B ad Ma r ke t
Cr e a tive Re a l Esta te f or a Ba d M a r k e t 21
The condo-plex concept is a rescue mission for distressed apartment complexes and overbuilt or over
converted condo developments in a community. El Cajon, California, a suburb of San Diego is known as a
renters’ city. In an attempt to change their image, the local government agencies have fast tracked the condo
conversion process for developers. Unfortunately, not only did they create a glut in the market but also the real
estate market as a whole has gone into a slump.
The author owned a company in Houston, Texas that specialized in ﬁxer upper apartment complexes. The
condo-plex name comes from the common usage of duplex for two units, triplex for three units, etc. The condo-
plex concept allows all of these combinations to be side by side within the same development.
There are more investors available to purchase smaller apartment complexes. The price per unit is almost
always higher. The management problems quite often discourage new investors before they can purchase or
trade up to larger complexes that have enough income to cover professional management.
By using the condo-plex concept, all parties beneﬁt. Even the initial objectives of the local government will
be served albeit in a more natural market way. The developers are at the greatest risk in this equation. They’ve
been tempted by high returns and government encouragement. This is a rare combination in a State that has
more obstacles for builders and developers than just about anywhere in the country.
While we can’t keep the timetable hoped for to turn renters into buyers, an interim stage can head off some
of the probable disastrous consequences of massive foreclosures and failed conversions.
By offering the units to small investors with existing tenants and professional management, a holding period
for full conversion can happen as a work through solution. This will require lenders, home owners associations
and developers cooperation. The condo-plex investors should get a wholesale price per unit. The condos
should be deed restricted to call for an owner occupant upon resale by the condo-plex investor. This will give
the investor a nice proﬁt in the future and fulﬁll the aspirations of everyone involved.
From a political point of view, this is just another example of good intentions being perverted by
governments’ lack of understanding. You can’t dictate real estate markets. Supply and demand decisions
should be taken out of government’s control. As an example from the twentieth century, building low income
housing by the government should prove forever that they are incompetent. This was just a feel good political
boondoggle that didn’t help anyone and cost the taxpayers billions of wasted dollars. The commucrats
entrenched establishment was fully responsible for this ﬁasco and many more projects like it throughout our
country. A “Bureaucrats Responsibility Act” should bring these people to task. Of the very least they should
loose is pensions and barred from public employment forever. This lack of accountability is at the root of power
abuse by the power triangle in this country. (SEE: plizzel.com)
The initial step taken by the developer of condo-plex solutions is to examine the numbers and prepare
a general plan.
Assume a ﬁfty unit complex at an average price of $250,000 per condo or a total retail price for the
entire complex of $12,500,000.
Assume a duplex in the area sells for approximately $225,000 per unit or a total retail price for the
duplex of $450,000.
Assume a triplex in the area sells for approximately $215,000 per unit or a total retail price for the
triplex of $645,000.
Assume a fourplex in the area sells for approximately $205,000 per unit or a total retail price for the
fourplex of $820,000. The pricing structure should be as follows:
Fire sale price - $175,000 per unit for the developer
Wholesale price - $200,000 per unit for the condo-plex investor
Retail or resale price - $225,000 to $250,000 per unit
22 Cr e a t i v e Real E state for a B ad Ma r ke t
Cr e a tive Re a l Esta te f or a Ba d M a r k e t 23
Upside down means you owe more than your home or condo is worth. Upside down with an adjustable loan
or a low down payment on a recent sale purchase is the area of the market that will see millions of families
loosing their American dream home. This is the situation that too many homeowners are ﬁnding themselves in
because of poor timing.
Several options can alleviate some of these nightmarish problems. Often, when a lender workout can’t be
completed, the family being foreclosed on is mentally like a deer on the road staring into the headlights. Some
people cure the problem by taking in roommates. That is, if there is extra room available and the tenants are
willing to put up enough money to pay the arrearage. Either that or the lender will have to settle with a new
payment plan that the homeowner can live with while waiting for the market to turn around.
A better solution for families is to take in a qualiﬁed investor. See the First Time Buyer solution. (page x) A
cash investor can be advertised for in all types of media. The safety factor and rate of interest/return should be
commensurate with other market investments. A comparison Performa using past performance numbers that
compare different types of real estate investments, stocks and bonds and other similar investment should be
prepared by the broker to help market each deal for the troubled home owner. A special REIT and a new type
of PMI insurance can be designed and implemented by professionals in each of these venues. As soon as a
reported product is available the author will include details for the readers in later editions of the book.
I’m currently working with a seller that will soon be in this position but they have two houses. (SEE: First
Time Buyer section on page __) The older home has a very good equity and can easily save the newer home
but the owner doesn’t want to make the payments on a asset that is going down in value. He may sacriﬁce his
good credit by dumping the newer home and moving back to his smaller place.
The following links are to foreclosure lists:
24 Cr e a t i v e Real E state for a B ad Ma r ke t
Cr e a tive Re a l Esta te f or a Ba d M a r k e t 25
COMMERCIAL REAL ESTATE BUSINESS CYCLES
Each type of commercial property has its own business cycle. Sometimes the bad markets run concurrent
with general real estate down turns. Other times the run counter to general real estate trends.
Apartment complexes usually reﬂect the market conditions for homes and condos. This is a regional or
local situation. If the local developers anticipate the market drop, the balance between supply and demand will
keep vacancies at an acceptable rate. Unfortunately, an overbuilt apartment market usually occurs in a housing
Inducements to attract tenants are commonplace at these times. All owners want to want maintain or
increase their income stream on their properties. Retaining good tenants and ﬁnding good quality residents
becomes of utmost importants to maintain the value of the owner’s investment. A good way to keep quality
tenants would be to offer “Rent Performance Rebate Vouchers”. These can be redeemed at any time during the
tenants’ occupancy. The voucher amounts can be creatively administered to suit the situation.
(Dollar amounts vary depending upon the Gross Monthly Rental)
Gross rent on a two-bedroom apartment - $1,000 per month
$25 – rent rebate if rent is paid on or before ﬁrst of the month
$20 – rent rebate if rent is paid no later the 3rd of the month
$10 – rent rebate if there are no complaints for the month
$50 – rent rebate on the 13th month of continued residency
$75 – rent rebate on the 25th month of continued residency
$100 – rent rebate on the 37th month of continued residency
$100 – rent rebate for each year of continued residency thereafter
In the event the complex is a condominium, give double coupons that can be used toward the purchase of the
unit by the tenant. (SEE: plizzel.com for coupon examples)
As a real estate broker in the seventies working primarily exchanging properties, I ran into this opportunity.
Ofﬁce buildings in many areas of San Diego, California were overbuilt and under rented. A fellow broker was
caught in this unfortunate situation with a new ofﬁce building and an eighty percent vacancy rate.
He was willing to give me the property plus boot (cash) to close a sale before the end of the year. We had
three business days to record the transaction. We did it in two days with no escrow. We drew up the papers and
hand carried everything to expedite the transaction. “Time is of the essence” had a new meaning for both of us.
“Necessity is the mother of invention” just to add another cliché to the equation would be applicable here.
Why would anyone do this to himself or herself? This is because I had a solution to the problem. An
exchange solution that hadn’t been done, to my knowledge, but made perfect sense in my mind was the reason I
proceeded with the deal.
To start with, a full understanding of the three types of value is imperative. In this case, they are as follows:
26 Cr e a t i v e Real E state for a B ad Ma r ke t
FIRESALE – A distressed sale for any number of reasons. In this case they were both personal and tax
WHOLESALE – The price the property would probably be expected to obtain on the market without
solving any of the market problems affecting this particular ofﬁce building.
RETAIL – The price this property should bring using the numbers generated by comparable ofﬁce
complexes in the area.
Note: The loan was assumable and the loan to value was based on the retail value of the building.
Due to government impediments during development, the time for new ofﬁce space had come and gone. The
permitting process in California is an abortion and the people that are bureaucrats and politicians in charge of
building permits should be held accountable for creating this nightmare for builders and developers. Any idiot
could ﬁgure a faster and better way to do construction permitting in a timely manner. These arrogant public
dictators should be regulated as soon as possible. Everyone looses, except these powerful government ofﬁcials.
The developers that take the risk of trying to predict the future market get hit ﬁrst. Then the general public
gets hit with higher prices. In a worse case scenario, the lender is the last victim in this vicious cycle by having
to foreclose on the building. Why does anyone have to put up with this public abuse?
The solution to this particular property was a combination of doing a standard “Down and Out” exchange
into a smaller property and ﬁnding a way to ﬁll the building at projected market rates. “Down and Out” refers
to ﬁnding an investor trying to trade up into a larger property to taking advantage of the 1031 tax rules. The
investors I found were also broker/owners that wanted to leverage their current portfolio. I choose two high
equity beach homes that ﬁt the retail value of my ofﬁce building equity.
The trick was getting leases on all the units. At the time there were morning real estate exchange morning
meetings for agents that specialized in trades. These meetings were held almost every day in one part of
the county or another. I prepared a ﬂyer and presented the property to each group outlining a new exchange
product. The name of the product deﬁned its essence. “PRE-PAID LEASES FOR TRADE” was the heading on
the handout. An example would be similar to my standard ﬂow charts for this book:
Cr e a tive Re a l Esta te f or a Ba d M a r k e t 27
28 Cr e a t i v e Real E state for a B ad Ma r ke t
Projected total annual income - $57,600
The retail value based on seven times the gross income is - $403,200
The existing loan is based on seventy percent of retail value - $302,400
Trade equity - $100,800
The terms of the exchange agreement between me and the owners of the two beach homes called for a ﬁrst
year guarantee of the projected income on the ofﬁce building. This was accomplished by raising enough cash
on the two homes traded in to prepay the rents for most of the units on the ofﬁce building. One large unit had
an acceptable tenant that counted as part of this requirement. I rented an ofﬁce on a two-year lease that also
counted toward the guarantee.
Annual ﬁrst year guarantee - $57,600
Less accepted leases - $12,000
Cash needed at close of escrow - $45,600
This meant that I had to raise approximately $50,000 to close the deal by either placing loans on the two
beach properties traded into the ofﬁce complex or sell or trade the two beach houses during the escrows for a
simultaneous closing. I traded one of the houses for a free and clear boat and the other for an almost new car.
The new buyers qualiﬁed for the loans needed to raise the cash to close the deal.
The buyers of the ofﬁce building were also concerned about having real tenants. By using my pre-paid lease
for trade concept, I was able to trade out almost every unit for vehicles and trust deeds that agents had taken for
commissions on other transactions and other types of personal property.
This whole process is a very good example of a “Boil Down Deal”. By taking in an assortment of personal
property items, I had manageable assets instead of a huge negative cash ﬂow on the ofﬁce building. Some of
these assets I used, some I sold to raise cash and others I used to trade into other situations. This was a true
win/win/win/win deal. Everyone involved got what he or she wanted by using an unconventional business
technique. Everyone involved was a real estate professional. Some of them went on to duplicate this template
transaction to save other distressed properties in the area.
Cr e a tive Re a l Esta te f or a Ba d M a r k e t 29
Shopping centers have a lot of creative solutions when they get into trouble. The basic reason they can
often be helped is in their very nature. They cater to and serve entrepreneurs, business owners. These folks are
naturally creative, industrious, adventurous, risk taking professional sales people. Problem solving challenges
are part of their everyday life or they won’t survive the competition to be successful in their business endeavors.
Cash ﬂow is almost always the main problem. There are lots of reasons an owner can get into trouble. Like
every other type of real property, location can make of break the center’s future. This section will be updated on
a regular basis on my web site. (plizzel.com)
Just to get it started, a real life solution that has been done successfully in many older and poorly located
shopping centers is presented below:
Older centers often fall prey of having their major tenant not renewing their lease. These spaces are usually
large open spaces. Large spaces with major tenant status generally pay a lot lower cost per square foot for their
long-term lease. Assume large space rent at one dollar per square foot and small space rent at one dollar and
ﬁfty cents per square foot. Start a ﬂea market with small spaces going at monthly, weekly and even daily rates
in the vacant space. If the business can be easily monitored as to the gross income, a percentage rent can be
offered. Spaces should also be offered to all the major barter organizations if there are chronic vacancies for
cash. The owner of the shopping center can use the barter credits for both personal and business purposes. All
barter money is “Found Money”
This concept brings out the bargain hunters and should ﬁll the parking lot. A private shuttle bus should
be offered for “shoppers only”. Home delivery of both the person and their purchases could prove very cost
effective and present an energetic entrepreneur an attractive business opportunity if properly managed and
30 Cr e a t i v e Real E state for a B ad Ma r ke t
INDUSTRIAL AND MANUFACTURING PROPERTIES
Like all large spaces available to business owners, a league of creative people are aware of the potential
proﬁts that can be made if a new use can be successfully developed for older vacant industrial and
manufacturing buildings. Sometimes a “Civic Service” can get the local political leaders to bend the rules. A
good example is as follows:
Search the records in the city that has the large vacant industrial or manufacturing building you want to work
with at the time for nuisance complaints for night clubs. Contact the owners of these clubs to see if they would
consider a huge site to relocate or even just expand their business. Give them a rental incentive and agree to
sub-let their existing location if the numbers work. These locations don’t have a residential neighbor problem
and will be easier to police without so many disturbances.
Another good use would be for the development of “Coach Condos”. Most industrial and manufacturing
buildings are well built out of steel or block or both. This lends itself to the coach condo concept to be able
to handle the weight of the motor homes. By designing each unit with drive through capabilities, a private
“Dan Tana” like lifestyle from the old TV show “Las Vegas” motor home owners can have a livable indoor
environment. Instead of a car in the living room, a recreation vehicle drives into the unit. Each unit can either
be leased or sold as a condo or timeshare.
These units can be sold bare bones or completely professionally designed. A local home remodeling with
the latest computer modeling software can be engaged to service your clients. Unfortunately, good ideas aren’t
enough. Your biggest obstacle, once again, is your local government ofﬁcials. They are the “No Birds” that
want to protect the status quo and their jobs. They don’t want to work any harder than they have to for the same
amount of money. New large industrial parks that are over built might be a good place to attempt this type
of usage. Recreation vehicle storage is already an acceptable use but with the concept of using the space as a
residential unit could present zoning problems with the local building departments. Each community is a little
different on their approach and may let you do a prototype development to see if it solves an overbuilt situation.
After all, this increases their tax base and that is something every community is searching for
Cr e a tive Re a l Esta te f or a Ba d M a r k e t 31
BAD FARM YEARS
Farms operate on a totally different business cycle than any other type of real estate. Events on the
other side of the world quite often affect farm prices. Weather and planting decisions world-wide dictate the
commodities market for the most part. Of course there are a lot of other factors like war or political situations
that affect prices. The most important factor is whether or not the individual farmer is up to date using the latest
technology. When a mistake is made and the farm has too much debt, the farm itself is often sold at a price
lower than expected. Usually the big farm conglomerates are fully aware of distressed farm properties and they
swoop down to take advantage of the obvious situation.
An alternate solution is needed. The following method can help some of these farms survive by adding a
new crop, baby boomers. By using the coach condo concept as mentioned in previous sections, along with a
shared equity structure, many of these smaller farms can be saved. By using underground steel living room
structures with drive through capabilities, the land above can become hobby farms. The CCR’s need to detail
what the individual timeshare owner can do with each unit. Some of the important rules that must be rigorously
enforced are as follows:
• No above ground parking of any vehicles to maintain the rural atmosphere and ecological perfection of
• All hobby farming by the timeshare owners to be supervised by management.
• All produce should be allocated in a logical manner depending on the crops chosen and the degree of
interest by each timeshare owner. Management should be prepared for the ﬂexible use of the hobby
• The produce is considered community property but should be considered a beneﬁt of ownership for the
traveling families and friends of the current users of each coach condo unit.
• All excess produce sold, less expenses, should be applied on a prorated basis to association fees charged
to the owners.
The best situation is where the current owner of the farm is retained as resident management. Their lifestyle
can be enhanced while doing something they love to do.
If the current owners aren’t willing to adapt to the new reality, professional management will have to be retained
by the home owners association. When a current owner is willing to stay on, the developer should be more
willing to structure the deal with shared ownership beneﬁts. This way the current owner can participate in the
proﬁts made by the developer. This should help motivate the seller to stay with the project and maintain some
continuity. In these areas, tradition can be very important. The local political environment might be more in
favor of new ideas if the old ways are respected by the developer. This is not the place for monetary arrogance.
The wrong attitude could very easily backﬁre with everyone losing instead of the project helping on all levels.
One of the best parts of this solution is the fact that the developer is generally dealing with a larger parcel
of land to start with using this plan. That means larger parcels can be marketed in the resale process to make a
reasonable proﬁt for the developer. That also makes for less disruption of the land and ecological enhancement
instead of degradation due to poor planning.
32 Cr e a t i v e Real E state for a B ad Ma r ke t
The following section concerns itself with problem solving in areas that aren’t particularly related to bad real
estate markets. If the reader enjoyed the solutions presented so far, these transaction should be of interest.
REIT OF REITS
Retirement investment options will soon be available that fully diversify a real estate portfolio with REIT
investments. In some cases they include properties formerly owned by the investor. REIT of REITS would be
very useful if the Bernie Cornﬁeld mistakes with Fund of Funds were taken out of the concept. This would give
the soon to be retired person a very versatile option and a long term plan for the younger investors.
Coach condos and condo quarters owned by the REIT investors can be added on a lease back basis if
properly structured for added diversity. This way the investor can have usage and liquidity along with a more
Another interesting possibility would be to add “Save a Home” properties. Both parties to a “Save a
Home” property would have to agree to the terms and conditions of the REIT involved. To pull off this kind of
solution, a very knowledgeable lender is required. After this type of doing business is more seasoned, lenders
will be more willing to get involved. Offshore investors could add another layer of sophistication. This could
include structuring, tax beneﬁts and International properties and ﬁnancing partners.
An extensive search for the necessary forms and legal procedures to undertake this project is currently
underway. The following links on the Internet are very useful:
wikipedia.org (search reit)
D u e t o t h e f act that many of the s olutions pr e se nte d in this book e nd with a c o n v e r s io n
t o a Re a l E st a t e Investm ent Trust, so me te c hnic a l inf or ma tion is pr e se nte d he r e f o r th e
p ro fe ssi o n a l r e al estate readers. SE E : FORMS
Cr e a tive Re a l Esta te f or a Ba d M a r k e t 33
R E IT O F R E IT S
P o r tf o l io
C a s h Inv e s tors
D i g i ta l C r e d i ts
C o m m i s s io n s
M anagem ent
R o th I R A
P e n s io n F u n d s
In d u s t r i a l S h o p p in g O ffi c e B l d g
M a n u f a c t u r in g C e n ter
R E IT R E IT
R E IT
M o r tg a g e
R E IT A p a r tm e n t
R E IT
O ff S h o r e
In v e s t o rs R E IT O R R E IT S
C o a c h C o nd o
R E IT
"S av e a H o me "
R E IT
C o n d o Q u a r te rs
R E IT
O ff S ho r e
P r o p e r ti e s
R E IT
34 Cr e a t i v e Real E state for a B ad Ma r ke t
BEACH FRONT AND LAKE FRONT PORTFOLIO EXPANSION
My oldest and best client owns a variety of properties but considers his recreational beach front and lake
front units his primary portfolio investments. He has reached a point where he still enjoys the real estate game
but doesn’t want the stress of management. Some of his units are retained for his personal use during certain
seasons. He is particularly good at weekly summer rentals. He’s come to the point where he is seriously
thinking of selling his holdings. He would also like to stay in the game. A new paradigm is called for to keep
his interest and increase his wealth and retain his lifestyle. Condo quarters to the rescue!
The initial plan requires that properties involved are placed in escrow with the proper 1031 starker verbiage.
Vesting the retained condo quarters should also be in a limited partnership or LLC structure if the tax
consequences are advantages. This strategy will allow for a later REIT absorption for greater liquidity.
EXAMPLE OF CONDO QUARTERS ON FOUR UNITS
SEASONAL CONDO QUARTER PRICES
1 2 3 4
Winter Penthouse $1.25M/$1.5M $1.25M/$1.5M $1.25M/$1.5M
*Spring $1M/$1.25 $1M/$1.25 $1M/$1.25 $1M/$1.25
Summer N/A N/A N/A N/A
*Fall $1M/$1.25 $1M/$1.25 $1M/$1.25 $1M/$1.25
9 units sold at between $9,700,000 to $12,000,000 in cash and seller carry back trust deeds.
*Plus two units presold at between $2,000,000 and $2,500,000 (Penthouse)
If this plan is carried out at least once a year for the next ten years the minimum proﬁt from sales should be well
over $100,000,000 and the summer condo quarters retained from each project should exceed over ﬁfty units.
Cr e a tive Re a l Esta te f or a Ba d M a r k e t 35
C O NDO Q UAR TE R S
OW N E R
4 B e ac h G E N E R AL L a k e F ro n t
F ro n t U n i ts P A R TN ER H o us e
B R O K E R
C O M M I S S IO N S
M a na g em ent
L im i t e d P a r t n e r
2 B e ac h 99 Y ea r L e a s e
F ro n t U n i ts or
P r e p a id
L e a se
D EV EL OPE R
C on dom i ni um
C o n v e r s io n
C O N DO
Q U A R T E R S
P e n th o u s e
1 2 3 4 5
S p ri ng
W i nte r
Own er I nv e s to r I nv e s tor In v e s t o r I nv e s tor In v e s t o r F ri e n d
O w ner
F a m i ly
S B ro k e r I nv e s to r I nv e s tor In v e s t o r I nv e s tor In v e s t o r
S u m m er
O w ner
B k r/D e v
S Own er O w ne r O w ner O w ner O w ner Own er
F F ri e nd
F a m i ly
I nv e s to r I nv e s tor In v e s t o r I nv e s tor In v e s t o r
DE V E L O P E R
O w n e rs O w n er s
1 03 1 E x c h an g e 10 3 1 E x c h a n g e
R e p ea t
C o n d o Q u a r te r s
M a r k e t in g
L i m i te d L im i t e d
P a r tn e r s h i p P a rtn ers h i p
C o n d o Q u a r te r s '
R E IT
36 Cr e a t i v e Real E state for a B ad Ma r ke t
One of the most interesting deals I’ve been involved with was helping timeshare companies market the tail
end of their timeshare inventories. Each company had over three hundred weeks left without the ability to
market them without taking a loss. The cost for them using their normal marketing methods was too high.
I purchased an option at ﬁre sale prices for close to nothing. The broker that handled the initial purchase
did an outstanding job of explaining my exchange methods. Without his help, it would have been much more
difﬁcult for me to set everything in motion.
It was possible to use the most creative solution that could be devised. These were just hot potatoes as far
as the original developers were concerned. Everyone involved was a real estate professional and most were
The pricing was broken down as ﬁre sale value, wholesale value and retail value as explained earlier. Some
of the trades were as follows:
• Free and clear Pontiac Firebird exchanged for 2 free and clear timeshares at retail prices plus 2 units
with 50% seller carry back loans at retail prices.
• Free and clear mobile home exchanged 3 free and clear timeshares at retail prices plus 3 units with 50%
seller carry back loans at retail prices.
• Precious gems exchanged for 1 free and clear timeshare at retail and 1 unit with 50% seller carry back
loan at retail price.
• Prepaid lease on ofﬁce space in downtown San Diego, California exchanged for 250 free and clear
timeshares at retail prices. I received 35 free and clear timeshares as the developer’s proﬁt. I used
these to trade for a variety of items and other real estate including a hill top mansion in Valley Center,
• Condo equity exchanged for 2 free and clear timeshares at retail plus 4 units with 50% seller carry back
loans at retail prices with 50% seller carry back loans at retail prices. The loans were kept by original
timeshare developer and the free and clear units were my developer’s proﬁt.
Needless to say, there were many other similar trades to complete the liquidation of over six hundred
timeshare weeks. The following links are major p y in the timeshare world:
Cr e a tive Re a l Esta te f or a Ba d M a r k e t 37
L E F T O V E R T IM E S H A R E S
C O M M IS S I O N S
3 0 0 + T im e s h a r e s 3 00 + T i m e s h a re s
L a ke T ah o e B R OKER P a lm S p r in g s
AUTO DE VE L OP E R O f f ic e
C ond o
M o b il e
P r e - p a id
GE MS L e as e
C la s s ic M o to r
D e v e lo p e r
C a r H ome
P r o f it s
KEE P C AS H TR ADE
38 Cr e a t i v e Real E state for a B ad Ma r ke t
This would best be described as a multi-media real estate venture, or maybe bum adventure. Just keep your
sense of humor and try not to be too politically correct. If that’s impossible for you, just burn the book, please!
The ﬁrst thing we need to do is ask one of the Indian tribes to give us a large in the middle of nowhere
for three new cities; “Hope”, “Training” and “Escape”. The reason this could prove to be the best strategy is
political. Both the left and the right wing politicos have agendas that won’t agree with our way of dealing with
the homeless. Legal hassles will just take food out of the mouths of the needy and the confused. Indian tribal
law could prove to be less cumbersome.
After securing the sites for the new Bum towns, three scripts/stories will be released to the participants
including the following:
• Members of the Humanarium Project – crew and recruits
• Low income social security recipients – monitors and storyboarders
• Homeless for the town of Hope – storyboarders
• Homeless for the town of Training – storyboarders and technicians
• Homeless for the town of Escape – storyboarders and games
• Indians – storyboarders, inspectors, trainers and referees
The scripts will be for the reality show and a possible movie if we can get backing and true professional
involved. This is why we can call all the amateur actors and actresses storyboarders. Hopefully some of
the storyboarders will go on to become professionals. It could be the same for some of the technicians that
are trained in the program. A good editor can frame several versions of the original screen play for possible
THE TOWNS OF HOPE, TRAINING AND ESCAPE
OUTLINE OF THE INITIAL THREE SCRIPTS
Opening Scene – A helicopter ﬂy over of the future home of the town of Hope emphasizing the remoteness and
natural beauty of the location. Credits and music added.
Cut to – Bowery type location showing the hopelessness of street sleeping. Feature each skyline and zoom
down to the street level to show the contrast. End in San Diego, California with the Humanarium Project
members and tribesmen giving tickets for ﬂight to the town of hope to selected homeless street people. All
applicants are screened to make sure they go to the right town.
Families or women and children usually have several local options. They are directed to these resources.
We are looking for the hardcore cases that litter the streets with their presence. For the town of Hope we look
for people where compassion can help the most. For the town of Training we look for candidates for self
improvement. For the town of Escape we choose the truly scandalous bums.
End shot – Show the same area of the city of Hope after it has been environmentally enhanced with the
visible building a huge solar structure. The increase in vegetation and animal population is featured. This is
done digitally on the computer using Maya 8 to project the future look of the town when the development is
Cr e a tive Re a l Esta te f or a Ba d M a r k e t 39
The stories of how this environmental enhancement came about constitute the core of each script. Some of
the themes include:
• Collecting new town members
• Trip trips
• Initial orientation problems
• Sponsor tie-ins and embedded ads
• Camping to living
• Featuring the Internet mentors (social security seniors)
• Skills acquired
• Hanging around habits
• Why bother
• New soaps
• Developing the infrastructure
• Cowboys and Indians (role reversal)
• Humanarium technology (Biosphere)
• New style electric vehicle races
Our ﬁrst choice of sponsors will be the beer companies. This will help us recruit bums. The ﬂyers will
emphasize “FREE BEER” to supply the number one commodity for the bums. This will be a trade out
sponsorship for beer and water supplies. The alcohol content will slowly be reduced to wean them back to
normalcy, or not. While drinking water will be supplied via helicopters, waste water recycling will be used to
enhance the landscape and provide drinking water for additional animals. Solar companies and electric vehicle
manufacturing companies will be pursued as sponsors on a trade out basis. Any other company interested in
the subject and would like to help will be welcomed as a sponsor. We are currently contacting the following
companies for possible sponsorship:
40 Cr e a t i v e Real E state for a B ad Ma r ke t
H O M E L E S S S O L U T IO N S
DEV EL O PE R
P R ODUC E R
I N D IA N H U M A N A R IU M G OV E R NME NT
L AND P R OJ E C T LAND
HOP E T R A IN I N G E SCAP E
C o m p a s s io n
S ic k / B a t t e r e d S e l f Im p r o v e m e n t S c an d al o u s
V a g r a n ts Bu ms
T r ip T r i p s
S p o n s o rs O r ie n ta ti o n
B io s p h e r e
S pon s or A ds
B e er
W at e r S to ry b o a rd e rs C a m p in g / L i v in g
R e a l it y
S c r ip t s
M e nto rs
S o la r
H ope T ra i ni ng
W in d
S k i l ls
E l e c t r ic
c a r ra c e s
S S G am es
E sc a p e
E l e c tri c M o n it o r s
V e h ic l e s
C o ll e c t in g H a b i ts
O th e r W hy B othe r
I n d ia n s
N e w S oa ps
H um a na ri um
V ol unte e rs In f r a s t r u c t u r e
Cr e a tive Re a l Esta te f or a Ba d M a r k e t 41
Buffer building refers to those spaces between the edge of the freeway and the nearest private property line.
In California, CAL-TRANS is actively seeking private party solutions. We will be testing their rhetoric and
Anything done should include a *soft crash zone and *quick vehicle removal systems to help with trafﬁc
management. Because of the nature of the topography in California the suggested uses only apply to certain
stretches of road. These are primarily urban solutions, not necessarily urban concepts.
Special architects and engineers will be needed to design buffer buildings. For long stretches of urban
freeway next to established subdivisions an intricate design could prove useful. Considering the fact that
freeways are a concept of the forties and ﬁfties, surely some new thinking is long overdue.
To start with, think of this plan as a tubular rectangle inside an outer tubular rectangle. The inside tube is
designed and used by combustion engine vehicles that should be isolated, if possible, because of noise and air
INSERT IMAGE HERE
Replace the above image with rendering of the Buffer Building concept Some of the possible designs could
• Overhead toll roads and rail systems
• Underground toll roads
• Solar voltaic on roof and south and southwest walls
• Electric vehicles only zone
• *Soft crash zone
• *quick vehicle removal systems
• Commercial and ofﬁce space
• Special landscaping
• Special signage, time, weather, breaking new and emergency information
• Speed and reckless driving monitors
The following links are posted below and should help develop some of these ideas:
42 Cr e a t i v e Real E state for a B ad Ma r ke t
B U F F E R B U IL D IN G
H U M A N A R IU M
P R OJ E C T DE V E L O P E R B R OK ER
P R O F IT S
C O M M I S S IO N S
F I N A N C IN G
DEV EL O PM ENT
P e n s i on F u n d s S Y N D ICA T E
In s u r a n c e C o . L L C or A R C H IT E C T
O ffs h o r e L e nd e r s L im i te d
P a r tn e r s h i p
A- 1 C O N T R A C T O R
C ondos E m e r g e n cy M in i- S h o pp in g S to r a g e
O f f ic e S p a c e C e n te r s RO ADS G ar ag e s P a r kin g
C A L-TR A N S
Cr e a tive Re a l Esta te f or a Ba d M a r k e t 43
SWEAT EQUITY TRADES
Sweat equity trades usually refer to someone in the trades or an actual contractor. My experience is that
the professions are a good candidate for bulk trades of their services. By determining what type of real estate
the professional is interested in purchasing, a credit for the amount of your commission or equity can be pre-
arranged or a contract can be delivered at close of escrow for the agreed upon amount. This new business and
found money for the professional, the broker and the any developer involved in this type of transaction.
This technique can replace the need for all but catastrophic health insurance and dental insurance. Pre paid
legal fees and accounting fees can also come in handy. Make sure the agreement includes the right to trade the
contracted services to third parties. Point out that you can do multiple contracts and bring new clients as fast as
you can trade out the current contract.
These contracts are good for buying cars, recreation vehicles, boats, even restaurant and advertising scrip
(gift certiﬁcates). If used properly, these contracts will go right to the bottom line of your business. Here is an
example of a simple sweat equity contract:
PRE PAID SERVICE CONTRACT
FIRST PARTY : __________________________________________________
Name of professional and type of service provided
Address State Zip
Business Phone Cell Phone e-Mail address
SECOND PARTY: __________________________________________________
Name of Broker or Developer
Address State Zip
Business Phone Cell Phone e-Mail address
Party of the ﬁrst part agrees to provide _________________________services for the total amount of
_________________________to the party of the second part or their assignees.
Party of the second part agrees to credit party of the ﬁrst part ____________________ dollars toward the
purchase of an acceptable property purchased through the second party at close of escrow.
Signature of First Party Date
Signature of Second Party Date
44 Cr e a t i v e Real E state for a B ad Ma r ke t
REAL ESTATE GAMES
FOR USE ON CELL PHONES, PDA’s, GAME BOXES, COMPUTERS
I’m currently designing a series of real life games that can be played by real estate professionals and
investors and their children. My partner is a Maya instructor. Maya is the premier animation software used in
the industry. Several Adobe products augment the development process.
For investment purposes, the game will use micro dollar amounts for even the smallest investments. I
use pay pal and digital credits for small amounts and credit cards for larger amounts. All transactions will be
over the Internet. For the kids that want to play, the amounts earned by playing can be locked into a product
that releases the funds for college or retirement by permission of the parents requiring a digital signature as
conﬁrmation of said permission. If this account is used, monthly or quarterly withdrawal amounts can be opted
for based on the amount in the account. The account will transfer to a REIT as soon as the investment legally
The games will have different levels aimed at the players lifestyle rather than a pre set market assumption.
Parents will be able to use the game to train their children about the work/play connection. They will also learn
some good habits like the importance of saving and investing for their future. They will also learn the power of
passive income when they reach a certain level.
Each level will require a reality aspect to move on to the next level. These tasks can be done over the phone
from a general database or in person with friends and family. Some of the projects include:
• Special chores and projects designed by parents. The parents should be verify upon completion before
the agreed amount is placed into the game vault for the child.
• Fund raising while playing the game will also get the player to the next level and earn an investment
credit based on volume.
• Participating Internet businesses can tap into this game to increase the sales inventory for the players.
Normal sales commissions will automatically be inserted into any players game vault.
The following links are companies that develop software for game development:
Cr e a tive Re a l Esta te f or a Ba d M a r k e t 45
R E AL E S TATE G AME S
M o b i l e P h o n e s , P D A 's , G a m e B ox e s ,
C o m p u t er s , K io s ks
T yp eo f G AME C o m m is s i o n s
G a me P LAY E R S B o n u s es
L e v el L ev e l
In d e p e n d a n t 1 3
C o n t ra c to rs & L e ve l
L ice n s in g 2
A g r e e m e n ts
C re d it
C ard s Pay Pal
C r e d i ts
M o b ile
P h o n es IN T E R N E T K io s k s
P D A 's G am e
C o m p u te r s
B oxe s
H U M A N A R IU M
PR OJ E C T In d us t ri a l
M a n u f a c tu r i n g
M o rtg a g e R E IT
R E IT
R E IT O F O ffS h o r e
A p artm en t
P r o p e r ti e s
R E IT R E IT S R E IT
K ID ' s S av e a C oa ch Q u a rte rs
O ffi c e B l d g S h o p p i n g C en t er
R E IT R E IT I R A fo r H ome C on do R E IT
S cho ol R E IT R E IT
46 Cr e a t i v e Real E state for a B ad Ma r ke t
While these don’t exist now, perhaps a clearance through the Security Exchange Commission would be
possible. This would require the proper legal structuring. I’m in the process of researching both the structure
and the process required to make this concept a reality.
The real estate investment trust (REIT) bonds could very easily be used for interim and construction
ﬁnancing. They could also be used as a leveraging tool in several situations. By making them general
obligation bonds of the entire REIT portfolio and using the funds to pay off the mortgage on an individual
property being developed, this property could become eligible for development ﬁnancing. In essence, the REIT
itself will be ﬁnancing selected projects by leveraging the REIT as collateral for the bonds.
CONVERTING DIGITAL CREDITS
(BARTER DOLLARS) INTO CASH
At present there are several hundred business owners in by barter organization. Only one hundred investors
are needed to qualify under the real estate investment trust rules. I’ll mix my members with some of my real
estate clients to have a good base.
The main beneﬁt for the barter people is their ability to be cash converted if they choose to sell their shares
in the real estate investment trust. The challenge will be ﬁnding the real estate where the digital credits can
be accepted by the REIT management. Only the initial set up with the original one hundred investors can be
absorbed by either real estate commissions or the developers proﬁt generated by the real estate investment trust.
Community apartments are a little used concept in California but might provide an easier way to bring small
investors into the market and allow them occupancy on a separate lease agreement. The projected income and
developer’s proﬁt would look something like the follow:
• Assume a 100 unit apartment complex @ $100K per unit = $10,000,000 purchase price
• Individual unit price of $132,000
• New loans including seller carry back - $120,000 @ current rates plus points
• Cash or acceptable trade of $12,000 as the down payment
• Approximate developers proﬁt of two million less development costs
Monthly payments of $1,000 to $1,300 per month including impounds
Cr e a tive Re a l Esta te f or a Ba d M a r k e t 47
UNDIVIDED INTERESTS IN
Undivided interests in recreational developments are also a little used concept in California but might
provide an easier way to bring small investors into the market and allow them use as a coach condo on a
separate lease agreement. (SEE: Legacy Flow Chart as example) The projected income and developer’s proﬁt
would look something like the follow:
• 200 acres gross – Purchase price - $1,000,000
• 180 acres for development as undivided interests in recreation development
• 20 acres for Humanarium Project
• Build four coach condos at $500,000 per unit building costs
• Sell 50 weeks per year or 200 units at $20,000 per week
• Approximate annual impounds per week for expenses plus environmental enhancement -
$300 per year
• Total of $4,000,000 or $1,000,000 per coach condo
• Developers proﬁt of $1,000,000 less marketing costs
SPACE CONDOS www.space.com
This is the Virgin Galactic space ship that will be taking up space tourists to the new space hotel. Why not
convert some of the rooms to condos to offset the cost of building the whole project? I’ll handle the sales of
these units. My commission is a ticket!
48 Cr e a t i v e Real E state for a B ad Ma r ke t
• Legacy Real Estate
• First Time Buyer
• Holdover Subdivisions
• Ofﬁce Buildings
• REIT of REITS
• Condo Quarters
• Upside Down
• Leftover Timeshares
• Homeless Solutions
• Buffer Building
• Real Estate Games
Cr e a tive Re a l Esta te f or a Ba d M a r k e t 49
• RV’s & Luxury autos convert to cash for R.E. purchases.
• Environmental investors for special land purchases.
• Developer available for house sitting.
• Execotel, share mansion with full guest services at better than hotel prices.
• Fixer upper condo-plex with management at great per unit prices.
• Facing foreclosure, upside down, loan problems, try us.
• Monthly rent rebates for on time quiet renters.
• Trade your whatever for prepaid lease on ofﬁce space.
• Rent in door ﬂea market space, daily, weekly, monthly.
• Buy a low carbon credit home with your RV or auto.
• Farm coach condos for your RV, low DP with hobby farming.
• Boomers usable retirement funds for active retirement.
• Condo quarters for the mobile partially retired user.
• Trade your vehicle for timeshares.
• Sponsor a homeless solution with your time or money. Be in a new reality show.
• Save a Home investment opportunity, split equity. Call upside down hotline.
50 Cr e a t i v e Real E state for a B ad Ma r ke t
Real Estate Purchase
Real Estate Exchange
Option to Purchase Real Estate
Lease Option to Purchase Real Estate
Limited Liability Corporation
Real Estate Investment Trust
Cr e a tive Re a l Esta te f or a Ba d M a r k e t 51
Option to Purchase Real Estate
THIS AGREEMENT is made and entered into this day of September, 2007, by and between
Pompilio Neyes as “Optionor,” and Humanarium Project and/assigns, hereinafter referred to as
“Optionee.”WITNESSETH, that for and in consideration of Ten Thousand Barter Dollars ($10.000), and the
mutual promises and covenants set forth below, the parties agree as follows:
1. Option to Purchase Real Property. Optionor grants Optionee the exclusive right to purchase the real
property described as: Fifty percent ownership in 792 Via Bahia, San Marcos, California, with the right of
possession as per 5 year lease option on the remaining ﬁfty percent retained by Optionor. SEE: attached
2. Term of Option. This option shall commence on September __, 2007 and expire on January 1, 2008.
3. Terms of Sale. The terms of sale shall be: Purchase price of ten thousand dollars over the amount owned on
both the current trust deeds of $560,000 or approximately $570,000 on the above property.The following items shall
be prorated at closing: PITI, utilities and Mello Roos.All personal property, appliances, attachments and ﬁxtures
shall be included in the sale except: . The Optionor shall convey title by a good and marketable quit claim
4. Extension of Option Period. Upon payment of one thousand barter Dollars ($1,000) Optionee shall
have the right to extend this option by one month under the same terms and conditions.
5. Notice of Exercise. This option may be exercised at any time during the option period as described above,
and Optionee may exercise the option with or without notice to Optionor.
6. Closing Documents. All documents necessary for title transfer, including, but not limited to a quit claim
deed and bill of sale, shall be executed by both parties
7. Insurance. Optionor shall protect Optionee’s interest by maintaining hazard insurance upon the property,
naming the Optionee as additional insured. In the event of destruction in whole or in part of the property,
Optionee shall have the option to proceed with the closing and accept the insurance proceeds for such
damage, or to declare this agreement null and void, releasing both parties from any obligations hereunder,
except for the return of monies paid by Optionee, which shall become immediately due and payable from the
8. Other Encumbrances. Optionor represents that the following liens and encumbrances currently exist on the
property: Mello Roos. Optionor covenants that he/she will not further impair or encumber the property without
Optionee’s express written permission. In the event Optionor defaults on the payment of any of the security
instruments, Optionee shall have the right to cure and/or satisfy the security instruments, and, in this event,
shall be entitled to a 10 percent interest on actual expenses incurred in doing so.
52 Cr e a t i v e Real E state for a B ad Ma r ke t
9. Assignment. Optionee shall be permitted the right of assignment of this option. 10. Agreement Binding.
This Agreement shall be binding upon the parties hereto and their respective heirs, administrators, successors,
and assigns. 11.Governing Law. This agreement, and all transactions contemplated hereby, shall be governed
by, construed and enforced in accordance with the laws of the State of California. In the event that litigation
results from or arises out of this Agreement or the performance thereof, the parties agree to reimburse the
prevailing party’s reasonable attorney’s fees, court costs, and all other expenses, whether or not taxable by
the court as costs, in addition to any other relief to which the prevailing party may be entitled. IN WITNESS
WHEREOF, the parties hereto have hereunto set their hands and seals the day and year ﬁrst above written.
On , 20 , before me, , appeared , personally known to me (or proved to me on the basis
of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and
acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that
by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s)
acted, executed the instrument. WITNESS my hand and ofﬁcial seal.
Signature of Notary:
Afﬁant Known Produced ID
Type of ID
My Commission expires
I found a young manager of a local loan brokerage ﬁrm that had a growing family. He wanted to buy a home
but couldn’t handle the huge payments that he would incur at the present market prices of homes in San Diego.
I suggested a split equity solution as mentioned above. In this case it would be a ﬁfty/ﬁfty split between the
buyer and the seller of the Via Bahia property. The developer only receives a cash conversion on his barter
The buyer also acted as a loan ofﬁcer to help Pimo, the seller, get reﬁnanced on his older home.
Cr e a tive Re a l Esta te f or a Ba d M a r k e t 53
REITS and the IRS
Purpose of Form
Use Form 1120-REIT, U.S. Income Tax Return for Real Estate Investment Trusts, to report the
income, gains, losses, deductions, credits, and to ﬁgure the income tax liability of a REIT.
Who Must File
A corporation, trust, or association that meets certain conditions (discussed below) must ﬁle Form
1120-REIT if it elects to be treated as a REIT for the tax year (or has made that election for a prior tax
year and the election has not been terminated or revoked). The election is made by ﬁguring taxable
income as a REIT on Form 1120-REIT.
General Requirements To Qualify as a REIT
To qualify as a REIT, an organization:
⊥6. Must be a corporation, trust, or association.
Must be managed by one or more trustees or directors.
Must have beneﬁcial ownership: (a) evidenced by transferable shares, or by transferable
certiﬁcates of beneﬁcial interest; and (b) held by 100 or more persons. (The REIT does not
have to meet this requirement until its 2nd tax year.)
Would otherwise be taxed as a domestic corporation. Must be neither a ﬁnancial institution (referred
to in section 582(c)(2)), nor a subchapter L insurance company. Cannot be closely held, as deﬁned
in section 856(h). (The REIT does not have to meet this requirement until its 2nd tax year). If a REIT
meets the requirement for ascertaining actual ownership (see Regulations section 1.857-8 for details),
and did not know (after exercising reasonable diligence), or have reason to know, that it was closely
held, it will be treated as meeting the requirement that it is not closely held.
The gross income and diversiﬁcation of investment requirements of section 856(c) must be met.
The organization must:
Have been treated as a REIT for all tax years beginning after February 28, 1986, or
Had, at the end of the tax year, no accumulated earnings and proﬁts from any tax year that it was not
For this purpose, distributions are treated as made from the earliest earnings and proﬁts accumulated
in any non-REIT tax year. See section 857(d)(3). The organization must adopt a calendar tax year
unless it ﬁrst qualiﬁed for REIT status before October 5, 1976. The deduction for dividends paid
(excluding net capital gain dividends, if any) must equal or exceed: 90% of the REIT's taxable income
(excluding the deduction for dividends paid and any net capital gain); plus 90% of the excess of the
REIT's net income from foreclosure property over the tax imposed on that income by section 857(b)
(4)(A); less any excess noncash income as determined under section 857(e).
See sections 856 and 857, and the related regulations for details and exceptions.
54 Cr e a t i v e Real E state for a B ad Ma r ke t
Termination of Election
The election to be treated as a REIT remains in effect until terminated, revoked, or the REIT has
failed to meet the requirements of the statutory relief provisions. It terminates automatically for any
tax year in which the corporation, trust, or association is not a qualiﬁed REIT.
The organization may revoke the election for any tax year after the 1st tax year the election is
effective by ﬁling a statement with the service center where it ﬁles its income tax return. The
statement must be ﬁled on or before the 90th day after the 1st day of the tax year for which the
revocation is to be effective. The statement must include the following:
The name, address, and employer identiﬁcation number of the organization;
The tax year for which the election was made;
A statement that the organization (according to section 856(g)(2)) revokes its election under section
856(c)(1) to be a REIT; and
The signature of an ofﬁcial authorized to sign the income tax return of the organization.
The organization may not make a new election to be taxed as a REIT during the 4 years following the
1st year for which the termination or revocation is effective. See section 856(g)(4) for exceptions.
Taxable REIT Subsidiaries (TRS)
A REIT may own up to 100% of the stock in one or more taxable REIT subsidiaries (TRS). A TRS
must be a corporation (other than a REIT or a qualiﬁed REIT subsidiary) and may provide services to
the REIT's tenants without disqualifying the rent received by the REIT. See section 856(l) for details,
including certain restrictions on the type of business activities a TRS may perform. Also, not more
than 20% of the fair market value (FMV) of a REIT's total assets may be securities of one or more
TRSs (see section 856(c)(4) for details).
Transactions between a TRS and its associated REIT must be at arm's length. A REIT may be subject
to a 100% tax to the extent it improperly allocates income and deductions between the REIT and the
TRS (see section 857(b)(7) for details). Additional limitations on transactions between a TRS and its
associated REIT include:
Limitations on income from a TRS that may be treated as rents from real property by the REIT (see
Limitations on a TRS's deduction for interest paid to its associated REIT (see section 163(j)).
To elect to have an eligible corporation treated as a TRS, the corporation and the REIT must jointly
ﬁle Form 8875, Taxable REIT Subsidiary Election.
When To File
Generally, a REIT must ﬁle its income tax return by the 15th day of the 3rd month after the end of its
tax year. A new REIT ﬁling a short period return must generally ﬁle by the 15th day of the 3rd month
after the short period ends. A REIT that has dissolved must generally ﬁle by the 15th day of the 3rd
month after the date it dissolved.
If the due date falls on a Saturday, Sunday, or legal holiday, the REIT can ﬁle on the next business
Cr e a tive Re a l Esta te f or a Ba d M a r k e t 55
A group of corporations with members located in more than one service center area will often keep all
the books and records at the principal ofﬁce of the managing corporation. In this case, the tax returns
of the corporations may be ﬁled with the service center for the area in which the principal ofﬁce of the
managing corporation is located.
Who Must Sign
The return must be signed and dated by:
The president, vice president, treasurer, assistant treasurer, chief accounting ofﬁcer; or
Any other corporate ofﬁcer (such as tax ofﬁcer) authorized to sign.
If a return is ﬁled on behalf of a REIT by a receiver, trustee, or assignee, the ﬁduciary must sign
the return, instead of the corporate ofﬁcer. Returns and forms signed by a receiver or trustee in
bankruptcy on behalf of a REIT must be accompanied by a copy of the order or instructions of the
court authorizing signing of the return or form.
If an employee of the REIT completes Form 1120-REIT, the paid preparer's space should remain
blank. Anyone who prepares Form 1120-REIT but does not charge the REIT should not complete
that section. Generally, anyone who is paid to prepare the return must sign it and ﬁll in the “Paid
Preparer's Use Only” area.
The paid preparer must complete the required preparer information and:
Sign the return in the space provided for the preparer's signature; and
Give a copy of the return to the taxpayer.
A paid preparer may sign original returns, amended returns, or requests for ﬁling extensions by rubber
stamp, mechanical device, or computer software program.
Paid Preparer Authorization
If the REIT wants to allow the IRS to discuss its 2006 tax return with the paid preparer who signed it,
check the “Yes” box in the signature area of the return. This authorization applies only to the individual
whose signature appears in the “Paid Preparer's Use Only” section of the REIT's return. It does not
apply to the ﬁrm, if any, shown in that section.
If the “Yes” box is checked, the REIT is authorizing the IRS to call the paid preparer to answer any
questions that may arise during the processing of its return. The REIT is also authorizing the paid
Give the IRS any information that is missing from the return,
Call the IRS for information about the processing of the REIT's return or the status of any related
refund or payment(s), and
Respond to certain IRS notices about math errors, offsets, and return preparation.
56 Cr e a t i v e Real E state for a B ad Ma r ke t
Assembling the Return
To ensure that the REIT's tax return is correctly processed, attach all schedules and other forms after
page 4, Form 1120-REIT, and in the following order.
Schedule N (Form 1120).
Schedule O (Form 1120).
Additional schedules in alphabetical order.
Additional forms in numerical order.
Complete every applicable entry space on Form 1120-REIT. Do not enter “See attached” instead of
completing the entry spaces. If more space is needed on the forms or schedules, attach separate
sheets using the same size and format as the printed forms. If there are supporting statements and
attachments, arrange them in the same order as the schedules or forms they support and attach
them last. Show the totals on the printed forms. Enter the REIT's name and EIN on each supporting
statement or attachment.
Depository Methods of Tax Payment
The REIT must pay the tax due in full no later than the 15th day of the 3rd month after the end of the
tax year. Generally, this date falls on March 15th after the close of the REIT's tax year, unless the
REIT has maintained a ﬁscal year. The two methods of depositing REIT income taxes, including the
capital gains tax, are discussed below.
Electronic Deposit Requirement
The REIT must make electronic deposits of all depository taxes (such as employment tax, excise tax,
and REIT income tax) using the Electronic Federal Tax Payment System (EFTPS) in 2007 if:
The total deposits of such taxes in 2005 were more than $200,000 or
The REIT was required to use EFTPS in 2006.
If the REIT is required to use EFTPS and fails to do so, it may be subject to a 10% penalty. If
the REIT is not required to use EFTPS, it may participate voluntarily. To enroll in or receive more
information about EFTPS, call 1-800-555-4477. To enroll online, visit www.eftps.gov.
Depositing on time. For EFTPS deposits to be made timely, the REIT must initiate the transaction
at least 1 business day before the date the deposit is due.
Cr e a tive Re a l Esta te f or a Ba d M a r k e t 57
Deposits With Form 8109
If the REIT does not use EFTPS, deposit REIT income tax payments (and estimated tax payments)
with Form 8109, Federal Tax Deposit Coupon. If the REIT does not have a preprinted Form 8109, use
Form 8109-B to make deposits. You can get this form by calling 1-800-829-4933 or by visiting an IRS
taxpayer assistance center. Have the REIT's EIN available when you call or visit.
Do not send deposits directly to an IRS ofﬁce; otherwise, the REIT may have to pay a penalty. Mail or
deliver the completed Form 8109 with the payment to an authorized depositary (a commercial bank
or other ﬁnancial institution authorized to accept federal tax deposits). Make checks or money orders
payable to the depositary.
If the REIT prefers, it can mail the coupon and payment to: Financial Agent, Federal Tax Deposit
Processing, P.O. Box 970030,St. Louis, MO 63197
Make the check or money order payable to “Financial Agent.”
To help ensure proper crediting, enter:
the REIT's EIN; the tax period to which the deposit applies; and “Form 1120-REIT” on the check or
money order. Darken the “1120” box under “Type of Tax” and the appropriate “Quarter” box under
“Tax Period” on the coupon. Records of these deposits will be sent to the IRS. For more information,
see “Marking the Proper Tax Period” in the instructions for Form 8109.
For more information on deposits, see the instructions in the coupon booklet (Form 8109) and Pub.
583, Starting a Business and Keeping Records.
If the REIT owes tax when it ﬁles Form 1120-REIT, do not include the payment with the tax return.
Instead, mail or deliver the payment with Form 8109 to an authorized depositary or use EFTPS, if
Estimated Tax Payments
Generally, the following rules apply to the REIT's payments of estimated tax.The REIT must make
installment payments of estimated tax if it expects its total tax for the year (less applicable credits)
to be $500 or more. The installments are due by the 15th day of the 4th, 6th, 9th, and 12th months
of the tax year. If any date falls on a Saturday, Sunday, or legal holiday, the installment is due on the
next regular business day. Use Form 1120-W, Estimated Tax for Corporations, as a worksheet to
compute estimated tax. If the REIT does not use EFTPS, use the deposit coupons (Forms 8109) to
make deposits of estimated tax.
If the REIT overpaid its estimated tax, it may be able to get a quick refund by ﬁling Form 4466,
Corporation Application for Quick Refund of Overpaid Estimated Tax. The overpayment must be at
least 10% of the REIT's expected income tax liability and at least $500.
58 Cr e a t i v e Real E state for a B ad Ma r ke t
For more information, including penalties, see the Line 25. Estimated Tax Penalty instructions.
Interest and Penalties
Interest. Interest is charged on taxes paid late even if an extension of time to ﬁle is granted. Interest
is also charged on penalties imposed for failure to ﬁle, negligence, fraud, substantial valuation
misstatements, and substantial understatements of tax from the due date (including extensions) to
the date of payment. The interest charge is ﬁgured at a rate determined under section 6621.
Late ﬁling of return. A REIT that does not ﬁle its tax return by the due date, including extensions,
may be penalized 5% of the unpaid tax for each month or part of a month the return is late, up to a
maximum of 25% of the unpaid tax. The minimum penalty for a return that is over 60 days late is the
smaller of the tax due or $100. The penalty will not be imposed if the REIT can show that the failure to
ﬁle on time was due to reasonable cause. REITs that ﬁle late must attach a statement explaining the
Late payment of tax. A REIT that does not pay the tax when due generally may be penalized ½ of
1% of the unpaid tax for each month or part of a month the tax is not paid, up to a maximum of 25%
of the unpaid tax. The penalty will not be imposed if the REIT can show that the failure to pay on time
was due to reasonable cause.
Trust fund recovery penalty. This penalty may apply if certain excise, income, social security, and
Medicare taxes that must be collected or withheld are not collected or withheld, or these taxes are not
paid. These taxes are generally reported on:
Form 720, Quarterly Federal Excise Tax Return;
Form 941, Employer's Quarterly Federal Tax Return;
Form 943, Employer Annual Federal Tax Return for Agricultural Employees; or
Form 945, Annual Return of Withheld Federal Income Tax.
The trust fund recovery penalty may be imposed on all persons who are determined by the IRS to
have been responsible for collecting, accounting for, and paying over these taxes, and who acted
willfully in not doing so. The penalty is equal to the unpaid trust fund tax. See the Instructions for Form
720, or Publication 15 (Circular E), Employer's Tax Guide.
Failure to ascertain ownership. If the REIT fails to comply with Regulations section 1.857-8
for ascertaining ownership and maintaining factual ownership records for a tax year, it must pay a
$25,000 penalty ($50,000 for intentional disregard) upon notice and demand by the IRS. If the REIT
can show that the failure was due to reasonable cause, the penalty may not be imposed. For more
information, see section 857(f).
Cr e a tive Re a l Esta te f or a Ba d M a r k e t 59
Other penalties. Other penalties can be imposed for negligence, substantial understatement of tax,
and fraud. See sections 6662 and 6663.
An accounting method is a set of rules used to determine when and how income and expenses are
reported. Figure taxable income using the method of accounting regularly used in keeping the REIT's
books and records. In all cases, the method used must clearly show taxable income.
Generally, permissible methods include:
Any other method authorized by the Internal Revenue Code.
Generally, a REIT must use the accrual method of accounting if its average annual gross receipts
exceed $5 million. See section 448(c).
Under the accrual method, an amount is includible in income when:
All the events have occurred that ﬁx the right to receive the income, which is the earliest of the date:
the required performance takes place,
payment is due, or
payment is received, and
The amount can be determined with reasonable accuracy.
See Regulations section 1.451-1(a) for details and Publication 538, Accounting Periods and Methods.
Change in accounting method. To change its method of accounting used to report taxable income
(for income as a whole or for the treatment of any material item), the REIT must ﬁle Form 3115,
Application for Change in Accounting Method. For more information, see Form 3115 and Pub. 538,
Accounting Periods and Methods.
Section 481(a) adjustment. The REIT may have to make an adjustment under section 481(a)
to prevent amounts of income or expenses from being duplicated or omitted. This is referred to as
a “section 481(a) adjustment.” The section 481(a) adjustment period is generally 1 year for a net
negative adjustment and 4 years for a net positive adjustment. However, a REIT may elect to use a
1-year adjustment period if the net section 481(a) adjustment for the change is less than $25,000.
The REIT must complete the appropriate lines of Form 3115 to make the election.
Include any net positive section 481(a) adjustment on page 1, line 7. Report any negative
adjustment on page 1, line 18.
60 Cr e a t i v e Real E state for a B ad Ma r ke t
A REIT must ﬁgure its taxable income on the basis of a tax year. A tax year is the annual accounting
period a REIT uses to keep its records and report its income and expenses. A REIT adopts a tax
year when it ﬁles its ﬁrst income tax return. It must adopt a tax year by the due date (not including
extensions) of its initial income tax return.
A REIT must adopt a calendar year unless it ﬁrst qualiﬁed for REIT status before October 5, 1976.
Change of tax year. A REIT may not change its tax year to any tax year other than the calendar
year. Generally, a REIT must receive consent from the IRS before changing its tax year by ﬁling Form
1128, Application To Adopt, Change, or Retain a Tax Year.
However, upon electing to be taxed as a REIT, an entity that has not engaged in any active trade or
business may change its tax year to a calendar year without obtaining the consent.
For more information on change of tax year, see Form 1128, Regulations section 1.442-1, and Pub.
Rounding Off to Whole Dollars
The REIT may round off cents to whole dollars on its returns and schedules. If the REIT does round
to whole dollars, it must round all amounts. To round, drop amounts under 50 cents and increase
amounts from 50 to 99 cents to the next dollar (for example, $1.39 becomes $1 and $2.50 becomes
If two or more amounts must be added to ﬁgure the amount to enter on a line, include cents when
adding the amounts and round off only the total.
Keep the REIT's records for as long as they may be needed for the administration of any provision of
the Internal Revenue Code. Usually, records that support an item of income, deduction, or credit on
the return must be kept for 3 years from the date the return is due or ﬁled, whichever is later. Keep
records that verify the REIT's basis in property for as long as they are needed to ﬁgure the basis of
the original or replacement property.
The REIT should also keep copies of all ﬁled returns. They help in preparing future and amended
Cr e a tive Re a l Esta te f or a Ba d M a r k e t 61
Other Forms That May Be Required
The REIT may have to ﬁle other forms. See Publication 542, Corporations.
Form 926, Return by a U.S. Transferor of Property to a Foreign Corporation, is ﬁled to report certain
transfers to foreign corporations under section 6038B.
Form 966, Corporate Dissolution or Liquidation, is used to report the adoption of a resolution or plan
to dissolve the corporation or liquidate any of its stock.
Forms 1042,1042-S, and 1042-T, Annual Withholding Tax Return for U.S. Source Income of Foreign
Persons, Form 1042-S, Foreign Person's U.S. Source Income Subject to Withholding, and Form
1042-T, Annual Summary and Transmittal of Forms 1042-S. Use these forms to report and send
withheld tax on payments or distributions made to nonresident alien individuals, foreign partnerships,
or foreign corporations to the extent these payments constitute gross income from sources within the
United States (see sections 861 through 865).
Also, see sections 1441 and 1442, and Pub. 515, Withholding of Tax on Nonresident Aliens and
Form 2438, Undistributed Capital Gains Tax Return, must be ﬁled by the REIT if it designates
undistributed net long-term capital gains under section 857(b)(3)(D).
Form 2439, Notice to Shareholder of Undistributed Long-Term Capital Gains, must be completed
and a copy given to each shareholder for whom the REIT paid tax on undistributed net long-term
capital gains under section 857(b)(3)(D).
Form 3520, Annual Return To Report Transactions With Foreign Trusts and Receipt of Certain
Foreign Gifts, is required either if the REIT received a distribution from a foreign trust or if the REIT
was a grantor of, transferor of, or transferor to a foreign trust that existed during the tax year. See
Question 5 of Schedule N (Form 1120).
Form 5471, Information Return of U.S. Persons With Respect to Certain Foreign Corporations, is
required if the REIT controls a foreign corporation; acquires, disposes of, or owns 10% or more in
value or vote of the outstanding stock of a foreign corporation; or had control of a foreign corporation
for an uninterrupted period of at least 30 days during the annual accounting period of the foreign
corporation. See Question 4 of Schedule N (Form 1120).
Form 5472, Information Return of a 25% Foreign-Owned U.S. Corporation or a Foreign Corporation
Engaged in a U.S. Trade or Business. This form is ﬁled if the REIT is 25% or more foreign owned.
See the instructions for Question 5, Schedule K, on page 12.
Form 8275, Disclosure Statement, and Form 8275-R, Regulation Disclosure Statement, are used to
disclose items or positions taken on a tax return that are not otherwise adequately disclosed on a tax
return or that are contrary to Treasury regulations (to avoid parts of the accuracy-related penalty or
certain preparer penalties).
Form 8300, Report of Cash Payments Over $10,000 Received in a Trade or Business. Use this form
to report the receipt of more than $10,000 in cash or foreign currency in one transaction or a series of
62 Cr e a t i v e Real E state for a B ad Ma r ke t
Form 8612, Return of Excise Tax on Undistributed Income of Real Estate Investment Trusts, is ﬁled
if the REIT is liable for the 4% excise tax on undistributed income imposed under section 4981.
Form 8621, Return by a Shareholder of a Passive Foreign Investment Company or Qualiﬁed
Electing Fund. Use this form to make certain elections by shareholders in a passive foreign
investment company and to ﬁgure certain deferred taxes.
Form 8842, Election To Use Different Annualization Periods for Corporate Estimated Tax, is ﬁled to
elect one of the annualization periods in section 6655(e)(2)(C) to ﬁgure estimated tax payments under
the annualized income installment method.
Form 8865, Return of U.S. Persons With Respect To Certain Foreign Partnerships. A REIT may
have to ﬁle Form 8865 if it:
Controlled a foreign partnership (i.e., owned more than a 50% direct or indirect interest in the
Owned at least a 10% direct or indirect interest in a foreign partnership while U.S. persons controlled
Had an acquisition, disposition, or change in proportional interest in a foreign partnership that:
Increased its direct interest to at least 10% or reduced its direct interest of at least 10% to less than
Changed its direct interest by at least a 10% interest.
Contributed property to a foreign partnership in exchange for a partnership interest if:
Immediately after the contribution, the REIT owned, directly or indirectly, at least a 10% interest in the
foreign partnership; or
The FMV of the property the REIT contributed to the foreign partnership in exchange for a partnership
interest, when added to other contributions of property made to the foreign partnership during the
preceding 12-month period, exceeds $100,000.
Also, the REIT may have to ﬁle Form 8865 to report certain dispositions by a foreign partnership
of property it previously contributed to that foreign partnership if it was a partner at the time of the
disposition. For more details, including penalties for failing to ﬁle Form 8865, see Form 8865 and its
Form 8875, Taxable REIT Subsidiary Election, is ﬁled jointly by a corporation and a REIT to have
the corporation treated as a taxable REIT subsidiary.
Form 8886, Reportable Transaction Disclosure Statement. Use this form to disclose information for
each reportable transaction in which the REIT participated. Form 8886 must be ﬁled for each tax year
that the federal income tax liability of the REIT is affected by its participation in the transaction. The
following are reportable transactions.
Cr e a tive Re a l Esta te f or a Ba d M a r k e t 63
Any listed transaction, which is a transaction that is the same as, or substantially similar to, a tax
avoidance transaction identiﬁed by the IRS.
Any transaction offered under conditions of conﬁdentiality for which the REIT paid an advisor a fee of
at least $250,000.
Certain transactions for which the REIT has contractual protection against disallowance of the tax
Certain transactions resulting in a loss of at least $10 million in any single year or $20 million in any
combination of years.
Certain transactions resulting in a book-tax difference of more than $10 million on a gross basis.
Certain transactions resulting in a tax credit of more than $250,000, if the REIT held the asset
generating the credit for 45 days or less.
The REIT may have to pay a penalty if it is required to ﬁle Form 8886 and fails to do so. See the
Instructions for Form 8886 for details and ﬁling requirements.
Transfers to a corporation controlled by the transferor. If a person receives stock of a
corporation in exchange for property, and no gain or loss is recognized under section 351, the person
(transferor) and the transferee must each attach to their tax returns the information required by
Regulations section 1.351-3.
Reportable transactions by material advisors. Until further guidance is issued, material advisors
who provide material aid, assistance, or advice with respect to any reportable transaction, must
use Form 8264, Application for Registration of a Tax Shelter, to disclose reportable transactions in
accordance with interim guidance provided in Notice 2004-80, 2004-50 I.R.B. 963; Notice 2005-17,
2005-8 I.R.B. 606; and Notice 2005-22, 2005-12 I.R.B. 756.
Dual consolidated losses. If a domestic corporation incurs a dual consolidated loss (as deﬁned in
Regulations section 1.1503-2(c)(5)), the corporation (or consolidated group) may need to attach an
elective relief agreement and/or an annual certiﬁcation as provided in Temporary Regulations section
Election to reduce basis under section 362(e)(2)(C). The transferor and transferee in certain
section 351 transactions can make a joint election under section 362(e)(2)(C) to limit the transferor's
basis in the stock received instead of the transferee's basis in the transferred property. The transferor
and transferee may make the election by attaching the statement as provided in Notice 2005-70,
2005-41 I.R.B. 694, to their tax returns ﬁled by the due date (including extensions) for the tax year in
which the transaction occurred. Once made, the election is irrevocable. See section 362(e)(2)(C) and
Other forms and statements. See Pub. 542 for a list of other forms and statements a corporation
may need to ﬁle in addition to the forms and statements discussed throughout these instructions.
64 Cr e a t i v e Real E state for a B ad Ma r ke t
Publication 557 - Introductory Material - Table of Contents
Form 1023, Application for Exemption Under Section 501(c)(3) of the Internal
Revenue Code (Rev. October 2004), has been substantially revised. Changes to
Form 1023 are not reﬂected in the text of this publication. However, the major
changes to Form 1023 are brieﬂy discussed on this cover page.Note The
information requested on the revised Form 1023 has substantially increased, thereby
minimizing the need for additional information from the ﬁler during the approval
process. Speciﬁc changes to the form include the following: •Form 8718, User
Fee for Exempt Organization Determination Letter Request, has been incorporated
into Part X of Form 1023. Therefore, when ﬁling the new Form 1023 you will
not need to ﬁle Form 8718 to determine the correct user fee. •The automatic
27-month retroactive exemption rule pursuant to Rev. Proc. 92-85, 1992-2 C.B.
490 has been incorporated into the application. •You can no longer submit Form
SS-4, Application for Employer Identiﬁcation Number, with the application. You
must have an Employer Identiﬁcation Number (EIN) prior to ﬁling Form 1023. •
Limited liability companies have been added as a type of organization eligible to
apply for tax-exempt status under section 501(c)(3) of the Code. •Questions about
compensation and other ﬁnancial arrangements with ofﬁcers, directors, trustees,
highly compensated employees, and highly compensated independent contractors
aimed at determining whether beneﬁts are appropriate have been added to Part V. •
Form 872-C, Consent Fixing Period of Limitation Upon Assessment of Tax Under
Section 4940 of the Internal Revenue Code, has been obsoleted and the required
information has been incorporated into Part X. Therefore, when ﬁling the new Form
1023, you will not need to submit Form 872-C. •A new Schedule E. Organizations
Not Filing Form 1023 Within 27 Months of Formation was created to consolidate
questions and ﬁnancial data in one place that relates to whether an exemption can be
made retroactive to the organization's date of formation. •Schedule H incorporates
advance ruling procedures for private foundations requesting advance approval of
individual grant procedures. Caution. Organizations that have begun completing
the prior revision (Rev. September 1998) may ﬁle it until April 30, 2005. Beginning
May 1, 2005, only the Form 1023 (Rev. October 2004) will be accepted.
Item to note. Section 317 of the American Jobs Creation Act of 2004, provides
that a farmer's cooperative is eligible for declaratory judgment relief with respect to
the initial classiﬁcation or continuing classiﬁcation as an organization exempt under
section 521(a) of the Code.
Cr e a tive Re a l Esta te f or a Ba d M a r k e t 65
This publication discusses the rules and procedures for organizations that seek
recognition of exemption from federal income tax under section 501(a) of the
Internal Revenue Code (the Code). It explains the procedures you must follow to
obtain an appropriate ruling or determination letter recognizing your organization's
exemption, as well as certain other information that applies generally to all exempt
organizations. To qualify for exemption under the Code, your organization must
be organized for one or more of the purposes speciﬁcally designated in the Code.
Organizations that are exempt under section 501(a) of the Code include those
organizations described in section 501(c). Section 501(c) organizations are covered
in this publication.
Chapter 1 provides general information about the procedures for obtaining
recognition of tax-exempt status.
Chapter 2 contains information about annual ﬁling requirements and other matters
that may affect your organization's tax-exempt status.
Chapter 3 contains detailed information on various matters affecting section 501(c)
(3) organizations, including a section on the determination of private foundation
Chapter 4 includes separate sections for speciﬁc types of organizations described in
Section 501(c)(24) organizations (section 4049 ERISA trusts) are neither discussed
in the text nor listed in the Organization Reference Chart.
Likewise, farmers' cooperative associations that qualify for exemption under
section 521, qualiﬁed state tuition programs described in section 529, and
pension, proﬁt-sharing, and stock bonus plans described in section 401(a) are not
discussed in this publication. If you think your organization falls within one of
these categories, contact the Internal Revenue Service (IRS) for any additional
information you need. For telephone assistance, call 1-877-829-5500.
Check the Table of Contents at the beginning of this publication to determine
whether your organization is described in this publication. If it is, read the chapter
(or section) that applies to your type of organization for the speciﬁc information you
must give when applying for recognition of exemption.
66 Cr e a t i v e Real E state for a B ad Ma r ke t
Organization Reference Chart. This chart enables you to locate at a glance the
section of the Code under which your organization might qualify for exemption.
It also shows the required application form and, if your organization meets the
exemption requirements, the annual return to be ﬁled (if any), and whether or not
a contribution to your organization will be deductible by a donor. It also describes
each type of qualifying organization and the general nature of its activities.
You may use this chart to determine the Code section that you think applies to your
organization. Any correspondence with the IRS (in requesting forms or otherwise)
will be expedited if you indicate in your correspondence the appropriate Code
Comments and suggestions. We welcome your comments about this publication
and your suggestions for future editions.
You can write to us at the following address:
Internal Revenue Service TEGE and Specialty Forms and Publications
Branch SE:W:CAR:MP:T:T:SP 1111 Constitution Ave. NW, IR-6406 Washington,
We respond to many letters by telephone. Therefore, it would be helpful if you
would include your daytime phone number, including the area code, in your
Cr e a tive Re a l Esta te f or a Ba d M a r k e t 67
Introduction to Barter
68 Cr e a t i v e Real E state for a B ad Ma r ke t
Introduction to Barter
The purpose of this part of the book is to give the reader an inside look at the digital credit or barter and
exchange world and learn how to apply this knowledge in starting a new business. Many books have been
written about barter and exchanging. Exchanging is just barter on higher ticket items such as real estate
and stocks. These are interchangeable terms. Digital credits are the new kid on the block. They are made
possible by the Internet explosion. For the ﬁrst time, the general public will be able to interface with an
organized barter group and more importantly, take advantage of new innovative ways of creating more
business using Credits. This will make for the most powerful currency conversion ever seen in the history
During the course of reading this book you will be introduced to all levels of barter and exchanging
except for a few very highly technical forms that are used by very large companies internationally.
Barter has been around since the beginning of time. Organized barter is relatively new. The use of coins
and the printing of money is really just organized barter. The more current forms of organized barter
are the use of checking accounts, credit cards and barter exchanges and now Credits, the true cash less
Barter itself is a cumbersome way of doing business and requires a great amount of expertise in
understanding values and markets. The professional also has to become an expert at matching
motivations of various parties to the barter transaction. The professional also knows that a simple two-
way trade is the most difﬁcult to ﬁnd but learns to recognize them when they do occur because they
work faster. The most common trade is one with three or more legs. Legs are a reference to the number
of parties to an individual transaction. The reason there are usually three or more legs is because of the
DON’T WANT FACTOR.
When a professional ﬁrst starts a barter or exchange, he ﬁnds a party that has something to trade and
knows what the party wants to trade for. The simple reality is that usually it’s easy to ﬁnd what the
party wants but generally the second party DOESN’T WANT what the ﬁrst party has to offer, hence
the DON’T WANT FACTOR comes into play. The professional then has two directions to go into, ﬁnd
another item that satisﬁes the ﬁrst parties needs and ﬁnd out what the second party would trade his item
for. This process goes on and on until a way to take out the DON’T WANT item or property is discovered
and then the whole transaction is completed.
All organized barter does is put all the DON’T WANTERS in a holding pattern until they have decided
what to do with the holding pattern in the form of coins, printed money, cash credits in a checking
account or a credit card company or barter credits in a barter exchange.
Each of these forms of organized barter has advantages and disadvantages. All of these methods of doing
business will come into play in this book. Direct barter and barter exchanges will be employed to give
maximum leverage. The other types of organized barter such as cash and credit cards will be used at a
Many types of businesses will be able to take advantage of the system that is outlined in this book. But
some, such as insurance and banking, will require a cash system for a while longer. Eventually, even these
businesses will be able to deal with other forms of organized barter and Credits as technology advances in
the communications world. Get involved with the digital credit currency conversion as soon as you can!
69 Cr e a t i v e Real E state for a B ad Ma r ke t
(2007) New additions will be added and this image will denote the changes. The original writing was done
in 1995. CHOOSING A BUSINESS
Most entrepreneurs would agree that the best business to start would be in a ﬁeld that you enjoy working.
Get as close to that as possible and life will seem sweeter even if you don’t have a major success in your
endeavor. Your chance of sticking with the project will be greater if it is something you enjoy doing.
Burn out is a very real problem in the beginning stages of a new business because you usually don’t see
immediate results. This could prove to be an exercise in futility if at the beginning you don’t look inside
yourself and check your motivation for starting the business you choose. If money or greed is the only
motive you have, chances are that the excess emotional baggage that you will have to carry by doing
things that you don’t enjoy, will detract from your success. That doesn’t mean that you can’t succeed at
other things, it just lowers the odds a bit.
Make a list of possible businesses you think you would enjoy working at or that you think would be a
proﬁtable venture. The next thing to do is research. If you don’t know exactly what it is the you want
to accomplish by starting a business, go to your local bookstore and pick up several magazines on the
subject. They are chuck full of business opportunities. The most important moment is when you pick the
business you want and give yourself a mental commitment to “just do it”.
There are some businesses that don’t lend themselves to barter as explained in this book. If you get to
chapter two and your wish list can’t be bartered or obtained with Credits, then it’s reasonable to assume
that this system won’t work very well for your particular business start-up. These are very rare. If it
happens, contact me directly. I may be able to direct you to someone that can help you ﬁnd out ways of
using the power of Credits and barter in your business. Once you’ve chosen your business venture, you
have to ﬁnd out about your competition and understand who your enemies are in the business world.
When it comes to starting a business using Credits or barter, your competition is usually easier to deal
with than your business enemies.
As we go along in this process, you will notice there are certain items that can’t be purchased with
Credits or bartered. If you are paying close attention, you will also notice that most of these items are
either government or pseudo government agencies that have their hands in your pockets before you
even get started. If you think your government is benevolent toward the individual entrepreneur, stop
reading this book, abandon your dreams of economic freedom through business ownership, get a job
or go on welfare. If you don’t, you will soon become very disillusioned and angry. These emotions will
increase your chances of failure. By recognizing the enemy in the beginning, you may have a chance of
circumventing the petty power freaks that will be putting up stumbling blocks on your road to success.
It’s very important that you keep your sense of humor when dealing with these people. In other words,
don’t let them get to you. Try to frustrate them in legal ways and you’ll turn a very negative situation into
a positive and fun game. Just don’t underestimate them. They are in collusion with big money. Big money
only has one goal with all the stupid rules and regulations that will be imposed on you. That is to make
you fail and go back into the ranks of the salary slaves. Assuming you already know these facts or are
willing to accept them, let’s proceed in a more positive direction.
Cr e a tive Re a l Esta te f or a Ba d M a r k e t 70
I’ve decided to start three businesses at the same time. “That’s crazy” you say. Perhaps, but that’s what
I’m going to attempt. I don’t recommend three at a time but I think you will see the method in my
The ﬁrst thing that you have to remember is that you’ll have to survive the start- up period somehow. If
you already have money saved or a well healed partner or investor, perhaps you won’t have to work at
something other than your new business. If you don’t, then start your new business on a part-time basis
and let it grow until it can support you.
In my case, I have a very compatible occupation while starting my new ventures. I’m a business
consultant that specializes in setting up special accounts using Credits issued by my company, Digital
Credit Systems, for all types of businesses. While I can place these businesses in several organized barter
groups, I prefer to place most of them with my company because of the lack of fees and the bonus system
that allows for greater leverage. This is the reason I can do four things at the same time, which by the
way, is not unusual for a productive entrepreneur.
Each of the three businesses I’ve chosen represent a basic classiﬁcation or business type. The three main
types of businesses are product oriented, service oriented or an intellectual idea. The main thing, in all
three cases, is that a proﬁt can be made by providing one or all of these features to the general public.
I’ve chosen to build and market computers for my product oriented business. The company will be called
BBC 3000. I’ll market the computers through the BXI system ﬁrst because of my association with them.
Then I’ll include the other organizations. This will give me a national market made up exclusively of
business owners, most of whom use computers to run their business.
The business I’ve chosen to represent the service oriented classiﬁcation is a restaurant delivery service.
This company will originally be called Restaurant Delivery Service Plus. The reason for the generic name
is two fold. I will sell this business either shortly before publication of the ﬁrst dining guide or as soon
thereafter as possible. The Plus in the name stands for other things that we will be offering for delivery to
the consumer. I’ll be able to use approximately ﬁfty percent of my advertising space for businesses that
will pay me in BX dollars. As I get new restaurants and businesses into the barter system, I’ll be earning
commissions to survive on until the project is completed.
The most obvious classiﬁcation that I’ve chosen a business in, is the idea market. This book is my example
and will be sold both to the general public and marketed through digital credit and barter organizations.
I’m sure you can see the common link between the three businesses and what I’m currently doing as a
business professional. At this point in time, I’m as curious as you are to ﬁnd out if all this is possible. The
writing of this book is helping me keep on track and gives me a record of results. Perhaps at this point in
time, you should do a simple analysis of your own situation. If you already own a business skip to the next
chapter unless you are planning a change. If you’ve already chosen a business, do the same. For those
of you that haven’t decided or don’t know how to choose a business suited to yourself, try this simple
71 Cr e a t i v e Real E state for a B ad Ma r ke t
MAKE A LIST OF MARKETABLE TALENTS
These talents should include anything that you’ve already worked at and mastered. They should also
include the teaching or consulting of these talents. If you have any hobbies that you are particularly good
at that might be marketable, include them in this list. ____________________________________________
_____________________ _____ _______________________________________________________________
__ _____ _________________________________________________________________ _____ ___________
______________________________________________________ _____ ______________________________
Number your talents according to ones you think could bring you the highest ﬁnancial gain based on your
own knowledge of the market for your services.
MAKE A LIST OF THINGS YOU WOULD LIKE TO ACCOMPLISH IN
This list should include personal and ﬁnancial goals. Try to list the near term goals ﬁrst and the long term
fantasy goals last.
_________________________________________________________________ _____ ___________________
______________________________________________ _____ ______________________________________
___________________________ _____ _________________________________________________________
________ _____ _________________________________________________________________ _____
Now, try to match the two lists. Pick the closest match and “just do it.”
If nothing matches, you need to do more research. Perhaps you are overlooking a talent. One that is
often overlooked is sales ability. If you feel comfortable being a salesman, you only need ﬁnd a product of
service that you believe in. Being a business owner automatically makes you a salesperson. A lot of people
don’t like to think of themselves in that light, but the truth is, you have to be a salesperson to succeed
in business. That doesn’t mean you have to be a hard core, high pressure salesman. It only means that
you have to know how to convey your message to the people you want to do business with. If you are an
effective communicator, you’ll be a successful salesperson in your business. Even an engineer type has to
sell their ideas at some level to be able to turn a proﬁt on them.
Cr e a tive Re a l Esta te f or a Ba d M a r k e t 72
For the ﬁrst time a barter situation has been designed to interface with the general public and pass these
beneﬁts on to business owners that use Credits issued by Digital Credit Systems. The San Diego beta
test for participating businesses is completed after almost two years of designing and implementing a
cash less system for commerce. The business owner’s section is completed and now the beta test for
the general public will begin. This is called the Spend and Save card and the Discount Directory. Both
systems will introduce the use of Credits to a vast number of individuals that have never been involved
with any type of organized barter. This is “Next Generation” barter for those that feel comfortable with
aligning this system with barter. We prefer to think of the process as a currency conversion system.
The wish list for a new business is just a detailed budget for the set-up and running of the business. At
the beginning of a business you’ll have an opportunity to set up vendors and other reoccurring expenses
as Credit accounts or barter accounts. The problem is, that you won’t have any Credits or barter dollars
that will have been earned yet. What you’ll need to do is contact Digital Credit Systems or your local
barter exchange and explain your plan to them. Give them your list of possible ways that you want to
spend your Credits or barter dollars. They will point out members that ﬁll these categories.
You should then contact businesses in the other categories; those not ﬁlled within the membership of DCS
or your barter group and get pro-active in promoting the Digital Credit Systems or barter system to these
businesses. If they know you will be their ﬁrst customer and that the system will increase their business
from other members, there is a good chance that they will join. Often times, giving DCS or the barter
exchange qualiﬁed leads for new members, you will earn Credits or barter dollars as a ﬁnders fee. Be
sure and ask ﬁrst.
Don’t be disappointed if you can’t trade with all of your vendors. If you are buying wholesale products to
market at retail, very few wholesalers will barter at 100%. Try doing a percentage in Credits or make a
barter agreement with them. Show them your DCS or barter directory so that the wholesaler knows that
they will be able to purchase from a large selection of local and national companies.
I’ll make an example of a wish list for each of the three businesses I’m starting. The businesses I’ve
chosen lend themselves very well into the digital credit and barter world because each product or service
is in high demand within the organizations for alternate commerce transactions.
Rent, Employees, Gas & Electric, Parts, Advertising, Telephone, FAX machine/modem
Fees & Permits, Delivery/mailing service, Printing and Training.
73 Cr e a t i v e Real E state for a B ad Ma r ke t
RESTAURANT DELIVERY SERVICE PLUS
Rent, Employees, Gas & Electric, Delivery Vehicles, Tuxedos, Food Containers, Printing
FAX machine/modem, Computer Software, Advertising, Telephone, Fees & Permits Signs
Printer, Advertising, Delivery/mailing and Internet web publishing
The easiest type of business to start with Credits or barter is an intellectual property such as a book or
art work. Basically, you just start these projects with a blank sheet of paper. Your time is the invested
capital. This is called sweat equity and it comes in many forms. Any type of labor or personal service can
be bartered in advance with a contract for future services. This is the best way to start earning Credits
or barter units. For direct barter, a simple statement with appropriate signatures by both parties can
give you a jump start into your business. For example; if you wanted to start some type of advertising
business, you would simply contract in advance for the work you need done by referring to your wish list.
Pick those products or services that you could do a direct trade with and then pick those items that may
be secured with an advanced contract for advertising within DCS or the barter organization. Using my
restaurant delivery service as an example, I could do a direct trade with the owner of a tuxedo store for
advertising. The printer should be set up with DCS or the barter exchange in advance. The restaurants
and the companies I want advertised within my publication should be chosen ﬁrst from DCS or the local
barter companies. This will build up a war chest of Credits and barter units that I can use to start my
business. (SEE: FORMS )
Put off all cash expenditure until the last minute. Try everything you can to avoid these costs. These
are the items that will break your back before you even get started. If you build up enough Credits
and barter units, then do a cash conversion and use the cash to cover your government and pseudo
If you have a particular skill that you can barter with, such as carpentry, drafting, handyman or anything
else that only requires your time, try bartering your time within DCS or the local barter organization.
Trade with anyone on a direct barter basis if they have something you need for your business or that you
can quickly turn into cash. Use a simple agreement, such as the following:
Cr e a tive Re a l Esta te f or a Ba d M a r k e t 74
Party of the ﬁrst part agrees to _____________________________________________
for an exchange value of ___________________ on or before ____________________
Party of the second part agrees to ___________________________________________
for an exchange value of ___________________ on or before ____________________
Other terms and conditions _______________________________________________
SECOND PARTY............ DATE
75 Cr e a t i v e Real E state for a B ad Ma r ke t
There are two other types of wish lists that are important to mention here. The ﬁrst is your personal
expenses and things that you need in the near future. Make a simple list. I’ll use my situation as an
example. I don’t have any reoccurring debt so this might not be the average lifestyle.
SURVIVAL EXPENSES MONTHLY
Rent ................................................. $810
Automobile ...................................... $200
Telephone ....................................... $200
Gas & Electric ............................... $100
Food ............................................... $400
Entertainment ................................ $200
Miscellaneous ............................... $200
Total ........................................... $2,110
Of the above items, rent and approximately ﬁfty percent of the food, entertainment and miscellaneous
items can be done through the local barter organization. This gives me a net of $800 cash that needs to be
earned to survive. That net ﬁgure, whatever it is for you, is what is keeping you from being able to start a
new business unless you’ve saved money, have passive income or can ﬁnd an investor to carry you during
your start-up period.
NEAR TERM PURCHASES
Television ........................................ $500
VCR ................................................ $300
Upgrade personal computer .......... $450
Video camcorder ......................... $1,000
Upgrade car ................................. $2,000
Clothing ....................................... $1,000
Miscellaneous ............................ $1,000
Total ........................................... $6,250
Cr e a tive Re a l Esta te f or a Ba d M a r k e t 76
From this list, I can either use barter credits or do direct barter for everything except the computer
upgrades and some of the clothing. None of these things are of major concern but they do serve as a
goal for the next few months. We are currently coming to the end of a very severe real estate market in
Southern California, (1997) therefore my major goal will be to put myself in a position to purchase real
estate at these lower values.
The other type of wish list, is one that is usually forgotten by most barter people. This is a list made up of
friends and relatives. If you can determine what some of the people in your life are looking to spend their
cash on, you can often use your Credits or barter units to purchase these things. A very good example
would be, when one of them needs a doctor or dentist. Any good alternate currency organization has a
variety of qualiﬁed professionals that you could advise them to use. It’s easy to ﬁnd out how good the
doctor or dentist is by checking with the local DCS or barter ofﬁce. (see chapter six, cash conversion)
These friends and relatives can then pay you in cash. Don’t overlook these opportunities if you have any
extra Credits or barter units. Apply for a larger credit line if you don’t have enough Credits or barter
I have succeeded in both renting and purchasing real estate using Credits. Everything on the above
list was purchased with Credits with some big surprises, such as software and computer hardware that I
didn’t think I would be able to ﬁnd using these methods.
Because of some new laws, actually the promise of “no new laws” for innovative Internet solutions,
Credits may soon be used to purchase shares in Internet stocks available at the Cyber Corporation site:
http://www.cybercorporations.com. This will make Credits are more liquid asset and increase the value
of the currency. The possibility of proﬁt with these shares is impossible to determine because this in a
new way of doing business. Don’t go into any of these investments with anything except excess income
from your membership in Digital Credit Systems. Credits are best used for the day to day running of
your business or to replace the need for cash in some areas of your personal life. Cash is still king, but if
you consider yourself a risk taker, you might consider following and investing in this new venture.
77 Cr e a t i v e Real E state for a B ad Ma r ke t
DIGITAL CREDIT AND BARTER STRATEGY
There are two basic forms of barter and now the new currency conversion process provided by Digital
Credit Systems. The ﬁrst, direct barter, where both parties have to adjust to dealing with each others
goods or services to make an exchange or barter transaction work. The second, organized barter, where
the values of each parties’ goods or services are converted to an exchange value in the form of computer
credits that can then be spent within the organization. Both types of barter should be considered when
setting up a effective barter strategy. I will give examples of the use of both types using the wish list in
chapter two and the advantages of using the new Credits issued by DCS. At ﬁrst I’ll give my opinion of
which direction I should attempt a trade and then after the fact, I will let the reader know the level of
success that the strategy proved to have for solving the problem.
Links to Barter and Digital Credit Organizations
Digital Credit Systems
Business Exchange International
* RENT.....To enable BXC-3000 to engage personnel to build computers, I will hire students from the
near-by colleges. The DCS system already has apartments for rent in my area. The students can rent
a three bedroom apartment for about $800.00 PM. They can convert one bedroom into a combination
ofﬁce/study and computer construction area. The other bedroom can either be rented out for cash or
two computer builders can share the apartment. I will recommend that each builder ﬁnds a cash paying
roommate because this is a very easy way to cash convert some barter dollars. I already have this
situation to start out with, although I’m using both extra bedrooms for my businesses.
* EMPLOYEES.....It is not wise to employ anyone when starting a new business. The reason is very
simple, the cost of doing business with the government. This is where more businesses fail before they
even start. Each area is different but I’m operating in the Socialist Republic of California where the
State and Local ofﬁcials have declared the individual entrepreneur an endanger species and they are
determined to see to the extermination of all present and possible forms of this vile form of social being. I
will document the costs that I would have had to incur if I did it the way that bureaucrats and politicians
want a business to start in this State.
Instead, I’ll hire only individual contractors. The local DCS and barter systems already have three or
more local computer builders each that I can contract with. Depending on how many orders I receive
nation-wide through the either network will determine how many college students I will have to train. I’ll
go through the motion of training at least three students that can also work for the restaurant delivery
service. Establishing your individual contractors status can be very tricky. They make it as tough to do as
possible because the system looses control of the individual.
Cr e a tive Re a l Esta te f or a Ba d M a r k e t 78
* PARTS.....The full $1,500 in cash will be used to buy the best and most inexpensive parts for the
computer sold by BBC-3000. Direct trade for hardware will be the most probable possibility in this
wholesale category. I won’t spend much time initially trying to trade for parts or software. Eventually,
some trades should take place and the beneﬁts will go into enhancing the product line to keep more
* ADVERTISING.....The cost of advertising will be borne completely by DCS and other barter credits.
Due to the fact that many barter exchanges have national publications and linking computer technologies,
this target market has a built in system for marketing my product. They would like nothing better then to
help me develop into one of their best clients.
I’ll also have mailing lists available for any direct contact advertising. Should I want to try the cash
market for my products, all of my advertising budget will be a barter transaction. There is no reason
to spend any cash when the barter dollars can be earned so easily and there are so many choices in the
barter community. Even weak barter organizations seem to be strong in this area.
* LONG DISTANCE PHONE.....Once again, the barter organization comes through. I can use my barter
units to pay for this service.
* FAX MACHINE/MODEM.....These items are available through trade. There are several methods
of obtaining these needed products but you have to be willing to settle for used equipment in order
to facilitate a trade. If this isn’t acceptable, pay cash. Don’t spend too much time trying to make this
transaction work in trade. It could be too time consuming for too small of a return. Don’t try hard to do
small “one time” deals in trade unless you can ﬁnd them quickly. Check with your local DCS or barter
service and read their latest publications. Sometimes, you’ll get lucky.
If you are really determined to get this or any other small items or equipment that isn’t usually found
in your local or national barter groups, try looking in your local want ad section of the newspaper.
Call these sellers and try to ﬁnd out what they would spend the money on if you were to purchase their
advertised item. A lot of times you can fulﬁll their needs by buying what they want through your DCS or
barter organization and then trading it directly to them for what you want. Remember, this is usually a
time consuming process and can take you from more pressing matters in your business. But if you have
the time or the interest in trying this technique, go for it. You’ll be surprised at how often you’ll be able
to accomplish the impossible trade. Another Hint; offer to buy the item at the asking price. Don’t dicker
with the seller if their price is at all reasonable. This fact will make them want to deal with you and even
help you in the process.
The week after writing the above paragraph I located a one month old FAX machine that suited my
needs. I was shopping for some used computer monitors at a used furniture warehouse, that is a local
barter member, when I noticed he had several FAX machines for sale. I got my FAX machine for 100%
barter credits saving my cash for other business expenditures.
* DELIVERY/MAIL SERVICE.....This is a category that the local barter organizations don’t have. I
happen to know that in other areas, they do have such services. I plan on getting a local carrier into
DCS or looking into those carriers available close by to see if an arrangement can be made to deliver my
computers throughout the country to barter organizations. Checking with the local trade directors of
your barter organization should give you the information you need for items like this. They have their
entire national membership on their computers and can access the information very easily.
79 Cr e a t i v e Real E state for a B ad Ma r ke t
* PRINTING.....Any barter service should have a good choice of available printers in your area. If not,
try to ﬁnd a better organization to deal with. Lack of printers is a good sign that you are in a weak barter
group. All small printing jobs from $1,500 on down should be available at 100% trade. Any jobs over that
amount you will have to negotiate the amount of cash versus the amount of trade credits.
* TRAINING.....Once again, the local DCS ofﬁce has a very strong computer category. The ﬁrst thing I’m
doing is having one of the members train me how to build computers. This way, If I have the time or need
to train one of my rep’s, I’ll be prepared. My plan is to have them trained by the computer experts in the
DCS system. This training is always available at 100% digital credits.
* GAS & ELECTRIC, LOCAL TELEPHONE, FEES & PERMITS.....Guess what? No trade possibilities
here and they will make all kinds of cash demands on you before you even have a chance to earn a
penny. Sounds fair to me! What seems strange is that they all beneﬁt from your success but seem hell
bent in stopping you before you even get started. Their rationalizations are endless and their results
are disastrous. I’ll document the start-up cost demanded by them as though I were conforming to their
concept of how I should start and run my businesses.
RESTAURANT DELIVERY SERVICE PLUS
* RENT, EMPLOYEES, FAX MACHINE, PRINTING.....Same as the BBC-3000 situation above.
* DELIVERY VEHICLES.....The easiest way to deal with this problem is to hire delivery personnel that
own their own vehicle. They would have to be compensated a little higher, but that would probably be
the best solution. My plan is to purchase a few back-up cars using Credits to cover emergencies. These
vehicles can also be used as an example for the delivery people as to what they can do with their Credits. I
plan on paying bonuses in Credits. It is very important that the delivery people realize the beneﬁts of the
Credits. All maintenance should be done with Credits or barter units unless the delivery person can ﬁx
their cars themselves.
* TUXEDOS.....Once again, the easiest way to solve this problem is to have the delivery personnel buy
or rent their own tux. We don’t have a local member in the DCS system that supplies tuxedos for rent or
purchase. The surrounding barter franchises all have this service. The worst case scenario is that we will
do business with them. I’m going to attempt to rectify this situation by getting a local company involved.
I will not only be their ﬁrst customer but they should realize a lot of extra business by joining DCS. You
don’t have to be in a position to sign members into an organization like I am to realize the beneﬁts. Most
barter groups pay a referral fee (See: DCS referral fees). If you prepare the business owner properly,
it should be easy to bring new members into the system. Just give the owner of the business owner a
brief explanation including the local fee structure. Tell the owner that you will be his ﬁrst customer if his
company joins the Digital Credit System or a barter organization. He’ll thank you for it later.
Cr e a tive Re a l Esta te f or a Ba d M a r k e t 80
* FOOD CONTAINERS.....These containers could prove to be the most difﬁcult items to trade for. They
are a specialty item and generally sold with very little mark-up. I’ll have to plan to use cash but I will
attempt to either get a restaurant supply house into DCS or locate some used units to do a direct trade.
With used equipment, I can either propose a direct trade, if I have something that is wanted by the owner
of the food containers or I can show him the local DCS directory and see if he will trade for Credits.
* COMPUTER.....In my case, I already have several computers. If you require one for your business,
either use BXC-3000 as a source for a new computer or use the DCS system or any other barter group
to buy one. If all else fails, refer to your local want ads and use your directory to entice a computer seller
into a trade with you.
* SOFTWARE.....The contact management software that is needed to keep track of prospects for the
delivery service publication is very inexpensive. I’m using a program called ACT. If you don’t already
have it on your computer like I do, don’t waste much time trying to barter for it. The real expense here
is in the software needed to run the business. There are several software packages already on the market
for this type of business. They range in cost from $3,500 to $10,000. This type of expenditure is worth
trying to ﬁnd a barter solution. Bartering for existing software of this type is not very likely but ﬁnding
a computer programmer that will design a similar program is much easier. There are usually several to
choose from in any good barter organization. We have three or four in our local DCS group. The biggest
beneﬁt here is that I’ll end up with a proprietary product in the form of custom software that enhances
the value of my business should I sell it or franchise it.
Two other software packages are necessary to complete my needs. “Quicken” to manage my ﬁnances
and “Adobe Illustrator” for graphic arts and “In Design” for desk top publishing should complete the
software requirements of my restaurant delivery service. (2007)
Unfortunately, this decision will require cash. If you are on a tight budget, use the newspaper want ads to
effect a trade. Sometimes you can even ﬁnd these used items through a barter organization. I’ll keep you
posted on which direction I ultimately go regarding these items.
All internet services should be available through any good barter exchange. I’ve taken the time and
trouble to learn how to design and post my own wet site that includes this book and a new currency
conversion organization at: http://www.plizzle.com
* ADVERTISING.....There is absolutely no reason to use cash for this category. Part of the service of
the DCS organization and most other barter organizations is to get the word out that your business
is anxious to barter with other members. You can even advertise in a monthly newsletter or want ad
publication that is send to each member in the country. It is absolutely free to place the ad every ninety
days. Most national barter organizations have some form of national exposure that is either free or that
can be paid for in barter units. This method will only be good to attract travelers within the barter groups
for my delivery service.
81 Cr e a t i v e Real E state for a B ad Ma r ke t
Probably the largest category in any good barter directory is the local advertising opportunities available
to the members. Any excess barter will be pumped into my advertising budget. This is a natural way to
create more cash business using the leverage of barter or Credits. Direct barter with non-members of
your local organizations is also a good method of leveraging your advertising budget. Don’t spend cash
here except for cheap want ads in the local papers to hire personnel or sell items for a cash conversion.
(see Chapter Six) I will also do some “like for like” trading. In other words. I will place an ad in a direct
mail situation for the same value in my publication. We will advertise our own businesses in each others
advertising vehicle. This method requires that you ﬁnd a knowledgeable trader that can see the beneﬁts
derived for the both of you, even though you compete for the same advertising dollars.
* SIGNS.....The only signs we’ll need will be for the delivery vehicles. We’ll use the removable type. Any
reasonable barter organization has several sign companies to choose from. Compare the values and the
services just like you would in the cash world.
* GAS & ELECTRIC, LOCAL TELEPHONE, FEES & PERMITS..No mercy, same old same old, CASH
* PRINTER, ADVERTISING.....Any national barter organization should be able to cover you if you
choose to publish your own work. There are also consultants to help you through the publishing process
that will take Credits or barter units for their advise.
* DELIVERY/MAILING.....While there aren’t any businesses in the San Diego area that are in organized
barter, there are companies in other areas that do offer these services. If I have time, I will attempt to
secure a local vendor.
* INTERNET....Everything imaginable is available to build and maintain a top of the line web site
using digital credits (barter units). Because of this degree of interest by local computer professionals,
I’ve started my own currency conversion organization that is totally aimed at the Internet business
community. Visit the Digital Credit System at: plizzle.com
Cr e a tive Re a l Esta te f or a Ba d M a r k e t 82
Contact management, for our purposes, can be broken down into two elements. The ﬁrst, is the
mechanical end of developing and keeping track of present and future customers. The second, is the
marketing for each company.
The mechanical side can best be summed up as any state of the art computer lead developing or
contact management software. In the San Diego area there is a company called CALDATA Solutions.
It is a barter organization member, therefore I will be able to lease their CD-ROM list generator
for approximately $1,500 BX dollars. This will enable me to make any kind of list based on my own
parameters to pinpoint any market I want to target in the San Diego area. I can use this for generating
mailing lists, potential sales leads or any other background information I might ﬁnd important for my
businesses. The contact management software can be bought off the shelf. Unfortunately, at this time I
don’t have a barter source. But for me, that is only a challenge. I’ll attempt to get a new member selling
new or used software into the DCS system before this booklet is completed. The other type of software
needed for my restaurant delivery service can be developed by a custom software developer. We have
several in the area. The estimated cost for this will be between $3,000 and $5,000 in Credits. This software
can be used to help give the business a greater value when it is sold or if the franchise route is taken in the
The following marketing strategies reﬂect the ﬁve most important elements of a successful winning plan
to bring any business to the public. Each of these areas will be explored closely and the ﬁrms that meet
our criteria of excellence will be chosen to represent our products. Fortunately, most trade organizations
are very strong in these areas. Most business owners prefer to use their Credits or barter units to generate
new cash business and the barter exchanges and Digital Credit Systems pursue these types of members
for their general membership. Print and media advertising, public relations, networking, Internet,
special promotional events, trade show presentation and set-up.
As you can see, each type of business uses the ﬁve marketing strategies differently. While the computer
company only uses an in house niche market strategy, both this book and the restaurant delivery service
need to use all ﬁve of the above methods of marketing.
The niche market, that I plan on exploring for the BBC-3000 computer company, has all the contact
management and networking tools in place. The ten percent that I pay to the organized barter companies
is my expense for setting up and using their technology. They don’t get paid, as a rule, until I’ve not only
earned but spent my barter dollars. This insures that they will not only help me market my products
or service, but that they have a vested interest in my ability to spend within their network. Beware of
barter companies that try to get their money up front. They lose their incentive to help you spend and are
usually very weak barter groups. DCS doesn’t charge a transaction fee. Instead you’ll receive a bonus
for going to the Internet and doing your own shopping. If you need service, go to a standard barter
organization, if not, use DCS to save the additional expense.
83 Cr e a t i v e Real E state for a B ad Ma r ke t
Locally, as the owner of DCS, we are developing software that we plan on marketing internationally to
other investors for the expansion of Credits globally. This software will allow any member, that has a
computer modem, the ability to access the entire membership throughout the system. The importance
of this is two fold. If you are planning on marketing, as I am, to a global organization, you’ll be able to
better access your clientele. Mailing lists are available through any good national barter organization.
Fortunately, most businesses now days require a good computer to help them with many aspects of their
business life. My plan is to contact as many members, as often as possible, to make them aware of the fact
that they can get computers through my company using barter credits.
The local companies also publish their directories and newsletters. I will list my company in any barter
organization that has a good reputation and I will make sure that ﬂyers go out with each of their
mailings. Flyers are usually a free service. You supply the ﬂyer and they cover the cost of mailing. The
worst scenario is when they charge you for this service, but it is always in barter units or Credits, so that
it doesn’t hurt too much.
Many barter organizations have a national want ad publication that it sends to every member with their
monthly statements. A member can place an ad absolutely free every ninety day. This will be a major
marketing outlet for my computer company. Imagine, free advertising nationally to over ninety franchise
locations with thousands of members all owning their own business. What a sweetheart market this is.
My restaurant delivery service will use contact management techniques in the following ways:
* PRINT AND MEDIA ADVERTISING.....by using DCS and the local barter organization’s directories
as contact tools, I’ll be able to pinpoint those businesses that might lend themselves well to my
publication. Because I’m doing this in four color with a high print cost, approximately one dollar per
magazine, I’ll want to have a certain upscale look about the ﬁnished product. By perusing the various
directories in the area, I’ll be able to pick and choose those companies I feel would be best to perpetuate
the ﬁnal look of the delivery services publication. This is extremely important to the ultimate success of
this project because I’m trying to produce an advertising piece that will be kept rather than thrown away
by consumers. My daughter “Yevette” is a graphic artist and will be in charge of the overall look of the
delivery service publication. She is a member of her local DCS organization and we will do business using
Credits. She will interface with my printer who is also a DCS member.
When I looked into the various directories, I counted over forty different advertising opportunities.
Several of the smaller barter organizations in the area such as San Diego barter and TCE also offered a
fairly large selection of advertising options. Personally, I will use several existing members but because
I earn a living by signing up members in the DCS system, I’ll approach non-member businesses and try
to get them interested in the concept. I will make it easier for the new member to pay for their set-up fee
when they join DCS.
Cr e a tive Re a l Esta te f or a Ba d M a r k e t 84
* PUBLIC RELATIONS.....There are several members in DCS and the local barter organizations that
specialize in public relations for companies. I’ll pick one of them and have them design a program
using existing participating businesses combined with a non-member list of options. I’ll contact those
companies chosen by the public relations specialist that are non-members and offer them the opportunity
to increase their volume of sales by joining our organization. Some of their suggestions won’t lend
themselves to this scenario, mainly because the TV or Newspaper suggested is too large to try to get their
company involved. My time can be better spend then trying to get through a bureaucratic nightmare with
a large corporation. If any of these companies require cash to do business with my company, they will go
to the bottom of the list. If I get so successful that I need to use cash as a tax deduction, then I’ll go the
* NETWORKING.....Barter organizations were doing state-of-the-art networking twenty years before
the word networking was used in this connotation. They are still the most underrated networking group
in any community. If I have extra time, I will visit local network groups such as Le Tip or Friends in
Business. They offer a different format to market from and it will be very interesting to see what the
response is at these meetings. Unfortunately, they all cost money (cash) to join or attend. I’ll attempt to
rectify that situation. I’ll report on the results.
The Internet will become the primary networking system of the future. SEE:http://www.plizzle.com
* SPECIAL PROMOTIONAL EVENTS.....While this is an entirely new area of promotion for me, I’ll
start by getting some advice of local DCS, BXI, ITEX and TCE members that specialize in this ﬁeld to see
if they have any suggestions. At this point in time, I’m aware that this is an important part of marketing
but my intuition tells me to get professional help before venturing into this ﬁeld. Unless you have this type
of experience, some guidance from the pros could save you a lot of time and expense.
* TRADE SHOW PRESENTATION AND SET-UP.....There aren’t any trade shows that speciﬁcally
deal with restaurant delivery services to my knowledge but that doesn’t mean that I can’t ﬁnd related
trade shows. This will give me the opportunity to check out all the local facilities and get a listing of their
conventions and trade shows. Perhaps, they’ll even join DCS in the process. I’ll deﬁnitely use the one that
does join. The trade show set-up can be designed and build using existing DCS members.
85 Cr e a t i v e Real E state for a B ad Ma r ke t
Every type of business has a different kind of opening day. Some, like my computer building company, go
by with nothing happening except ﬁlling the ﬁrst order. This was exceptionally easy because computers
are in such high demand as a barter purchase. Up until now, it was very difﬁcult for our members to get
anything except used computers or over priced new “end of the line” computers. I was able to get ﬁve
or six orders by just mentioning it to a few members. I’m sure this situation will change as the barter
market is saturated by my company and other vendors that see the power of barter to establish national
markets. This can be repeated with many other high demand items as well.
1999 Update: Unfortunately, the proﬁt margins aren’t high enough to make the above business model
one that can work with barter, but we’ve come up with a different business model with the DCS that will
make computers available to businesses using Credits.
DCS has dedicated 20% of the cash proﬁts from the Spend and Save cards and the Discount Directory
cards to buy wholesale items for selected categories that have not been available in the barter world.
These wholesale items include food for restaurants, paper for printers and parts for computers. This
business model will make the most generic categories in DCS solidly committed to doing business using
The reason this is a separate chapter is because in many instances, the ﬁrst day or the Grand Opening
Day, has many one time spending opportunities. If possible, try to use credits or barter to off-set these
costs. If your product is very generic, like food in a restaurant, you my need only issue scrip for trading
purposes. Scrip is just another word for a gift certiﬁcate. This is a good time to set up your printing of gift
certiﬁcates if they are an integral part of your future business. The good thing about scrip or any direct
trade is that you don’t have to pay the ten percent to the organized barter company to do business. The
bad thing is, that you will have to work harder to make deals with vendors and you will have a tendency
to use someone just because they will trade with you. A good barter exchange will give you many choices
and can be well worth the ten percent. Credits are better than both situations and will be the wave of the
future if properly promoted.
Some of the things that can be purchased with Credits or bartered at your opening day are as follows:
* Advertising, Printing, Signs, Catering, Entertainment, Special transportation, Extra personnel
* Booth preparation and all Internet services
The restaurant delivery service falls somewhere in the middle of the road as far as hoopla needed to kick
off a business is concerned. Advertising and extra personnel will be the main important ﬁrst day needs
for this business. Advertising includes public relations in this section of the book. The opening day will
not require a public gathering like many retail businesses do, but rather a internal start-up of all systems.
If this is the type of opening day your business will have, I would suggest thinking of it as more of a lift
off. Make a “count down” list of things that have to be ready before you can function as a viable concern.
Cr e a tive Re a l Esta te f or a Ba d M a r k e t 86
My count down goes as follows:
1. Have a minimum of 5,000 copies of the restaurant menu guide ready to distribute.
(a) Five DCS restaurants signed up for the delivery service.
(b) Five cash paying restaurants signed up for the delivery service.
(c) Three full page ads taken out by DCS members.
(d) Three pages of cash paying ads.
(e) All ads into printer two weeks before opening day.
2. Computer systems ready to operate.
(a) High speed stand alone computer dedicated to this business only.
(b) Fax machine dedicated to this business alone.
(c) FAX modem.
(d) FAX & “E” mail software.
(e) Internet software.
(f) Contact management software. (ACT)
(g) Business management software. (QUICKEN)
(h) Custom software to run restaurant delivery service.
3. Communications system ready to operate.
(a) Two way radios for drivers.
(b) FAX machines for all restaurants and businesses offering delivery through our publication.
4. Delivery vehicles.
(a) Have at least three back-up vehicles in good running order.
(b) Design and take delivery of detachable business signs for the vehicles.
5. Advertising the delivery service.
87 Cr e a t i v e Real E state for a B ad Ma r ke t
(a) Prepare direct mail campaign.
(b) Prepare an ad campaign using San Diego County Digital Credit and barter members.
(c) Sign up more advertising members into Digital Credit Systems.
6. Hire personnel.
(a) Place ads in the local newspapers for delivery people and a dispatcher.
(b) Place ads at the local colleges for the same.
(c) Prepare independent contractors agreement.
7. Buy or set up monthly rental of tuxedos.
8. Buy ﬁve delivery cases.
9. Pay for business fees & permits.
(a) Business license.
(b) Check for any health department requirements.
This book will be the biggest challenge for me to market. Opening day is more like a series of opening
days at different public relation events. The only real ﬁrst day promotion will come when I list my book
for sale with the barter organizations. They are the ﬁrst obvious target market.
Most of the rest of this chapter will be written after I’ve gotten some advice from several of the local DCS
members that are listed as consultants in this area. I will also attempt to get any specialist that I might
need as a new member in the organization.
After checking the local directory, it became clear that this area didn’t have any local book stores for
it’s members. In my case it will be easy to access all the book stores and their owners using the CD
technology offered by the CALDATA system that I leased through the BXI barter group. There is even
a small chance of interesting a local publishing company. It will be important to point out that we have
talented members that would submit their works to them. We have some of the largest print shop in San
Diego that could cover a lot of the hard costs of printing if the publishing company choose to publish a
manuscript. My book will be submitted to local companies ﬁrst to see if they see any merit in this concept.
Cr e a tive Re a l Esta te f or a Ba d M a r k e t 88
The web publishing world, if you take the time to learn about it, will be the conduit for publishing in the
future. I’ve trained myself to do this because art and writing are my hobbies. The Internet is the perfect
tool for use in both of these venues. The more you know about the computer world, the better chance you
have of succeeding in today’s business world. The internet is the best place to start.
1999 Update: The book is now scheduled to be an integral part of the Digital Credit Systems’ web
site and can be read or downloaded as a tutorial of sorts for anyone wanting more information about
alternate ways of starting and running businesses. The book is included free and will be updated
occasionally and will remain free. The time was well spend but not directly proﬁtable as a publication.
Understanding the cash conversion process will determine, in most cases, whether you will become a
power user of Credits and barter or just a casual player. The most important thing to remember about
Credits and barter is that it is found money, most of the time. Credits and barter should never replace
cash business until Credits have become the universal currency that everyone knows will happen sooner
or later. It should always be extra income. As bonus income, it should be thought of differently from cash.
Cash is simple. Buy low and sell high to make a proﬁt. Credits and barter is the reverse. Earn at retail
and sell at a discount. That might seem strange, but just follow these simple numbers:
ONE YEARS CASH INCOME ----------ONE YEARS BARTER INCOME
Income: $100,000---------------------------- Credits & barter income @ retail: $30,000
Cost of goods: $30,000--------------------- Cost of goods: $9,000
Fixed expenses: $20,000
Discount (cash conversion) $9,000------Gross Proﬁt: $50,000
Gross Proﬁt: $12,000
As you can see, the total gross proﬁt is improved by almost twenty ﬁve percent. If you have a service and
you are only selling time or paying labor only, the ﬁgures are even better. If you are selling empty seats,
rooms or admission tickets, the proﬁt couldn’t be higher, it’s almost all found money, extra income, bonus
for the year. The only extra cost associated with these categories is cleanup.
Now that you understand this principle, quit trying to compare apples and oranges (cash & Credits or
barter). The key word here is ﬂexibility. You must learn to think in more general terms and accept a
process that is geared to ultimately leading you to enhanced cash income for your business. Sometimes,
it’s possible to get full value for your extra Credit or barter income. The best example of that, is when
you enhance your advertising budget. If your business success is in direct proportion to the amount of
advertising you can afford, this is the absolute best place to spend your extra Credits or barter income.
89 Cr e a t i v e Real E state for a B ad Ma r ke t
If you use any Credits or barter to run your business and pay the normal price that you would have to
your vendor, the above discount value of the Credits or barter units (30%) is reduced even more and
your bonus gross proﬁt goes up proportionately. Refer to Chapter Two to see if you can reduce this
factor. Cash conversions are only necessary with excess Credit or barter income. Try to spend Credits or
barter units to help your business ﬁrst and then identify the excess Credits or barter units and include
scrip. Leave a buffer zone to cover any changes that might happen. You know what “Murphy” can do to
business plans. Another thing to consider before going for a cash conversion/discount, is whether you can
use the Credits or barter units in your personal life where you would have used cash. If you can, use your
Credits or barter units there before you consider doing a cash conversion. There is nothing worse than
doing a cash conversion and then coming up short on Credits or barter units.
Sometimes a cash conversion is necessary because you’ll need the cash to run your business. In starting
the three businesses in this book, there will be such times. An example for each business is as follows:
The ﬁrst cash obstacle we ran into with the building of computers was with parts. We found that in
order to be competitive in the BXI organization, we had to give more value. We could build a Pentium
computer with the $1,500 cash but that was not enough to entice buyers for another $1,500 in BXI
units. We solved part of the problem by identifying software that could be purchased through barter
organizations. We added a $500 software package for each unit purchased. This still wasn’t enough, so we
decided to add a bare bones computer. These could run anywhere from $250 to $350 wholesale for parts.
This is where the cash conversion was a must. If you add the ten percent charged on the $1,500 BXI units
or an additional $150, to an average cost of $300 for the bare bones unit, we needed to raise $450 cash
using only $1,000 in BXI units to show a proﬁt.
My decision was to buy used cars with Credits and sell them for cash. Another way that could be used,
is to rent apartments or commercial space using barter credits and then sub-letting the units out at a
thirty percent discount. Either way, my goal was to receive $700 cash for each unit. This would give me
a $250.00 proﬁt per computer. This is a reasonable proﬁt for a niche market created with virtually no
overhead. The BXI members get a real good value and my company should have a healthy income for the
The only other cash costs will be the start-up fees charged by the government and any extra telephone
costs. I’ll need a re-seller’s license, a business license and a corporation. If eventually, I’m forced to
employ someone, then the fees are astronomical. I will avoid this as long as possible. There should be
some sort of a grace period for new businesses. Once you show a proﬁt, then these fees are not so onerous.
More people could be employed and the system would generate more income for the State. Unfortunately,
that is not the way bureaucrats think. They would counter with the fact that some business owners would
beat the system and cheat the government. I’m sure that’s true but it’s also very short sighted. The net
result of their paranoia, is less employment and a smaller tax base. Some day I hope to sponsor a bill or
join forces with a sponsor that would change the way California treats new business owners.
Cr e a tive Re a l Esta te f or a Ba d M a r k e t 90
RESTAURANT DELIVERY SERVICE PLUS
Half of the income from setting up the delivery service will be in cash. In other words, ﬁfty percent of
the restaurants will pay cash to join the service and half the advertisers will pay cash. Once the business
is going, most of the customers will be cash customers and there won’t be any need for cash conversions
except with excess Credits and barter income. This is a nice spot to be in.
During the start-up period, I have identiﬁed several areas that will require a cash conversion or a cash
investor. My choice is to try to make it work without an investor. Unfortunately, of the three businesses,
this one requires the most up front cash investment.
The food containers will probably have to be all cash. I can’t seem to ﬁnd a restaurant supply company
that will talk trade. They sell at wholesale and are extremely competitive in the San Diego area. This
will require approximately $2,500. I’ll have to sell one of my cars to pay for it. I’ve accumulated six
transportation vehicles using BXI barter credits. They’ll come in handy. I’ll use another car to pay for
software and a FAX modem. It will also take at least the sale of one other car to pay for fees, permits, and
additional phone costs. This will leave me with a personal car and two back-up vehicles for the delivery
service. I’m assuming that my drivers will have car troubles on a regular basis. My back-up vehicles will
keep us in business.
The only cash I’ll need for this book should be a portion of the cost of printing. Most barter organizations
have a rule that states that the ﬁrst $1,000 to $1,500 is in trade per transaction and the balance is
negotiable between the buyer and seller. Because paper is a high percentage of the cost of printing,
usually only about ﬁfty percent of a large printing job can be expected to be on barter. Paper is a
commodity and is only bartered in large quantities with major companies. The average printer won’t
be able to cover this cost, which will probably run in the neighborhood of seventy percent of the total
printing run. Fair play comes into this equation. The printer will either have to be a power user of barter
or have a special use for the credits in order to break through this 50/50 barrier.
I’ll rent an apartment and convert some Credits by sub-letting at a reduced cash rate to pay for this
printing. The number of copies printed will be determined by the amount of Credits I manage to convert
by the time I bring this book to the printer.
Everything else to do with bringing this book to fruition, including web publishing, should be done with
Credits. That is the best cash conversion of all. It goes straight to the bottom line.
Because you are earning and spending Credits or barter units on tax deductible items at the same time,
you don’t have any tax consequences to speak of. Trying to do this in the cash world is a little trickier.
Don’t ever assume that you can do barter through an organization to avoid taxes. They send a 1099-B to
you and to the I.R.S. The advantage with Credits or barter, is that if you do spend on a non-deductible
item that you would have spend cash on, you always have the cash in your pocket to pay your taxes. Just
don’t spend your Credits or barter units foolishly. Treat them with respect, not like funny money. If you
do it right, digital credits will transfer to the bottom line of your business as pure proﬁt. This can be the
difference between success and failure in your business venture.
91 Cr e a t i v e Real E state for a B ad Ma r ke t
DIGITAL CREDIT SYSTEMS’ ”ADVANCED CASH CONVERSION PROGRAMS”
It is the intention of Digital Credit Systems to plow back a minimum of twenty percent of the proﬁts
into purchasing strategic materials used by participating business owners in DCS .
Some Example Businesses are as follows:
Restaurants: Restaurant supplies and wholesale food items. Printers: Paper and Ink Computer
Makers: Parts General membership: Ofﬁce Supplies General membership: Ofﬁce & Home furniture &
appliances (used) Contractors of all types: Building Supplies
As the system gains acceptance and grows, these items will be supplied by participating businesses
as the major suppliers for DCS using Credits and Cash melds. Several ﬁnancial instruments have been
developed to help members spend down their balances by the company. These have investment features
that may require a registration process to make them available to the general membership. There will
also be a category and minimum credit balance to qualify for the investments. In the real estate ﬁeld we
are developing the following programs:
1. Individual purchases of all types of property using Credits as a down payment.
2. General partnerships with DCS to purchase properties using Credits as down payments.
3. Limited partnerships with DCS as the general partner and the participating business owners as the
4. Convertible Trust Deed investments. This ﬁnancial instrument has been design for the speciﬁc use
by Digital Credit Systems. It allows for the members, a chance to have their money in a short term trust
deed position on properties owned by DCS and still retain the ability to convert back to Credits to spend
in the system if a good purchasing situation presents itself to the member. These trust deeds are fully
assignable to a third party to raise immediate cash by the beneﬁciaries/members. (See attached example
The following is the direction that the company is going into and is not presented as an offering to
purchase stocks or securities of any kind, but rather a statement as to the present intentions of Digital
1. A special type of common stock has been designed for DCS that allows the participating businesses a
way of purchasing stock in Digital Credit Systems with Credits instead of cash with a convertible feature
that allows the member to covert back to Credits to buy within the system if a advantageous opportunity
presents itself. (See: http://www.plizzel)
2. Digital Credit Systems is planning four other cyber corporations based on Internet technologies.
These corporations will also issue convertible common stock that will be made available to the
participating businesses using Credits instead of cash for the shares.
Cr e a tive Re a l Esta te f or a Ba d M a r k e t 92
OTHER CASE HISTORIES
While it’s very easy to ﬁnd case histories of successful companies that can attribute a good part of their
success to the use of Credits and barter techniques, it’s more than difﬁcult to ﬁnd someone that has used
Credits or barter to get started. Most of the reason lies in the fact that most members in the Digital Credit
Systems or a barter organization are referred into the system. Obviously, this would be after the company
has already started. It’s unfortunate, but even in business schools, very little is known or taught about
alternate currencies or the barter economy.
I’ll start with an example that I’m aware of in the local membership. It may take some time to ferret out
enough examples of new business start-ups that used Credits or barter techniques from the beginning of
their companies inception to make this a viable chapter in my book. Perhaps in later editions, as business
owners come forward to tell me their stories, you’ll learn of more examples of business start-ups other
than the ones documented in the front of this book. For now, most of the examples will be of ongoing
businesses where barter techniques enhanced their productivity.
The start-up example is of a young man that wanted to start a painting business. He was currently
employed at another job. He had an experience with a local barter group in Florida that was very positive
so when he got to the San Diego area he contacted the barter organizations in the yellow pages. It took
him a little while to come up with the start-up fee to join the local BXI barter exchange. He could tell that
it would be worth his while by just looking at the local directory of barter members. Apparently, he had
contact with a much smaller group in Florida that was helpful and he could see the barter power of this
larger group of local business owners.
He was right. It wasn’t long before he had lined up so many painting jobs that he no longer needed his
regular employment. The painting jobs allowed him to pay for an apartment, buy a vehicle and many
other important purchases to free him from the job market.
He then turned to advertising using his barter credits to ﬁnd cash customers. He also invented a
“paint in a bucket” product that he wanted to market. Our membership list included many marketing
professionals that gave him a plan for developing his product. He is currently implementing that plan and
hopefully he will remain an entrepreneur for the rest of his life.
1999 Update: At the present time, my company is probably the best example of starting and running a
business using Credits. To date we have spend almost $300,000 in Credits and less than $10,000 in cash
over an almost two year period.
The New Millennium Discount Card that we have a licensing and marketing agreement with will use
Credits to launch their business. Further writings will give the reader more detail about their success or
All requests for particular vendors from my Digital Credit Systems membership will be found at plizzle.
93 Cr e a t i v e Real E state for a B ad Ma r ke t
* TO DO LIST
* CALL ORGANIZER
* NEW CLIENT INFORMATION CARD
* NEW ACCOUNT APPLICATION FORM
* CLIENT LIST
* MAILING LIST MAINTENANCE FORM
* PRICE QUOTATION
* PURCHASE ORDER
* RESTAURANT DELIVERY AGREEMENT
* DELIVERY SERVICE ADVERTISING AGREEMENT
* FOOD ORDERING FAX FORM
* MENU EXAMPLE
* DELIVERY FAX ORDERING FORM
* SHIPPING FORMS
* LEASING FORMS
* STOCK RECORD
* EXAMPLE OF BARTER EXCHANGE MEMBERSHIP AGREEMENT
* CREDIT APPLICATION
* EMPLOYMENT APPLICATION
* TIME SHEETS
* WEEKLY PAY SLIP
* WEEKLY RESTAURANT PAYMENT RECORD
* INDEPENDENT CONTRACTORS AGREEMENT
* EXAMPLE FLYER FOR BBC-3000
Cr e a tive Re a l Esta te f or a Ba d M a r k e t 94
BARTER SYSTEMS “A business guide for trade exchanges” by: Roger Langrick
101 WAYS TO GROW YOUR BUSINESS WITH BARTER, by: Kirk Whisler and Jim Sullivan
BARTER AND THE FUTURE OF MONEY, by: Terry Neal and Gary Eisler
BARTER NEWS, Publisher/Editor Bob Meyer, barter@ﬁa.net
95 Cr e a t i v e Real E state for a B ad Ma r ke t
BOOK OF SOLUTIONS
LOCAL PROBLEMS, SAN DIEGO
LOCAL PROBLEMS, HOUSTON
This part of the book will evolve into a separate book of its own. I will contribute to it as long as possible.
If the process proves successful, others will follow with solutions.
My method for ﬁnding solutions is based on my experience at problem solving in real estate. A multiple
exchange of properties is usually the best solution to difﬁcult situations. It has often been said that one
person’s problem is another person’s opportunity. By replacing the “person” in this equation with
“company,” “country,” “municipality,” “ethnic group,” or any other term for a group, you can see the
basis of problem solving. Add positive capitalism with political power to this equation, and natural
solutions should follow.
Most social solutions cause other problems. As long as the new set of problems is minor, the original
solution can be considered viable. The evolutionary process will gradually reﬁne society to provide a
better life for each individual. This list of problems will be updated as events bring new problems to light.
The mission of positive capitalism is to solve problems, and its success as a political party should always
be judged by this criteria. Who is in a leadership capacity is only a secondary goal that supports the
How often we have heard that the two things we can count on in life are death and taxes. This is very true
but very negative. Our political fortunes will be tied to turning this negative reality into positive results.
Every solution will have as its primary goal either the extension of life or the elimination of taxes by
governments. This will be the acid test for success.
Many of the solutions presented here are drawn from positions that are already being considered as
solutions. The party should have as clear a policy concerning issues and problems as possible. These
solutions are more of an endorsement than a creative answer to problems.
Cr e a tive Re a l Esta te f or a Ba d M a r k e t 96
How can people learn to accept one another’s common humanity
How can universally accepted principles of conduct be established?
How will humanity survive in the future?
How can religion and positive capitalism reconcile their differences?
How will other political systems ﬁt in during and after the
How can over population be turned into a positive human condition?
How can industrial growth be reconciled with environmental
Is peace possible? If so, how can it be accomplished?
Can science and religion be reconciled?
Can human intelligence be expanded?
Is it possible to reduce cognitive dissonance in individuals?
How can government control of individual rights be reduced
What role will politics play in space?
97 Cr e a t i v e Real E state for a B ad Ma r ke t
HOW CAN PEOPLE LEARN TO ACCEPT ONE ANOTHER’S
COMMON HUMANITY WITHOUT RESERVATION?
The great majority of people already realize the importance of accepting differences in people, but some
do not. Acceptance is an emotional response that can be manipulated by negative leaders. This negativity
creates power for leaders; it gives them an excuse to exercise power against others. First the leaders
create the enemy, and then they use this hatred to enslave their followers. The following is a list of reasons
leaders have used to manipulate hate:
1. Racial conﬂict.
(A) Claims of inferior intelligence.
(B) Claims of inherent evil coupled with religious bigotry.
(C) Fear of miscegenation.
(D) Claims of overpopulation by the other race.
(F) Territorial disputes.
(G) Claims based on old documents and treaties.
(H) Claims based on the need for “lebensraum” (more space for citizens).
(I) Claims based on divine right.
(J) Religious differences.
(K) Claims that the Almighty has chosen a certain group of people as superior by becoming a member of
(L) Claims based on religious territory.
(M) Claims based on a caste system supported by religious dogma.
Most negative leaders use as many of the above as possible to enhance their personal power. Because
acceptance is an emotional problem, knowledge and communication are the only defense. Positive
capitalism uses none of the above reasons to excuse its existence. We can replace many power systems
because of humans' natural positive nature. Fear will be replaced by knowledge and communication.
Evolution of the human species can be measured by the elimination of negative motives. Territorial
claims can be settled by arbitration and monetary settlements. These are merely political real estate deals.
The only remaining political entities will have economics as a basis. If people are free to choose which
economic system they want to live under, there will be a natural balance and peace. We will promote
positive capitalism as the best system but coexist with any other viable, freely chosen economic system.
Remember, freedom is freedom from government!
Cr e a tive Re a l Esta te f or a Ba d M a r k e t 98
HOW CAN UNIVERSALLY ACCEPTED PRINCIPLES OF
CONDUCT BE ESTABLISHED?
These principles will be easy to establish by just taking a common sense approach to organized religion.
Remove the religious dogma and references and most of the universal principles will remain. A person
can then interject private religious beliefs without interfering with other peoples' belief. The goal is
maximum freedom and minimum interference by religious zealots. Universal principles of conduct
should be very much like the Ten Commandments, but without any religious claim. These ideals should
not automatically be enforced by law. Some principles will rely on common sense and reason as the
enforcement agency. Personal responsibility must be the license to call oneself an adult. Retraining
deviant behavior rather than retribution should be the method used to enforce most of the principles.
To establish a set of universal principles acceptable to everyone, a world political body with power
to make and enforce laws seems most logical. This has been a goal of many great leaders throughout
history, but they have had very mixed results. The larger nations and empires are a product of this type
of thinking. The United States of America could very easily have been several different countries without
the dream of a common purpose by a few great statesmen.
The problem with forming any world political body is that individuals who disagree with the edicts of
such an organization would lack recognition. How can this problem be reconciled to the satisfaction of all
concerned? The answer would seem to be that the fewer rules put forth by this organization, the better.
Regional or local reﬁnements of these rules could more easily reconcile individual and group differences.
HOW WILL HUMANITY SURVIVE IN THE FUTURE
Survival will probably depend on how we handle population growth. There are three ways this scenario
can work itself out:
1. Reduce the population with a major war or disaster.
2. Maintain present population with strict birth control.
3. Accommodate population growth with a plan.
A plan is the most reasonable solution to population growth. One of the six major functions of The
International Capitalist Party will be solving the future population problem. You will ﬁnd more detail
concerning this plan in Chapter Five, which discusses the Star Life Project. The Star Life Project is
basically a survival plan. We will develop Humanariums (biospheres) to test technologies that will be
useful politically here on Earth and also in future space colonization. The party will take a strictly
commercial interest in their development, using capitalist principles as the best and most efﬁcient method
99 Cr e a t i v e Real E state for a B ad Ma r ke t
HOW CAN RELIGION AND POSITIVE CAPITALISM
RECONCILE THEIR DIFFERENCES?
The moral demands of positive capitalism are actually in concert with most religious thought. If the
moral demands are not met, the capitalist suffers directly. Capitalism is actually more demanding
because of the direct "“ause and effect"”nature of each business transaction. Such things as talent, effort,
and judgment directly affect a capitalist with the best of intentions. Religion and positive capitalism
come into conﬂict in two basic ways. The ﬁrst is when an old rule or dogma or a particular religious sect
contradicts common sense or common knowledge. Capitalism does not have any interest in stopping
religious practices. We do have an interest in stopping any type of intimidation or force used to make non
believers conform with a particular religious practice. Freedom of choice is our bylaw when dealing with
religious thought or action. We do not condone or condemn and religion. We use each religious code in
a positive way. Any moral demand that is good within itself and does not harm non believers because of
religious hate is an asset. We will embrace these positive thoughts and ideas.
The other way religion and capitalism come into conﬂict is when individuals use capitalistic methods in a
negative way. Drug dealers, pimps, extortionists, and the like would be extreme examples. These people
call what they do business, but in fact they are dealing in death and destruction. It is our responsibility
to purge society of these parasites. Religion, unfortunately, tries to use force in the form of laws to solve
these problems. Capitalist can see the proﬁt motive being abused and would take the proﬁt out of these
activities to solve this problem. Resentment against the establishment is often the misdirected reason
some people get involved in negative, self-destructive social behavior. These people feel and sometimes
know the double standard that society imposes up them. Government and religion could help by
removing the element of force in "freedom of choice" activities. They should join in the battle to make
these activities unproﬁtable, not illegal. Participating in these activities would then lose its popularity,
creating a minimum amount of negative activity. Positive capitalism and organized religion should always
be on the same side concerning these problems. Religion could be the expert in all morally negative
behavior, and positive capitalism could provide the practical solutions. This partnership should provide
the most obvious and perfect solution to problems that have been with humanity from the beginning of
HOW WILL OTHER POLITICAL SYSTEMS FIT IN DURING AND AFTER
THE EVOLUTIONARY PROCESS?
Most other political systems will be useful during evolutionary change as an examples of backward
societies. There will be exceptions, in which a system will be symbolically retained. A present example is
the monarchy in England. It has no political power but has become a great tourist attraction.
During the evolutionary process, we will try to dwell on the positive parts of other political systems. A
good example would be free communism of the type practiced in Israel. Voluntary groups of people share
their lifestyle as evenly as possible. A system like this can work on a limited basis, provided everyone
agrees to it without force or coercion.
Cr e a tive Re a l Esta te f or a Ba d M a r k e t 100
Without force, you cannot create a class of slaves. A slave is an individual forced to work for others with
the sanctions of the government. People'’ right to keep the fruits of their labor are abused. Anyone calling
this a fair system must have a gun to his or her head or have a dark, ulterior motive.
Every system that does not include the freedom to withdraw from that system will not be a viable
alternative when the evolutionary process is completed. The completion of the evolutionary process
will be marked more by this element of freedom than it is by the participation of everyone in positive
capitalism. Some people constitutionally are more comfortable in a very controlled situation. A
professional soldier is a classic example. As long as people are within this system voluntarily, there is no
harm. They should not have the right to force others into their controlled environment. Military dictators
should become football coaches or professional dance instructors or join other positive professions that
require strict discipline and order on a voluntary basis.
Communism can also be a useful system if properly identiﬁed as the charity part of society. Voluntary
transfer payments from those who have to those who truly need will probably always constitute a small
portion of any political system. The fallacy of misplaced compassion should never be the driving force
of any society. This is always the hallmark of government control and should be resisted and removed in
whatever form it takes so humanity can be ﬁnally and forever free.
HOW CAN OVERPOPULATION BE TURNED INTO A
POSITIVE HUMAN CONDITION?
There is nothing more important in the universe than a human life. The more people who are given
a chance to live, the better. Overpopulation is a political problem caused by lack of freedom and
knowledge. The only way overpopulation can become as asset is to have a political system that allows
private solutions to society'’ problems. A politician or bureaucrat looks at a lot of people and sees a
lot of customers. One persons' problem is another persons' opportunity. Human ingenuity will solve
any population problem. The use of money and creation of wealth, if properly understood, will create
solutions. Some of healthiest economies are in highly populated areas with minimum government
interference. Hong Kong is a city soon to be blighted with government control. Hong Kong possibly could
avoid government interference if negative capitalism was not part of their system. No one could throw
stones at the progress made in this great city if the low life element was removed or retrained. Even with
this negative element, the living standard is far above that of the giant country that surrounds it. The
contrast is so great that the giant, China, will eat this oasis of freedom to perpetuate its big lie.
Japan is another area of high population that uses positive capitalism to solve population problems. It
proves that population is not the problem when a country is motivated to solve problems using the proﬁt
Eventually, there will be over population, but if addressed the same way as any problem under positive
capitalism, the solution will be obvious. Some examples of these solutions follow:
The Humanarium project will make uninhabitable areas livable by total environmental control.
The Star-Life project will make space an unlimited area of colonization.
101 C r e a t i v e Real E state for a B ad Ma r ke t
A combination of these two projects could even produce a scientiﬁc solution: maximum birth. This
concept has not yet been addressed because the technology and the supporting ethical and moral
philosophy has not been available. Basically, maximum birth is the voluntary fertilization of as many
human eggs as possible. A woman could produce twelve or thirteen eggs per year without any technical
enhancement. Obviously, each of these eggs would have to be brought to term outside the woman'’ body.
Such a baby Humanarium could be very important once the need to populate space becomes apparent.
The chief concern is the quality of life for children born into this situation. The challenge will be to
combine hi-tech with hi-touch to produce a complete person. If this can accomplished, only the most
superstitious and foolish person will have an objection to maximum birth. Voluntary fertilization will
be the beginning of this high quality, life giving situation. "The Curse" will be turned into a blessing of
HOW CAN INDUSTRIAL GROWTH BE RECONCILED WITH
Environmental problems are probably the greatest potential source of new business. The environment is
the most important problem today. Positive Capitalism will aim it'’ creative thrust not only at preserving
natural habitats but also at enhancing and improving environments. The concept of resource allocation
will have a new and more complete meaning when the ecosystems of the universe are understood better.
The abrasive technologies of high pollution and questionable output are already being phased out. The
politics of resisting change is the only impediment. The pessimists must have their say, just in case a
legitimate argument for delay can be produced. If delay can be produced, a new problem solving business
will sprout up to clear the day. The human spirit will not be denied its destiny.
IS PEACE POSSIBLE? IF SO, HOW CAN IT BE
Peace will only be possible on a lasting basis when people are free to move from one type of political
system to another. There will never be one system that appeals to everyone. Positive Capitalism and
voluntary communism will be the two main choices. There should also be some free religious governments
to give everyone a choice. Movement from one system to another by individuals without penalty and by
choice will alleviate the pressure for conversion, the main source of tension.
Human psychology has shown how different the perception of reality can be from person to person.
Some people need total freedom to function at their best, and other people require and freely admit
that they prefer to be controlled. Still others want to comply with a religious philosophy that may be a
combination of freedom and control. Everyone can be satisﬁed, provided individuals are allowed to seek
their preference without penalty.
In the future, people may try many different systems before making a long term choice. Direct experience
living in different cultures would make anyone realize the common humanity in most systems. Friendly
competition rather than the wish to convert should be the message presented by the leaders of every
system. There is no need for an enemy.
The International Capitalist Party does not need to convert, because capitalism is the oldest form of
politics. We only need to give capitalism power until the other systems allow freedom of choice instead of
trying to force unnatural politics on individuals.
Cr e a tive Re a l Esta te f or a Ba d M a r k e t 102
CAN SCIENCE AND RELIGION BE RECONCILED?
They will never be completely reconciled until the words “Fact" and “Faith" have the same meaning.
When either scientists or religious people can prove their after death theory, the two systems will merge.
Until then, they will be natural antagonists.
Both systems try to blend for the mutual beneﬁt of everyone. This blending of ideas beneﬁts humanity.
The International Capitalist Party need only be concerned with being a good listener.
The two systems represent the rational and the emotional side of human nature. Either carried to a
extreme will probably cause harm to society. Together they can give a natural balance until the universe
and all its mysteries are unraveled.
The International Capitalist Party'’ position will be that there is not a conclusive answer. The abuse of
power from either of these positions is the only concern the party should have. Individual preferences
for ideas are the by-product of a free society. We will try to take the best from both systems to create a
positive economic and political system.
CAN HUMAN INTELLIGENCE BE EXPANDED?
Part of the Humanarium program will be to create an environment that could be considered a brain
extender. The Humanarium (biosphere) environment will not only have computers but also private
extruders and regenerating energy systems. This combination should be able to adapt to any new
Several organizations are already dealing exclusively with this problem. Intelligence can be expanded
externally and internally. Artiﬁcial intelligence is the current hi-tech solution in the computer ﬁeld. This
type of intelligence should be able to handle more information because of its ability to store unlimited
memory. The question will become whether its decision-making process and imagination or innovative
facility can surpass basic human capacity. If this happens, the only superior mental activity we will have
beyond our emotional lives will be freedom of choice. We will always control the on/off button.
Internal brain improvement should also be taken very seriously in the future. We now have the
beginnings of the ability to analyze and deﬁne brain parts. By asking the right questions and creating the
right tools, any physical problem should be solvable. The new computerized medical machines, combined
with our natural curiosity, should help us expand the use of a semi-dormant organ like the human brain.
To be very futuristic, one could imagine an individual brain being used to the maximum in concert with
the state-of-the-art artiﬁcial intelligence machine. Given the human capacity for always wanting forty
percent more, no matter what one has, the cloning of a portable brain to give even more intelligence to
the individual may occur.
IS IT POSSIBLE TO REDUCE COGNITIVE DISSONANCE IN
Cognitive dissonance is the individual'’ ability to know what is right and good but still do the opposite in
a very destructive way. Some examples follow:
103 C r e a t i v e Real E state for a B ad Ma r ke t
Smoking cigarettes while knowing the health problems. Stealing while knowing the likelihood of getting
caught. Driving fast while knowing the statistics of trafﬁc deaths on the highway.
This is not a discussion about making mistakes, but one about deliberately abusing oneself or others
knowing the probable consequences. This behavior has been called many things, including negative
thinking, antisocial behavior, and deviant personality type. We all suffer from this negative behavior to
some degree. Mental confusion and misplaced priorities seem to be with all of us. Could there be some
general root causes?
To understand how strange this type of behavior is, one needs only think of a dog or a bird killing
itself by smoking cigarettes. All of the other species use their limited mentalities to survive the best way
possible. For some reason, even when we know better, we forget the most basic rules of survival.
Possible reasons for the existence of cognitive dissonance are: Psychological – Emotional – Chemical –
Social – Economic – Political. Any of these six major categories can be attached and show results over
a period of time. The problem will never be solved unless all ﬁve categories are in harmony within the
individual.The International Capitalist Party will try to deal with cognitive dissonance by providing a
non-contradictory economic and political system that spells out clearly and defends the positive aspects
of life. The other two parts of the problem will have to be dealt with from a scientiﬁc and medical point of
view. The combination of solutions should give us our best chance of lowering the incidence of dissonant
HOW CAN GOVERNMENT CONTROL OF INDIVIDUAL
RIGHTS BE REDUCED PERMANENTLY?
As an example, laws protecting individual rights will have to be passed in countries that have the ability
to pass such laws. Democracies can either put out a clear message of freedom or a mixed message of
government interference. Freedom is freedom FROM government, and any excuse to the contrary
dilutes freedom. Freedom and positive capitalism set an example that will be an irresistible force in the
world. America now sends out mixed messages. Government interferes in every phase of life, and it
has a corresponding high degree of negative capitalism. The heavy hand of government causes a lot of
negative capitalism. Whenever the human spirit is shackled by rules that assume everyone is the same,
a natural and destructive rebellion will always occur. This frustration of being unduly controlled is like
a nervous tic. If you force a cure, the problem will just crop up again in a different form. The real cure
is always freedom of choice and will never change. Government and the beneﬁciaries of control will do
anything to tighten the noose of restrictions on individual rights and thereby enhance their power and
control over individual citizens. The diligence of a political system supported by aware individuals is the
only way to stop the loss of freedom that every government tries to force on its citizens. Creative laws
against lawmakers' ability to restrict the rest of us are needed. The individual members of government
must also be made accountable personally for the casual way they solve every problem in society with
taxation and more restrictions. The end result of each new scheme perpetrated by governments on
citizens must be analyzed, and a system of accountability and recourse must be in place to handle the
lawmakers' mistakes. Now the lawmakers can use any harebrained solution to justify their existence.
Years later, when they can no longer be held responsible, the results of their meddling will ﬁnally come
in. This is too late to do anything about their tragic mistakes. We need to bring back the concept of public
servant, not the current concept of "public dictator" that now exists in every country to one degree or
Cr e a tive Re a l Esta te f or a Ba d M a r k e t 104
WHAT ROLE WILL POLITICS PLAY IN SPACE?
The farther people are from their seat of government, the less they pay attention to the nonsense of state
control. Common sense and positive capitalism naturally become the way of life. Sometimes voluntary
socialism also arises. Provided force is not the motivating factor used to choose an economic system,
there should be very little conﬂict. Both systems can build a better life for everyone if government force is
removed as much as possible from daily life.
Religious power should be reduced in space because it has a proven history of causing conﬂict. Mysticism
has always needed someone to point out as the enemy, that is, someone less than human. Private religious
thought should neither be encouraged nor discouraged by the political powers of the state. Perhaps
when the brain is better understood, irrational hate will be nothing more than a chemical imbalance
in the nervous system. Irrational hate will then become a treatable mental illness. If not, then mass
communications without political or religious manipulation will be able to stop the inﬂuence of mysticism.
Space will allow people the option of escaping from religious and political insanity. This very option could
make it almost impossible for a perverted leader to abuse a power system. The Starlife Project will be
completely free from political loyalties. Each Starlife community should have its own identity. Distance
from their communities, combined with the ability to communicate as if they were next door neighbors,
will allow the human spirit a freedom and joy never before experienced by so many people.
105 C r e a t i v e Real E state for a B ad Ma r ke t
What are the duties of The International Capitalist
Party in the international community?
How can nationalism be brought under control?
Is the United Nations a solution for conﬂict?
How can drug commerce be halted?
Is free trade a possibility?
How can Apartheid be solved peacefully?
How can communist countries be converted to positive capitalism?
Will the politics of hunger be solved?
What type of national defenses should countries deploy?
Can anything positive come out of the international arms race?
How can worldwide racial integration be brought about?
Should space be conquered internationally?
How can dictators and fanatical religious leaders be converted to
Is a worldwide refugee program possible?
Where should The International Capitalist Party purchase land to
develop a model society?
Cr e a tive Re a l Esta te f or a Ba d M a r k e t 106
WHAT ARE THE DUTIES OF THE INTERNATIONAL
CAPITALIST PARTY IN THE INTERNATIONAL
The primary duty of The International Capitalist Party`is to give the capitalist economic system political
power. Capitalism has been with humanity since the beginning of time, but has never been given credit
for its natural perfection. Leaders of every type of government have chosen to diminish or destroy
capitalism within their society. Capitalism is the only system that does not need government to exist. This
fact does not appeal to leaders seeking power for its own sake.
The party'’ appeal will be to the individual within the various existing political groups. If the individual
is seeking freedom and fairness in society, capitalism will be the ultimate answer. Bringing the message of
economic enlightenment will be the party'’ duty.
Problem solving using the capitalist method will be another duty that the party will owe the international
community. The party'’ solutions will be to use a minimum of participation by governments and
maximum effort by individual entrepreneurs.
Another important duty will be to make sure that capitalism remains an evolutionary tool and not an
excuse for political revolution. Political revolution always translates into violence and death. The system
that follows is always concerned ﬁrst with power and government instead of freedom for the individual
citizen. From feudal lords to communism, the game is the same; just the name of the system changes. This
is a pitfall into which capitalism must not fall.
HOW CAN NATIONALISM BE BROUGHT UNDER CONTROL?
The world economy will soon be so closely knit by technology that even language differences will become
obsolete. Education in every part of the world will leave the world'’ population with the realization that
nothing matters in determining the worth of a person except for individual effort and ability. The opening
of the space frontier will leave the concept of boundaries as nothing more than a legal description for real
This sort of natural evolution need only be understood to be a solution. Nationalism is nothing more than
an idea. Nationalism is a good idea to give a sense of team spirit. When friendly competition is replaced
by hatred of any kind, nationalism becomes a negative social force. This negative force should be scorned
by the world community wherever it is found. Fortunately, educated people of the future will be the
natural answer to this problem.
The International Capitalist Party will help this process merely by being in existence. All of the party'’
programs, policies, and goals will enhance the natural evolutionary process.
IS THE UNITED NATIONS A SOLUTION FOR CONFLICTS?
Any world organization is a step in the right direction, but the United Nations does not have a reputation
for solving very many conﬂicts. This is mostly because of the Security Council. The council'’ veto power
stops any rational action against aggression. When criminals have the ability to stop enforcement by
simply voting against it, there can never be a solution for conﬂicts. The rules have to be changed before
the United Nations will ever be effective.
107 C r e a t i v e Real E state for a B ad Ma r ke t
The International Capitalist Party would be useful as an international political party with a clear
economic message. We are not an American political party. Because of this fact, Third World and other
types of resentment will be absent. We can actually put pressure on the American culture to relieve
itself of negative capitalism. With America as a better example of positive capitalism and freedom from
government, the hypocritical image America now has would disappear.
The International Capitalist Party can then go into foreign countries separated from ties to the CIA,
unstained by American imperialism, and unclouded negative capitalism. Freedom would have a second
chance to be heard worldwide with a clear political and economic view. The party has the potential of
unmasking every petty commissar or dictator in the world. Their motives and their programs would be
bankrupt with the proper message of truth given to the citizens of each country. Their use of force for
revolutions shows the impotence of their ideas.
HOW CAN DRUG COMMERCE BE HALTED?
The illegal drug business is the Achilles heel of America. Drug dealers use normal business practices and
advanced technology to promote the sale of human poison. America'’ enemies can be the suppliers from
almost any part of the world. We are trained within the capitalist system, and suppliers know we like to
make money. We are proud of this fact, because money creates individual freedom. Individual freedom
is the main reason for accumulating wealth. Our enemies can pervert this idea by making popular
substances that are highly addictive and very destructive. This is a subtle form of chemical warfare. Plus,
our enemies can move their drug business anywhere, hoping we will add another problem by attacking
those countries that the drug dealers have moved into.
The abuses these substances cause in our society become a basis for propaganda. enemies are always
pointing out the decadence in America. This decadence is nothing more than negative capitalism.
Unless Americans want to play into this trap, we have only one choice. The only answer is to take the
proﬁt out of the business by partially legalizing the drugs. They not be legalized like two other major
human poisons, alcohol and tobacco. They must be legalized like rat poison. They must be properly
labeled with skull and bones and extremely strong addiction warnings. Suicide centers should be built for
drug addicts. These centers will help take the glamour out of substance abuse. The centers will also help
the addict hit the bottom and hopefully bounce back in a controlled environment.
The black eye of capitalism will heal as soon as the proﬁt and glamour is taken out of the drug trade.
Several other solutions are presented in other sections of this book in more detail.
The opponents to partial legalization rightfully point to the legalization of alcohol and tobacco have
affected society. They also will point to Northern Europe'’ experience with problems created by drugs
after they were made legal. It is very obvious that just making drugs legal does not solve the problem. In
fact, it creates more health problems. But it does solve criminal problems if the drugs are cheap enough.
Another important point should be made here. It is very tempting to sell this program to the government
by suggesting a high tax to discourage use and raise moneys for other programs. However, government
should not beneﬁt from human misery the way it does with alcohol and tobacco. There must be no
collusion with suppliers to the detriment of society. Poison should be so cheap that any idiot can get as
much as he or she wants.
Cr e a tive Re a l Esta te f or a Ba d M a r k e t 108
The only other choice is to turn this country into a police state and abandon more of our personal
IS FREE TRADE A POSSIBILITY?
Free trade is a capitalist idea. Any time a government tries to impose any other economic system, free
trade breaks down. Currently, free trade is suffering because governments are subsidizing whole
industries. They operate these industries at a loss, trying to drive the free competition out of business.
They are trying to say this form of competition is fair. The only thing they will succeed in doing is
creating a tariff war. They will lose twice. Once when taxpayers subsidize the industry and a second time
when the tariffs make cheating ineffective.
Free trade is positive capitalism, whether it is done by two individuals or two governments. The
International Capitalist Party can only promote this ideal at every opportunity. The system requires
voluntary participation; therefore, any society with a repressive economy cannot participate fairly. A
tariff retaliation against its cheating will be the only cure.
A tariff should never be used against other free traders just because they are doing a better job. This type
of protectionism is actually an act of war. Protectionism would be considered very bad sportsmanship if
done at the Olympics. Protectionism is like letting one country start in a foot race before the rest of the
teams get the go signal. Fairness is the key to international free trade. If the sportsmanship and fairness
of our international games could be brought to the marketplace, we would have worldwide free trade and
greater prosperity for everyone.
HOW CAN APARTHEID BE SOLVED PEACEFULLY?
Apartheid is fueled by fear and unreasonable expectations on both sides. The whites fear the loss of a
viable economy with the intrusion of communism or socialism. The so-called redistribution of wealth is
just an excuse to take property from the owners. The blacks, who fear they will not get full citizenship
rights, are falling into the opportunistic hands of the revolutionaries.
The only way apartheid can be solved peacefully is for both sides to make a commitment to the capitalist
economic system. Freedom and equal opportunity will replace fear and repression. This is actually a great
opportunity for capitalist to set an example of peaceful transition.
Apartheid is a classic example of why the West is losing the international struggle. We are trying to sell
democracy, which is just a way to elect leaders. Communists and socialists are selling a total political and
economic program. Even when democracy wins, they still can get a communist or socialist elected. It is no
wonder that the whites are afraid, given the example of government transitions worldwide.
South Africans need to pass a constitution that ends apartheid concurrent with adopting the capitalistic
economic system. Such a system will allow the country to have as many black leaders as its citizens want
without jeopardizing the life and property of the whites. Everyone will ﬁnd this a happy evolutionary
transition. The other choice is short term conﬁscation, which will cost lives and destroy a very healthy
109 C r e a t i v e Real E state for a B ad Ma r ke t
HOW CAN COMMUNIST COUNTRIES BE CONVERTED TO
The economic success and impregnable defense system of free countries will set the stage for this
conversion. Agreements with communist dictators are fairly useless. The communists are like religious
fanatics; they think their antiquated system of forced adherence to an economic system is natural and
correct. Getting the elements of force and repression out of communism or socialism is the only hope
for its long term existence anywhere. The present leaders are so unsure of themselves that any contact
with the West causes major paranoia. During the evolutionary process, if the leaders of the communist
countries will allow their citizens freedom of movement, their positions as leaders will be strengthened.
We do not need to destroy other types of government to have a successful evolution. If groups of people
choose to live under the yoke of communism or socialism, provided they have the ability to leave that
society at will, positive capitalism can live alongside their systems without conﬂict.
The evolutionary process will have to become more aggressive if freedom of choice is not forthcoming
in communist and socialist countries. Methods of capitalist intrusion must be developed to help people
understand the capitalist message. The repression of the communist yoke can only be broken by the will
of the people. Communism can stand or fall on its own merit. The freedom of individuals trapped under
communist repression is the major concern of The International Capitalist Party. Unless you believe
humans should be treated as robots by the state, you will understand this principle.
WILL THE POLITICS OF HUNGER BE SOLVED?
Technology has assured the world that hunger is a thing of the past. Only government intervention and
government control of the methods of production and distribution can cause famine. The spotlight should
be placed on the leaders of these countries. The world community must pressure these individual leaders
into changing their methods. A leader'’ life is not worth any more than a peasant'’ especially when the
leader is misusing power for negative purposes. The capitalist free market system can guarantee food for
all. A natural or man-made holocaust is the only way this system can be temporarily disrupted.
Anywhere there is hunger; The International Capitalist Party will try to put pressure on the government
that caused it. Any country with massive hunger should either replace its government or release the
means of production to the people and replace their closed economic system with a free market. Famine
takes away any legitimate claim to power a government has over people. Famine means a complete
breakdown of the government'’ ability to govern properly. The International Capitalist Party will leave
the charity aspect of famine to the organizations already formed for this purpose. The party will, instead,
concentrate on solving the long term problem of economic evolution.
Cr e a tive Re a l Esta te f or a Ba d Ma r k e t 11 0
WHAT TYPE OF NATIONAL DEFENSES SHOULD COUNTRIES DEPLOY?
THE BEST! Humanity will crawl forward until freedom of choice is installed in every corner of the
world. After that happens, the pure waste of military might can be turned in a positive direction.
Capitalist countries that have to defend against a slave economy have to use coercive communist
methods to ﬁght back. The most obvious method is using the income tax to raise money for the military
establishment. The income tax is the worst manifestation of communism in a capitalist society. It causes
government intrusion into every aspect of an individual'’ life. Unfortunately, no viable alternative has
been forthcoming to help the defense effort until now.
The International Capitalist Party will concentrate on the politics of economic evolution. Evolution is the
key word here. The income tax, if repealed in America as a constitutional amendment, would disrupt the
balance of militarily and guarantee success to communist countries. The problem will be replacing the
communist income tax system with a less intrusive method of raising money for the military. There are
two possible scenarios that can accomplish this goal.
The ﬁrst scenario, which almost guarantees results, is a political extension of President Reagan'’ Star
Wars program. The difference is The International Capitalist Party position is that it separates the two
Star Wars is supported by the income tax. Star Wars is a defense against communism. Income tax is pure
communism; therefore, communism is ﬁghting communism. If the income tax was used only for defense
purposes, which is the reason or excuse for its existence, we will in a short while bankrupt the communist
nations, with their own system working against them. (1976)
However, we are using communism (the income tax) within our system for other reasons. The two main
items that should not be paid with income tax moneys are transfer payments and interest on nonmilitary
debt. The ﬁrst way to develop a national defense without peer would be to go directly back to the original
intent of the income tax and call it a defense tax.
The second scenario incorporates the ﬁrst scenario but allows for a transition, with alternate solutions to
the problems created by transfer payments and interest on national debt.
The transfer payment problems can start to be solved by asking not what your country can do for you but
what you can do for yourself. The corollary of this concept is the fact that the more you do for yourself
the less you will need your country, and you will free the slaves of taxation.
The national debt should be paid once and for all with a federal land auction. After enough money
is raised to pay the national debt, Congress should pass laws prohibiting borrowing by the federal
government using income tax as the method of repayment except in emergency situations clearly spelled
out by law. Certain large blocks of land could be sold to some of the wealthier countries that have
everything except room for their people. They could start large ethnic communities that would increase
the tax base, pay off the national debt and serve as a tourist attraction. These areas should be in what
are now basically rural areas. The land values will be based on a completed community plan, not raw
land values. This will give the taxpayer maximum leverage. A fast track solution should be implemented
because land planning is the biggest waste of time by bureaucrats in real estate. The land could very
easily be some of the deserted valleys in the West. It would probably be best to start with a German
community, given the racial stupidity of some elements in the American culture.
111 C r e a t i v e Real E state for a B ad M a r ke t
CAN ANYTHING POSITIVE COME OUT OF THE INTERNATIONAL ARMS RACE?
Technology is the only by-product of a war machine that can be considered positive. Waste is the main
ingredient of war technology. The only way we can turn this waste into something would be to convert a
wartime technology into something useful. The atomic warheads could be converted into a power source
for space travel. Laser technology is already convertible. Germ and chemical warfare does not seem to
have a convertible factor, but perhaps one can be developed. The defense system and its convertibility
should become joint projects more often. The space shuttle and interstate highway systems are two great
examples of this principle. Defense budgets should be more concerned with this combination to get better
public support. The Humanarium project could easily, in its early stages, become a convertible defense
system. By selling the positive aspects of the Humanarium project, controlled by civilians for defense of
the general population, a Star Life scenario could be developed.
HOW CAN WORLDWIDE RACIAL INTEGRATION BE BROUGHT ABOUT?
America is the melting pot of the world. By maintaining this attitude and improving on the incidences of
racial discrimination, the example set by America will be proof positive that everyone can live together
Once again, technology will speed up this process with advances in communication and travel. A common
computer language and instant translations by lightweight communicating devices should ﬁnish the
transition of understanding between cultures.
The capitalist political and economic system can make the exchange of goods, services, and ideas a
mutually advantageous transaction for every race and culture. The International Capitalist Party will
keep racial, religious, and cultural bias out of capitalism. A person need only be fair, honest, and hard
working to succeed with positive capitalism.
Integration will be a given factor at the very beginning of the evolution of capitalism. When the process
of evolution is completed, integration will have occurred world wide. The very existence of capitalism as a
political force will guarantee a solution to this problem.
SHOULD SPACE BE CONQUERED INTERNATIONALLY?
Space will be the ultimate in free competition. The last time the world had a new frontier, the English
empire exploded, seeking new markets. The Industrial Revolution was born, and human suffering was
dealt a major blow. Space will demand political freedom for anyone venturing into its vastness. The
politics of force and control, which are so much against human nature, will be dissipated with the new
Space will be a "ﬁrst come, ﬁrst served" society. This will happen no matter what ridiculous rules
governments agree upon. Capitalism will rule because it is the natural way for humans to deal with one
another fairly. The International Capitalist Party will develop projects to assure that this process has a
good start. Even if the party does not succeed in the short run, positive capitalism will inevitably be the
economic choice of the future in space. The people of the world will lose every reason for cooperation with
governments' restrictive rules with such a large frontier to conquer. The goal and the possibilities of space
are so massive that the self-conscious negative behavior of governments will have little to offer citizens.
Cr e a tive Re a l Esta te f or a Ba d Ma r k e t 11 2
Each new world will have a new beginning and an opportunity to live a life of freedom and happiness.
This should be an international goal but one free of international government interference. This does not
mean international governments should not participate in the development. They should only realize that
their power will dissipate in direct proportion to the success of space exploration. A positive government
will not mind this assessment. Instead, an enlightened government will take it as a tribute to freedom.
HOW CAN DICTATORS AND FANATICAL RELIGIOUS
LEADERS BE CONVERTED TO POSITIVE CAPITALISM?
Leaders who use physical or mental force are the last individuals to be converted to anything positive.
If their leadership qualities have any use, perhaps a conversion would be possible. The only method of
conversion that could possibly work would be one that clearly beneﬁts the leaders. Capitalism can show
these leaders, through examples of success in other countries that have adopted positive capitalism, a way
they and their citizens can prosper.
Conversion probably will not happen. Given this fact, the citizens of these countries seemingly face a long
period of hardship. Evolution from the grass roots of these societies, based on a clear understanding of
freedom of the individual, will come. The free countries can only set an example and apply economic and
social pressure for positive change.
The other possibility is the worst solution but also the most likely. These leaders believe in force, and they
will respond to force and respect it. Retaliation against their aggression should be swift and hard. The
force of retaliation should be against the leaders of these countries, with minimum damage done to the
general populace. This should be the policy against terrorists of any political or religious persuasion.
IS A WORLDWIDE REFUGEE PROGRAM POSSIBLE?
The refugee program would be a good opportunity to use the Humanarium project in areas not normally
populated. These refugees are generally not wanted because of the economic pressures they place on the
host government. Conversely, it will be difﬁcult to get people to move into previously hostile climates
for the Humanarium project. A trade off between the needs of refugees and the Humanarium project
could provide a useful solution for everyone involved. Refugees have historically become the pioneers of
any new society. Once again they have a chance to participate in the progress of humanity while saving
themselves. The Humanarium project is probably the most important movement of its time for the future
of humanity. The ﬁrst stage could easily be pioneered with refugees. This stage of the Humanarium
project would be a method to solve the earth'’ population growth problem. The next stage would be
the exploration and colonization of space. The International Capitalist Party has a vested interest in
helping this evolutionary change in human development. Encouragement, money, and political power
will be needed to pursue this positive goal of human survival. The party will add the element of private
enterprise as the major contributor to this process. By following this path, it will guarantee that freedom
and opportunity will be available to the refugees. Integrated into the Humanarium program will be a
cultural retraining computer program to help the refugees adjust to a new culture and environment. This
solution would solve a lot of problems in a natural and positive way.
11 3 C r e a t i v e Real E state for a B ad Ma r ke t
WHERE SHOULD THE INTERNATIONAL CAPITALIST PARTY
PURCHASE LAND TO DEVELOP A MODEL SOCIETY?
Land will be needed for the Humanarium project. Most of it will be in very isolated areas to test the
survivability of the Humanarium. The costs should be minimal, and in some cases there will be no cost
whatsoever. In the beginning, Humanarium colonies will be small and will have very little contact with
the outside world. Capitalism in communities this small will be a moot point, yet each person will be fully
trained in the principles and concepts of positive capitalism. Training of this type will assure a motivated
and free society within the Humanarium colonies. The ﬁrst purchase will be in a desert area to test the
solar and wind energy sources. The project will try to establish a recyclable agriculture economy. Water
will have to be constantly reused in this controlled ecosystem.
Money I earn form real estate activities will be used to make this ﬁrs purchase. But it is not very likely
that I will be able to ﬁnance the entire Humanarium project; membership income will be required to
complete it. Some people and organizations will want to see this project of faster. They can use our
convertible grant membership program or the membership including the individual unit trust. The
complete power triangle of the membership drive will be used to ﬁnance this project.
Cr e a tive Re a l Esta te f or a Ba d Ma r k e t 11 4
How can The International Capitalist Party ﬁt into America'’ political life?
How can the drug problem be solved?
How can we improve education?
What can be done to reduce government regulation and taxation?
Can America'’ environmental problems be solved?
Can the court system be changed to provide swift justice?
Can transfer payments be restructured?
Can the prison system be improved?
Should we expunge all communism from American politics?
What is the opinion of The International Capitalist Party on life and death issues?
Are there political solutions to unemployment?
Can the problem of illegal immigration be solved?
Can we improve on the "BUM" situation in America?
Can the nation'’ growing trafﬁc problems be solved without increasing the income tax?
11 5 C r e a t i v e Real E state for a B ad Ma r ke t
HOW CAN THE INTERNATIONAL CAPITALIST PARTY FIT
INTO AMERICA'’ POLITICAL LIFE?
The three main ways for The International Capitalist Party to ﬁt into America'’ political life are as
1. Promote positive capitalism as a foreign policy.
2. Provide a PAC-like pressure group or lobby to promote positive capitalism within government.
3. Compete with government in solving social and political problems using capitalistic principles.
The ﬁrst way The International Capitalist Party can help shape existing policies is to send out a clear
message about positive capitalism. Current American policy concentrates on democracy only. Capitalism
assumes democracy at the very root. One on one business transactions, voluntarily entered into for the
mutual beneﬁt of both parties, require a system that is a democracy to function properly. Both parties
vote or agree to do business. Both parties vote or agree to the terms and conditions of the transaction.
Both parties are aware that they must both beneﬁt from the transaction if they want to do business with
each other again. This is democracy in action at the lowest level.
Democracy is not only how we choose the individuals who form the government, it is also how we chose
the type of economic system that will prevail in the country. Our present policy is only concerned with
democracy in choosing a leader. With positive capitalism as the economic system of choice, we will
have a back-up system to ensure political freedom. The way foreign policy works now, we can create
a democracy and end up with a dictator or a communist as head of state. This mockery of democracy
happens all too often.
The International Capitalist Party will try to include a political and economic policy to combat this
serious oversight by American policy makers.
Another advantage to this approach is the fact that we can proudly and openly promote a system instead
of having to use covert, CIA-type activities. This approach will help clear up our Ugly American, "Yankee
go home" image. This direct and honest approach to international politics can result in a new respect for
The second way the party can help in national politics is to become like a political action committee
(PAC). Some of the income earned from our capital basis can be used to help elect politicians with the
best records for promoting positive capitalism. The party can also ﬁll the gap sometimes created when
there is no real choice. Periodically the Republicans and Democrats give the public the choice between
two extremists from the same side. This is equivalent to no choice at all. An example would be when two
extreme left-wing candidates go against each other. The International Capitalist Party could ﬁll the gap
by offering either of these other parties a chance to ﬁeld a candidate who temporarily carries our political
party'’ banner. We do not need to compete directly in American politics, but the party could serve as a
safety valve against extremism on either side.
Cr e a tive Re a l Esta te f or a Ba d Ma r k e t 11 6
Should one part or both abandon positive capitalism as its economic system of choice, The International
Capitalist Party should then move to actively recruit and elect leaders. This is not our goal, because there
is no reason to change something that already works well. That does not mean we cannot help improve
the American system, only that the party does not need to dominate the system politically. Our best use is
in countries that need the capitalist message more than America does.
The third way the party can help includes the ﬁrst two but refers to problem solving wherever there is
a political or economic reason to ﬁnd answers. The party will apply the methods and ideals of positive
capitalism in formulating the answers to pressing questions. "The Book of Solutions" will be an ongoing
project of the utmost importance to members. I will start the process, but I do not presume to have all
the correct answers to the many problems that confront today'’ world and the world of the future. My
effort will only be one among many. The difference will be a clear political and economic philosophy from
which others can work. This system has been developed over the ages, and I can only hope to further it
along the way brieﬂy. Capitalism'’ real strength comes from the fact that it is the most natural and fair
way for humans to deal with one another politically and economically. Life will be better when this fact is
formally recognized by as many people as possible.
HOW CAN THE DRUG PROBLEM BE SOLVED?
Drug dealing is a black eye for capitalism. The drug dealers use the capitalist economic system but abuse
the principles of a fair exchange for the mutual beneﬁt of both parties. They also deal in an extremely
negative product. Their product has mental force built into it. They are the worst problem, domestically,
that the party has. America is at the same point that it was just prior to the repeal of Prohibition. The
difference is that this time, instead of letting one dangerous substance into society, there is a list of
dangerous human poisons. The drug using public uses the excuse that they should have freedom of choice
when dealing with these substances. The problem with that argument is that freedom of choice is taken
from them because of the addictive properties in all of these drugs. Some would argue further that this
addiction is the addiction to pleasure. They may have got away with this argument years ago, but science
has proven that disruption of the chemistry in the brain causes physical addiction. The present situation
has force on both sides: The government uses force to keep you off drugs, and the drugs themselves use
force to keep you on them. The only way to put free choice into the drug problem is to remove force
from one side or the other. Government has declared a war on drugs. If they ﬁght this one the way they
did Vietnam, the drug dealers will win. This is the ultimate guerrilla war. The expense in life and limb
will make America'’ Civil War seem like small potatoes. We have a contingency plan at the local level,
provided the federal government decides to follow this path of destruction (see "Local Problems: San
The solution to this problem is to legalize drugs on a limited basis. Make them available cheaply to take
the proﬁt out of the business. This policy will stop the crimes associated with drug trafﬁcking. Limit
distribution to poison centers where anyone who registers, for public safety reasons, can buy drugs. The
drugs should also be labeled with the skull and bones symbol and with full explanations as to the physical
and mental consequences of using these drugs. Labeling will create a small black market for drugs, but
at least the warnings will be there to make a person think twice. Freedom of choice does not mean that a
person will make the right choice.
11 7 C r e a t i v e Real E state for a B ad Ma r ke t
The only other solution is massive government interference, but it is worse than the problem. It creates
three types of criminals: Dope dealers, user/victims, and users who have to commit crimes to support
their habit. This solution causes our legal system to break down at every level. The police spend a great
amount of their time dealing with government created criminals. The courts cannot even get close to
dealing with this problem, and there just is not enough jail space. The net result is less respect for the
most important part of our government, the local police department; a great many people in our society
see the police as the enemy. This system also makes the police look foolish. They do their job, which is
very dangerous, and the criminals they catch are let out with just a warning because of the lack of jail
space and the lack of funds to deal with the problem.
Government has a vested interest in perpetuating the drug problem because it gives leaders a moral issue,
attorneys more clients, judges more cases, police more work, and social services many more victims. The
problem is now beyond their ability to control, and they will have to break this vicious cycle one way or
the other, with maximum force or freedom of choice. The choice is in government'’ hands. It will tend
toward force, but that solution may backﬁre in the government'’ face.
HOW CAN WE IMPROVE EDUCATION?
The best way for The International Capitalist Party to improve education in America is to support the
1. Incentive pay for teachers. This program puts the money where the performance is. Consumers, in
this case the children and their parents, evaluate the teacher, and the teacher'’ performance is rewarded
2. The voucher system, which allows parents the choice of public or private schools without having to
pay for both. When parents pay for private education, they relieve society of a large ﬁnancial obligation,
one that is much larger than what the parents would pay in taxes. Taxpayers without children would
also beneﬁt from this system because of lower taxes. Encouraging private schools is a fair program that
beneﬁts all parties.
3. More "how to make money" courses at all levels of education. Most such programs are available
only through large seminars held at local hotels and convention centers. The purpose of education is
to improve the human species. Money is the applause given to those people who contribute the most to
improving the species, in most cases. We should not ignore or snub this fact in schools. Although there
are glaring exceptions to this fact of life, most people are rewarded in proportion to their contribution to
humanity in a free society.
In a society that is primarily a capitalist economy and practices positive capitalism, the reward for an
individual'’ contribution is in proportion to the beneﬁts to society, with very few exceptions. We need
to emphasize the beneﬁts of positive capitalism in our schools to protect students against the sham of
Cr e a tive Re a l Esta te f or a Ba d Ma r k e t 11 8
WHAT CAN BE DONE TO REDUCE GOVERNMENT
REGULATION AND TAXATION?
The primary goal of The International Capitalist Party politically is to reduce government intervention
wherever appropriate. The elements of communism that are ingrained in any mixed economic society
should be the ﬁrst concern. The most vicious element of communism, and the ﬁrst to be attacked, is
the graduated income tax. For a society that values performance and effort, we have an inhumane and
destructive attitude toward taxes. Any income tax should be structured to motivate high performance
rather than punish it. This single attitude shows legislators' lack of knowledge about the very system that
protects and assures their own personal freedom. They are victims of misplaced compassion and dupes of
the organized resistance to capitalism and freedom.
The national income tax policy should reﬂect "donors" for those who pay high taxes. Tax freedom should
mean that the top net cash paid to the government in income taxes is $50,000 per taxpayer; adjusted
yearly for inﬂation. Then individuals can earn as much as they please and donate additional cash for
honor credits on a voluntary basis. The income from the honors tax should be designated to that area
of government that the "donor taxpayer" so designates. If not so designated by the taxpayer, the money
should be designated by the President.
Even this type of income tax should be replaced by private enterprise solutions to problems that
government has taken on as an excuse for the existence of an income tax. The only exception may be a
defense tax for that purpose only. If the party can'’ remove this most invasive of government intrusions
and abuse, the rest of our freedoms will slowly erode because of government controls.
All anti-tax groups should join under one organizational umbrella and make a clear statement that
cannot be ignored or abused by politicians. The program should include a complete phase out of personal
income tax schemes.
The other major area of regulation that should be removed has nothing to do with communism but feeds
its propaganda machine by providing another example of negative capitalism. This is government created
CAN AMERICA'S ENVIRONMENTAL PROBLEMS BE
Pollution of the environment will generate many new businesses. Every business has at its core a problem
solving mechanism. You might say that a business cannot exist unless it has a problem to solve. This fact
is true. Try to think of a business that cannot be thought of in this way, except for one operating under
People should gravitate naturally from businesses, such as farming and dentistry, that have become so
successful in providing solutions as to render a massive number of practitioners obsolete. If this migration
of effort continues naturally, the solutions will be forthcoming from the market economy.
11 9 C r e a t i v e Real E state for a B ad Ma r ke t
Government enforcement of pollution laws should be directed toward the many departments and
companies that do business either for or with the government. The heavy hand of government on the
private sector will do, as always, more damage than good. If government wants to get into the act, let it
set a good example and provide some tax relief for companies cleaning up their operations.
Science and business are the most compatible parts in positive capitalism. Together they walk the same
path to the many solutions required in cleaning and balancing our environment. The party need only give
them political encouragement and freedom to act in their own best interest. The solutions will fall from
the tree of knowledge as needed by humankind. Political interference rather than encouragement is the
only pitfall in this process.
The Humanarium project has many environmental solutions built into its plans. The many participants
are tuned into current technologies that work and that are proﬁtable.
CAN THE COURT SYSTEM BE CHANGED TO PROVIDE
The court system can be helped two ways by The International Capitalist Party. America has had over
tow hundred years of our personal freedoms being eroded through rules and regulations, which are the
inventions of lawyers and legislators to increase their inventories. Many laws are just plain ridiculous but
not overly harmful. These laws could be easily removed. The toughest laws to change are the ones that
create monopolies, such as the American Bar Association itself. These monopolies are supposedly created
“for the good of the people”, but the people are always the practitioners who are beneﬁting at the public
expense, the lawyers and the politicians themselves. The party will try to recruit sympathetic lawyers and
lay people to help remove and reﬁne laws that inhibit personal liberty and business freedom. Rule makers
should be subject to periodic review because of the irresistible temptation to rationalize and abuse power.
This abuse of power is a natural human tendency, “for the good of the people"; in this case the public, a
body of law should be founded that recognizes this tendency even in people with the best of intentions.
The only thing that will ever destroy this negative tendency within the legal and legislative area is a
positive, organized effort to offset this form of negative capitalism. The removal of the inventory of
damaging laws will automatically reduce court congestion. This subject is as intricate as the law itself and
can only be outlined here to show our basic positions.
The other method to provide swift justice is the movement currently going on to supply private
courtrooms and settlement arrangements to relieve congestion. The International Capitalist Party will
support these efforts and provide a forum to help decide crimes that may fall into the political arena, for
example, monopoly or tariff laws.
Cr e a tive Re a l Esta te f or a Ba d M a r k e t 120
CAN TRANSFER PAYMENTS BE RESTRUCTURED?
Transfer payments must be restructured if there is to be any evolutionary process at all in America.
Transfer payments represent government force and coercion against the best in society for the beneﬁt of
the worst. This fact alone breaks every natural evolutionary law imaginable and is pure communism, the
antithesis of freedom. This is the most classic example of doing something "for the good of the people"
at the expense of ninety percent of the population. If force is to be used, it should be used to motivate the
ten percent who do not contribute to society. Workfare and retraining programs with real teeth in them,
in case of obstinate failure by the participants, and a voluntary one on one program, can change the face
of this problem. All those taking advantage of subsidy programs should be properly identiﬁed as welfare
recipients. Anyone willingly dipping into the government'’ coffers should be placed into this category.
This is a broad policy statement, but it shows the direction that positive capitalism will take in resolving
any dispute concerning individual programs. No person has the right to another person's earnings or
property if said earning and property are fairly and legally earned. The one on one voluntary program
can solve many of the problems that cause and perpetuate the welfare society. This program will use
existing knowledge of the behavior and activities of welfare recipients. A statistical formula concerning
the portion of the national budget allocated for welfare divided by the number of taxpayers would give
a cost per taxpayer of the welfare program. The taxpayer would be given an incentive to intervene with
direct support and training for an individual welfare recipient. The people on welfare should have an
incentive program that doesn't punish them for working. An example would be, where for every three
or four dollars earned by the welfare recipient, only one dollar of beneﬁts are lost. This could be on a
monthly or weekly basis. This policy would help wean the citizen off government dependency.
CAN THE PRISON SYSTEM BE IMPROVED?
The greatest single improvement for the prison system would be to keep single one-time abusers away
from multiple abusers. Some convicts are in jail for a single crime or category of crimes, such as drug
dealing or thievery. These convicts should be motivated to earn their way out of jail and, where possible,
compensate the victims or contribute to a social program that off sets their negative social behavior. Long
sentences should be given, with an alternate motivational plan to substantially reduce the time served on
a performance basis. These volunteer prisoners should go into a private prison institution with proﬁt as
the motive. For a more detailed description of one type of alternative prison system, see the discussion of
the drug question in "local Problems: San Diego, California," following in this chapter.
More attention should be paid to the intermingling of social deviants. Sex offenders should be placed only
with other sex offenders, thieves with thieves, murderers with murderers, and so on. Each of these social
problems can be isolated, and then, if broken into smaller components, the large, so-called impossible job
may become manageable. Each type of deviant social behavior can be studied from a scientiﬁc point of
view. Each behavior type can be treated as a form of mental illness. The cures may even help the general
public directly if such things as brain chemical disorders or other direct cause and effect linkages can
be identiﬁed. We all have a dark side to our nature that could be improved upon. The extreme abusers
can perhaps relieve some of these tendencies in society if scientists can treat prisoners as socially ill. This
proposal does not mean removing all punishment. For some crimes, punishment may actually prove to be
the cure. Now, recidivism rates show otherwise.
121 C r e a t i v e Real E state for a B ad Ma r ke t
SHOULD WE EXPUNGE ALL COMMUNISM FROM
Nothing should be removed from American politics that is just opinion. The problem is one of removing
impediments to freedom and justice, not removing particular political leanings. Communism could
actually exist in America if done on a local, voluntary level so participants could freely move out of
the system. The problem with world communism, as it is practiced, is its arrogant belief in the robot
mentality and the use of force. America is already swamped with communist programs, but nobody will
admit to being a card carrying communist. The reason for having so much communism is that a long
stream of legislative salespersons has created bureaucracies in the name of compassion. The price of
this misplaced compassion has been the state sanctioned slavery of every taxpayer. The International
Capitalist Party will have its hands full just identifying and trying to remove the obstacles to freedom and
justice created by our benevolent elected and appointed parent substitutes (bureaucrats and politicians).
Their resistance will always come in the form of "for the good of the people”. Our job will be to expose
this myth and show the public who these bureaucrats and politicians are really serving with these well
meaning but bankrupt programs. We can quote page, paragraph, and author of each of the rules of
communism and link them directly to these absurd social programs. By merely exposing them in clear,
simple English that anyone can understand, we will either remove an enemy within or become as one with
our enemy. The latter will cause a loss of freedom and liberty that will make the Dark ages seem a bright
time in history.
WHAT IS THE OPINION OF THE INTERNATIONAL
CAPITALIST PARTY ON LIFE AND DEATH ISSUES?
This section is comprised of the three following issues:
1. CAPITAL PUNISHMENT. Capital punishment should be an option for very heinous crimes that
need to be given every possibility of being stopped through punishment and example. The criminal has
taken the life of another by choice and, in this case, has given up his or her own life in return. Only by
showing extreme duress can the criminal expect any leniency by the courts. The problem with capital
punishment is that we will never be able to prove whether it is a deterrence for murder. A carte blanche
attitude toward either murder or capital punishment forgets the many reasons and motivations that go
into the crime. Trying to match punishment with a particular crime will be a test of individual judgment
by judges well into the future.
2. ABORTION. As for abortion, women'’ freedom of choice is the current and correct solution. When
the Star life program has been developed further, the unwanted embryos can participate without any
harm to the mother or society. Use of force without sufﬁcient knowledge is nothing more than a dogmatic
answer to a very personal situation;
3. MEDICAL EXTENSION OF LIFE. Once again, when it comes to the medical extension of life, the
choice should lie with the individual or the individual'’ closest relatives. It should not be a mandate
of force from the government. Discouraging the termination of life should be the policy, but when
termination is chosen freely, the issue should be closed privately and without added harm or punishment
by the government.
Cr e a tive Re a l Esta te f or a Ba d M a r k e t 122
ARE THERE POLITICAL SOLUTIONS TO UNEMPLOYMENT?
If you are talking about one hundred percent employment of those willing to work rather than some
arbitrary percentage of those able to work, the solution is a free market economy using positive
capitalism. In our unemployment ﬁgures, we would include anyone involved with negative capitalism.
These people may be technically employed but are actually contributing to the destruction of an
economy and therefore would be considered a debit on any reasonable balance sheet. The employment
of people to dig holes just to have the holes ﬁlled the next day is a ridiculous concept that shows a
gross misunderstanding of the creation of wealth. People who promote jobs like this think money is
just printed, not earned. This category of thinking includes a lot of government activities. Union and
minimum wage laws contribute considerably to unemployment problems. License and certiﬁcation laws
also must be put on a very short leash; otherwise, these government created monopolies contribute to
unemployment. Tariff and import laws solve short-term problems and create long term suffering in any
industry that tries this method. The long-term suffering will come with the loss of international markets,
causing unemployment. In all of the above situations, people are trying to get something for nothing or an
undeserved proﬁt. Employment will only be stable when people learn that labor is a commodity that goes
at a market price set by willing buyers without force or coercion. Quality work will always earn more,
and shoddy workmanship will always have trouble with free employment practices. There is no political
solution for laziness or lack of ability except for self realization by the individual.
CAN THE PROBLEM OF ILLEGAL IMMIGRATION BE
Only by making this country into a less desirable place to live in can the immigration problem be totally
solved. Some people will do anything to be free, and as long as this country is perceived to be free, they
will persist. The expansion of positive capitalism will create economies in other parts of the world that
will foster free citizens with little interest in immigration to a country just because it's called America.
Freedom from government is the only reason people want to come to this country. If we can help
them attain this ideal in their own country, they will naturally prefer their homeland. There is nothing
inherently better about America except for its history of freedom from government intervention in the
citizens private and business lives. Another way to stop illegal immigration would be to continue our
current policy of increasing the size of government. This will make us so much like the Third World
countries that those people will lose all motivation to leave their homelands.
Free trade agreements will go a long way to accomplish the above goals. Immigration could be a dead
issue in the Americas by the turn of the century if trade agreements are properly structured by the
123 C r e a t i v e Real E state for a B ad Ma r ke t
CAN WE IMPROVE THE "BUM" SITUATION IN AMERICA?
At ﬁrst glance, this seems like a rather heartless question. First one has to deﬁne terms. A "Bum"
is a person who has chosen a negative lifestyle that is offensive to society. We are not talking about
the homeless who are in an unfortunate position through very little fault of their own. The true bum
mentality is earmarked by the individual'’ ability to manipulate compassionate systems and people for a
quick ﬁx way of life. This behavior is accompanied by a chemical abuse problem that is usually at the root
of the antisocial behavior.
Human motivation is basically simple. People are motivated by either the carrot or the stick. The true
bum isn't interested in fame or fortune and has given up on success, frequently because of chemical abuse
or in conjunction with other personal problems. Jail and poverty level living standards should be enough
to motivate a person if the stick approach could be used to motivate a bum. It’s obvious, however that
none of these approaches work. So what is the fate of these individuals? Quite simply, it's an early death.
They are really committed to social suicide. They are letting the natural elements of society kill them with
little or no resistance. They are almost daring society to do something about their situation.
This party's solution is an attempt to take them up on this proposition while minimizing the cost to
society. We will actually attempt to make a proﬁt by starting a "Bum City" with a Humanarium
construction project in the center. This city will be in the most remote part of the country that we can
ﬁnd. There won't be any road into or out of the area. Everything will be brought in by air. Because
the Humanarium community is totally self-contained and independent from local political control, it's
residents won't be able to feed on federal and state programs. Our approach is a basic survival program
aimed at training the participants in the art of self-reliance. We will teach them survival techniques and
keep them far away from harmful chemicals. They will then be trained in several basic skills that will
produce a proﬁt, from which they will pay the party for their training. Upon completion of the program,
they will be returned society or be allowed to remain as an inhabitant of the Humanarium community.
The program will require the cooperation of the police and judges in identifying the chronic offenders
within each city. The judges will then have to either sentence the individual or get a voluntary statement
of participation by the offender. The truly needy should be directed to social service or charity programs
unless they feel that a survival program would be helpful in training them for life situations. This will
be kind of an adult Boy Scout and workfare program aimed at curing the problem and turning a small
proﬁt for everyone involved.
Cr e a tive Re a l Esta te f or a Ba d M a r k e t 124
CAN THE NATION'S GROWING TRAFFIC PROBLEMS BE
SOLVED WITHOUT INCREASING THE INCOME TAX?
To do so, just give private industry leasehold routes for the airspace, mineral rights, and excess land
rights so it can build privately owned and maintained alternate transportation systems. The combination
of automation in both the vehicles and the transportation systems will allow for cheaper and better
transportation. Use bar code laser technology similar to pricing technology at the supermarket. Citizens
who decide to use an alternate transportation system are issued a laser sticker that is applied to each
vehicle, for billing purposes. This will eliminate tollbooths and trafﬁc congestion. Overhead laser
monitors can register mileage, and script or vouchers can be used for tax rebates for the users.
Those who still believe in something for nothing can continue to use federal and state roads and continue
to pay for them by paying their regular taxes without a rebate.
The leasehold income that the private companies pay for the right to use the routes can be a source of
additional moneys earned by the government and can be earmarked to replace tax income. This program
would have the effect of lowering taxes and giving private industry a chance to give us the best possible
transportation systems and the best price and a clear proﬁt motive for innovation in the industry.
125 C r e a t i v e Real E state for a B ad Ma r ke t
SAN DIEGO, CALIFORNIA
The following are just a sample of existing problems and solutions, included more to demonstrate a
format than to exemplify perfect solutions. Local problems are the most sensitive politically because of
the many factors involved, including local customs and personalities.
What can be done about population growth in the area?
Is there a possible solution to the airport noise?
Can illegal immigration be turned into a positive situation?
How can the party tap the resources of the youth gangs and turn their
activities in positive directions?
Can the local drug problem be solved?
Can Southeast San Diego be revitalized?
Cr e a tive Re a l Esta te f or a Ba d M a r k e t 126
WHAT CAN BE DONE ABOUT POPULATION GROWTH IN
The San Diego area is a natural environment for people due to its mild climate and proximity to
recreation of all types. Resistance to natural migration by using government force, which shows a
disregard for other people, can be done on an individual basis but should not be forced on everyone.
Many people invest in this area because of future growth. The government should not have the right to
depreciate natural real estate values with oppressive policies. No bureaucrat or legislator can do a better
job of developing property than the owner or developer following the free market system. If you don'’
believe this, all you have to do is go to a state planned country. A voluntarily planned portion of San
Diego, with consent or reimbursement to individual landowners, can let government planners ply their
trade. What should be required of these planners is a contractor' license , a degree in architecture, and
their own capital invested in their grandiose plans for other people'’ property. The result would be the
typical cost overruns, shoddy workmanship, and a mediocre, bland architectural style.
San Diego was a semiarid desert able to support but a handful of inhabitants with very few plants.
Because of far sighted developers who were willing to risk everything, San Diego is now a Mecca of
beauty and perfection. This beauty, purchased freely by homeowners, is now in danger of being denied
to others by tying the hands of the very developers who created the beauty to begin with. A fair balance
must be struck to prevent no-growth people from hoarding and controlling their neighbors' property.
The no growth attitude is particularly devastating to smaller contractors and developers, the backbone
of American progress. The no growth policy causes a government created monopoly in construction, with
only the very large contractors having any chance to build.
During a period of recession, one doesn't hear a word from the no growth advocates. With businesses
moving out of the area because of government policies, we can see the real results of a no growth attitude
in a community, no prosperity.
IS THERE A POSSIBLE SOLUTION TO AIRPORT NOISE?
San Diego'’ population is spread throughout the county with very little open space large enough for an
international airport. The possible sites all have something wrong with them. This problem is almost
impossible to solve without a very large stretch of the imagination. The following is a list of requirements
for an airport of international stature:
1. Large enough area 2. Close to downtown and the convention center
3. Safe 4. Minimum ﬂights over populated areas
We also have another controversy in San Diego about offshore drilling. The environmental problems
seem to outweigh the huge ﬁnancial beneﬁts that could be derived from a healthy oil industry in San
Diego. The current problems and requirements for offshore drilling are as follows:
127 C r e a t i v e Real E state for a B ad Ma r ke t
1. Drilling rigs are eyesores that offend the esthetic tastes of most people and therefore building them in
the middle of San Diegos’ natural beauty could have a negative economic impact.
2. Leaks and accidents could be harmful to sea life and shoreline.
3. Currently, oil costs relatively little but drilling costs a lot.
The answer to both environmental problems could be a combination of solutions. The government
could motivate the oil companies to build a futuristic, privately owned, beautiful mini-city around an
airport supported by disguised offshore drilling rigs meeting tough safety requirements. By making the
total operation privately owned, with major tax breaks, this solution won't cost the government. The
only problem will be for oil companies to ﬁnd a way to make a proﬁt. The beneﬁts to consumers will be
enormous if this plan can be implemented.
CAN ILLEGAL IMMIGRATION BE TURNED INTO A
People who come to this country illegally realize that the economy of their homeland doesn't allow
freedom of opportunity. They become a problem here only because of the fear we have of being overrun
with too many people seeking this economic freedom. The immigrants don't come here because they love
America or Americans. If their country didn't have oppressive economic laws, most would prefer to stay
The American government isn't in a position to interfere with other countries' laws except by setting
an example of a free economy. The opposition to this freedom has a full body of political and economic
theory that can be made to sound plausible. Communism or Marxism can be imported into any country.
The system is independent of a foreign government. This gives them a propaganda edge.
The International Capitalist Party will attempt to ﬁll this political gap. San Diego would make sense as a
base for this attempt in the Latin American countries because of the relatively good relations between the
people of San Diego and the Mexican people. One of the best ways to obtain motivated members for our
party in some of the countries would be to gain access to illegal immigrants. These individuals are already
active in trying to better themselves and their families. The natural direction for them would be to import
a system that could change their homeland through evolutionary change.
The party will attempt to get cooperation from ofﬁcials for a training class for all illegal aliens before they
are returned across the border. If this isn't possible, the party will inﬁltrate illegal alien groups before
they are caught.
The training will include a method of networking that should expand the party's membership
signiﬁcantly within a short time. The party will give illegal aliens a money making method that will
motivate them to accomplish this goal.
Cr e a tive Re a l Esta te f or a Ba d M a r k e t 128
HOW CAN THE PARTY TAP THE RESOURCES OF YOUTH
GANGS AND TURN THEIR ACTIVITIES IN POSITIVE
The gang problem is a combination of several obvious situations in society: the drug problem, inadequate
housing, and lack of jobs. Areas like Beverly Hills and La Jolla, California may have a large number of
drug abusers, but the people living there don't have the other two problems. Gang mentality is based
on so-called pride in local turf. This pride is twisted into a backward and negative type of rock and roll
nihilism. To have pride in something and at the same time revulsion for the reality of the slum causes this
THE PROBLEMS’ POSITIVE ASPECTS
Drugs Capitalist sales techniques used to distribute drugs
Run down neighborhood Pride in local turf
Lack of jobs Youthful energy, resourcefulness, ﬂexibility and talent
The drug and housing part of this equation are treated separately following this section. Jobs will be
the main concern in this section. If one takes the positive aspects out of the above problems, there is an
The ﬁrst major solution that will overcome rock and roll nihilism is to take the glamour out of being a
gang member. The media must get on this bandwagon with in depth stories of the misery perpetrated by
these gangs and show a contrast of the gangs that stay together to accomplish positive things. Perhaps
a movie showing the very big possibility of the adult non-gang members of the community banding
together in an exaggerated extermination of gang members would show the ultimate and deﬁnite end to
the gangs' continued violent existence.
The solution would lie within the gangs themselves. A plan developed with each individual gang would
use its positive aspects within the neighborhood to give the members jobs, pride, and a purpose in
revitalizing their own neighborhood. Money making techniques, as well as skills, must be developed. An
actual corporation should be formed, using the gang's name and colors. Each member would own shares
and earn bonuses given in shares for work well done. This method will keep alive the feeling that each
gang member talks about, the feeling of belonging to a family.
This program obviously won't work if the drug problem persists, because chemical dependence causes
intense irrational behavior in anyone using drugs. There can be no rational approach until drugs are
considered dumb or cool by the members of gangs. This subject will be dealt with in the next section.
129 C r e a t i v e Real E state for a B ad Ma r ke t
CAN THE LOCAL DRUG PROBLEM BE SOLVED?
The main problem in San Diego is the lack of jail space for drug dealers. The solution to this problem is
turning negative capitalist into positive capitalist by using the following methods. Drug dealers abuse
capitalist techniques. They use distribution, manufacturing, and sales techniques that would make them
successful in most legitimate businesses. They choose to abuse their own talents. Their mentality is very
similar to the Nazis. They rationalize their participation in the marketing process by saying their victims
would just purchase drugs from someone else if they didn’t supply them.
The only semi legitimate argument the dealers have for pushing drugs is that other negative capitalists
manage to get their products, cigarettes and alcohol made legal and popular. These commodities were
legalized before the scientiﬁc evidence was in place to prove how dangerous they really are. What the
world needs is less negative capitalism, not more. The dealers' argument is like Nazis saying that, because
they've already gassed three million Jews, we can use that as an argument to kill the rest of the Jewish
Drug dealers also are like Nazis in that they not only poison people but torture them ﬁrst. The fact that
most of them also use drugs only shows how insidious the system of drug dealing is. This factor should be
taken into account when grading the different types of drug dealers:
A. Nonuser, manufacturer and wholesaler
B. Nonuser, retailer
C. User, small-time manufacturer and wholesaler
D. User, retailer with assets
E. User, retailer to support habit
Each of these dealer types should be treated separately. The more severe treatment should be meted out
to those at the top of the list. Most of the laws already conform to this list. The program that follows will
also conform to this pattern. Drug dealers are salespeople going in the wrong direction. By redirecting
their efforts into our maxi-level membership program, the dealers will pay for their own keep and help
pay for their victims' treatment.
The beginning of this process will be a membership drive, with the proceeds going to the construction of
a private jail. The members will be given a unit, in the form of a variable net income trust deed, per one
hundred dollars collected. The income will be derived form a membership program with the prison.
The cost of building a prison of this type will be approximately one hundred dollars per square foot,
including the land. The average square footage per dealer, including the inside common areas, would be
ﬁve hundred square feet. The amount of living area per dealer would be proportionate to the dealer'’
success with maxi- level membership drive. This is an initial outlay of approximately ﬁfty thousand
dollars per prisoner. This outlay includes many security devices and a sophisticated telecommunications
network within the prison. The initial outlay also includes a private kitchen and bath. Each unit could
best be described as a studio apartment.
Cr e a tive Re a l Esta te f or a Ba d M a r k e t 130
The telecommunications network will be the way that the inmates will market memberships. The phone
system will be programmed with number that the dealer will call. The inmates will have no choice with
the dialing system, to prevent abuses. Follow-up and recalls will also be monitored with a computerized
security system. To the initial ﬁfty thousand dollar cost per unit must be added the cost of food, medicine,
and security ofﬁcers. A business run by the inmates that shows a proﬁt would be the ultimate goal. This
proﬁt can then be split between drug rehabilitation programs and owner/member of the institution.
Judges will have to decide on their own personal formula for each individual. The program will conform
to each sentence. Just in case you have any doubt as to whether the government has anything to do with
the encouragement of drug use in this city and many others, ponder this situation; Every drug offender
that is released on parole is given scheduled urine drug tests. Every felone knows that all you have to do
is stay clean several days before the test and then they can resume using. They also keep a spare dosage of
someone else'’ urine around in case of a surprise visit. Now, you either have to draw one of two different
conclusions, either the government is encouraging drug use or the parole ofﬁcers are some of the dumbest
people in the world. You decide who is guilty!
CAN SOUTHEAST SAN DIEGO BE REVITALIZED?
Southeast San Diego is located in an area that should be very valuable residential property. There is only
one equitable and relatively fast way to encourage a new look for the area. Because of new apartment
projects in the area, a residential single family home designation won'’ work. The other choice is a
high-rise area that will attract developers because of the low cost per unit of land. This area would be
extremely good for high-rise development because of the natural ocean and city views. The change
should be accompanied with a complete explanation of the increases in value so the homeowners are
prepared rather than abused by the change. Advance ﬁnancial planning for these owners should be
part of the package to assure a fair market price for their property. There should also be a ceiling price
to prevent obstruction by owners. A correct and just balance has to be struck because of the nature of
existing government control over the property. If this isn't done properly, people with political pull will
take "advance knowledge" advantage of these owners. Advance knowledge by owners also creates a false
value in the minds of the owners and will discourage development. The biggest political problem will
come from renters in the area. They will represent a block of voters trying to keep the area distressed,
using misplaced compassion as their tool. Two things can be done to defeat this political problem. The
ﬁrst is a "renters moving committee" that concentrates on the relocation problems of tenants. Developers
of low cost housing should be the leaders of this group so it provides concrete answers rather than just
being a complaint committee. These experts can turn a very negative situation into a positive experience
for everyone will to put forth effort rather than just complain. The other solution will be to get active
support from voters outside the depressed area. These votes can offset the negative vote from the renters,
but they shouldn't cause an impossible situation for the renters. This political power should coordinate
with the renters movement committee to assure a compassionate change. The above solution sounds like
more government intervention. This is because of the existing controls. If normal transition took place in
the market, it would be very similar in nature to this solution. The biggest variable would be the actual
prices paid by the developers. Without a master plan for the entire area, individual developers would
be taking more of a gamble and would demand lower land costs to offset the uncertainty of conforming
projects. In the later stages of development, land prices would be higher for the holdout owners. A
balance of values will have to be struck between the owners and the developers because of the intense
government control already in place in the area.
131 C r e a t i v e Real E state for a B ad Ma r ke t
Can more population growth be stimulated in this area?
Can the petrochemical industry be expanded?
Should The International Capitalist Party invest in this area?
CAN MORE POPULATION GROWTH BE STIMULATED IN THIS AREA?
Houston is the only large city that allows and encourages development with very minimal government
interference. This political position has always been the key to Houston'’ success and should continue to
be so. Perhaps a direct advertising campaign that emphasizes this heroic freedom in the face of massive
federal constriction of rights could get the message across. Creative freedom in business is at a premium
in many areas of the country. Sometimes the problem is a direct government measure, such as a no-
growth initiative. Creative developers become enemies to society, and many times their personal initiative
dies with the dream. The advertising mentioned above should give special attention to these backward
areas to reach some of these special people. Another area of expansion would be a worldwide search
for creative business people with an emphasis on free positive capitalism as their personal policy. This
should attract new ideas into the area. The International Capitalist Party will attempt to purchase an
empty or near empty ofﬁce building and develop percentage leases for new entrepreneurs. The party will
headquarter its entire operation in one of these buildings.
One of the Humanarium projects can be constructed in Houston, with encouragement from government
rather than resistance. This site should be very commercially oriented rather than pure experimentation
like the desert Humanarium. The Houston Humanarium project should be constructed and owned with
partners in the local petrochemical business. When this project is successful as an example of a self-
contained community, the ideal of a minimally governed community can be situated anywhere without
concerns about weather or location. Space will be the ultimate use for commercial, self-contained
habitats. The Humanarium will be a center for the development of this idea.
Houston is also a natural place to bring in refugees from countries having political upheavals. A
conversion program with a proﬁt motive should be implemented aggressively to encourage migration
into the area. These people can be trained and housed in Humanarium type structures without assistance
from government agencies. This will help stop the political resistance from blocking immigration into this
Houston has been pointed out as one of the worst places to live because of environmental health concerns.
This situation coupled with fact of minimal government force through regulations gives the local business
community an opportunity to clean up their act without being coerced by government ofﬁcials. The clean
up of local water and air pollution or the control of these factors, could give Houston something new to
Cr e a tive Re a l Esta te f or a Ba d M a r k e t 132
CAN THE PETROCHEMICAL INDUSTRY BE EXPANDED?
Oil is a limited resource. It can'’ be manufactured or grown. So why do we burn it? The long term results
will be the equivalent of killing all the ﬁsh in the oceans. It doesn't make sense to abuse this natural
asset. The question then is how to make this a market decision rather than a political decision. How can
oil become as proﬁtable as a building material as it now is as a fuel? A massive demand must be created
for total environmental communities constructed with petrochemical products (Plastic). Once again, the
Humanarium project with its integrated scientiﬁc systems provides a futuristic answer to this problem.
Every part of a Humanarium should be recyclable as indeﬁnitely as possible. Plastic provides the
recyclable building and parts material necessary for the success of the Humanarium project. Wood, metal
and cement products all have their uses but lack the total ﬂexibility of plastic materials. This specialized
use for the self contained recyclable Humanarium project will make domestic oil too precious to burn.
The message to consumers in America could become "build with domestic oil, and burn imported oil”.
This policy could be of use until a viable alternate energy system evolves. This change of policy could
make marginal oil ﬁelds into self contained Humanarium communities. The well could be the center
of the community, with a small reﬁnery and computer controlled extruder completing the cycle of
construction and perpetual renewal and growth.
These communities can be constructed in former barren areas wherever oil is present. The economies of
these communities should also be self contained and independent of other communities as an experiment
for space colonization. Later, a product line should be developed for trade as a backup system without
jeopardizing the primary goal of an independent community.
SHOULD THE INTERNATIONAL CAPITALIST PARTY INVEST
IN THIS AREA?
Houston will be the primary investment area for The International Capitalist Party at the beginning of its
evolution. The reason is the community'’ political attitude and consistent policy of encouraging positive
capitalism. In short, the party won'’ have to ﬁght City Hall. Local politicians may not endorse our ideas,
but at least they won'’ try to stop them. That assurance is enough to get the party off to a good start. To
me, this attitude translates into friendly neighbors and a free political economy. Another major reason
for the party's choice of Houston as a base is the petrochemical business that drives the economy of
Houston. The party'’ goals are very compatible with this industry. Our commonalty of goals should lead
to a remarkable political and economic relationship if properly developed.
The party'’ headquarters will be in Houston. Ofﬁce space is over built in the area, and party should be
able to solve some very serious economic problems for the owners of several of these ofﬁce buildings. A
conﬁdential plan to solve some of these problems has already been developed. The party will implement
the solution as soon as the time is right. At the present time, the party is checking each individual
opportunity in the area.
The next type of investment will be a location that includes an oil well, to be developed as a Humanarium
community. This location will be as close to Houston as possible for maximum exposure to our project.
If our membership drive interests some professional oil people, we can then recruit their assistance and
expertise for the Humanarium project. This assistance will be on a mutually beneﬁcial basis consistent
with ideals of positive capitalism.
133 C r e a t i v e Real E state for a B ad Ma r ke t
The complete works of Ayn Rand
Walden and civil disobedience – Henry David Thoreau
The philosophy of John Stuart Mill
The wealth of Nations – Adam Smith
The complete works of Rose and Milton Friedman
A history of western philosophy – Bertrand Russell
Selected works of Aristotle
The Constitution of The United States
Trilateral over Washington – Anthony C. Sutton & Patrick M. Wood
The complete works of Karl Marx and Frederick Engels
The Prince – Machiavelli
The cross and the sacred mushroom
The Koran – Mohammed
The dagger of Islam – John Lafﬁn
Cr e a tive Re a l Esta te f or a Ba d M a r k e t 134
ABOUT THE AUTHOR
The author of this book is also the owner of the I.C.P. He states that the reason for his ownership is to
illustrate the principles involved in the value of ownership. With a background of over thirty years in the
real estate and investment markets, his belief in private ownership over public ownership is profound.
His ownership of this organization is for sale for one billion dollars. The money will stay in the party to
accomplish as many of the goals as possible. These goals are clearly deﬁned in this book. It is only for
sale to a single individual. This is to emphasize the importance of each person’s contribution to society by
The author, Barry Bowdidge, has been a tax protester to conform with the principles of positive
capitalism since the beginning of The International Capitalist Party on July 4, 1976. While an ardent
believer in the law, he has seen ﬁt to live below the legal poverty level for this period of time. He reasons,
that even if they do process his protest, it will be a waste of tax payers money because he wouldn’t owe
them anything when the accounting is completed. Legal poverty in America is not a pleasant thing, but it
does allow a person to survive and even thrive if they are prudent with small resources.
During this period of time, Mr. Bowdidge painted hundreds of pictures, wrote several books and
pursued his study’s privately. He’s studied all the great philosophers and different schools of thought
in psychology. He’s studied genetics down to the atomic level with an emphasis on brain and nerve
chemistry. He’s trained himself to build, use and program computers.
As a lifetime individual entrepreneur for all but three years in the military, he has been forced to
participate in a political system that too often abuses the American Dream. He states “that he had hoped
that someone else would do this job,” but it never happened. He has now committed the rest of his life to
building the I.C.P.
He knows that his life will never be the same once this journey is begun. He has decided to go down this
road in a spirit of fun and adventure. He’s even started designing a video game with all the government
monsters and pitfalls that he will encounter. It is obvious that this game will have to be updated every few
The author has avoided all types of degrees in order to insure non conventional thinking as a survival
tool. This method is not recommended, it just has to do with knowing oneself. He prefers to teach himself
a discipline by interpreting books and information without someone else’s opinion. This is not to say that
he hasn’t attended many schools and colleges, it’s just that he only took the classes he wanted.
At nineteen, he started into the barter world big time. He became a California real estate agent in Santa
Barbara. As a personal favor to a mutual friend, one of the top ﬁrms there hired him, Sunset Realty.
The broker at Sunset was very fair and objective about the situation. He told him that he couldn’t have
a desk and that he would only allow him to use the ofﬁce for a ninety day period. He wasn’t trying to
be mean, as anyone that knows Silvio would tell you, it’s just that in his heart he didn’t think someone
his age could survive in real estate. Silvio thought he would just learn a hard lesson and then move on
to something else. Or as the saying goes, fools go where angels fear to tread. He heard this saying many
times but it wasn’t until much later that he would realize it’s full meaning.
135 C r e a t i v e Real E state for a B ad Ma r ke t
That year he became the second highest grossing agent in the ofﬁce and obviously received a desk and full
support by the broker. His method of survival was to specialize in tax deferred real estate exchanges. This
was back in the early nineteen sixties when the government had just begun to conﬁscate property and
over regulate all form of investments and businesses. Real estate was still fun. It took almost thirty years
for the government to destroy the joy of doing real estate exchanges as a broker. He recently let his license
expire permanently, just as he had his registered representative license with the Securities Exchange
Commission. Some of the other casualties where his California insurance and annuities license and his
Federal commodity options license. He received that license in the ﬁrst group ever issued a commodity
options license in this country. The only license he currently has is his drivers license and he would like to
get rid of that. Just joking!
At age twenty one he had accumulated enough passive income, without getting into any debt that wasn’t
covered by rental income, to retire. He played golf for about six months and realized that retirement
would never be a goal of his. He did try it two more times. One time to draw hundreds of pictures and
another time to write several books. He is the author of “The Evolution of The International Capitalist
Party” which is a very serious political book and “The Blue Guppy” which is a tongue and cheek
interactive novel about the conﬂict between the environmentalists and the entrepreneurs in California.
Each time, his retirement activities drove him back to doing what he really likes to do the most, trading,
exchanging, bartering or whatever else it can be called.
He is currently studying computers and brain physiology. If you get an opportunity to read his other
books, you would see how that all ties together. Believe it or not, these studies are to help close a concept
real estate exchange. If that deal is consummated, he’s promised to write another “How To” book about
the transactions that went into the making of his concept exchange.
For those of you that aren’t afraid to be spiritual, think of this organization as a church with as many
gods as there are people in the Universe.
Cr e a tive Re a l Esta te f or a Ba d M a r k e t 136
(C) 1996/2007 by Barry Bowdidge. All rights reserved. No part of this material may be
reproduced, translated, transmitted or stored in a retrieval system for public or private use
without the written permission of the author or publisher.
137 C r e a t i v e Real E state for a B ad Ma r ke t