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Creative Real Estate for a Bad Market


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  • 1. TABLE OF CONTENTS Introduction SECTION I – Real Estate Trade Secrets Legacy Real Estate First Time Buyers Holdover Subdivisions Execotel Condo-plex Upside Down Commercial Real Estate Business Cycles Apartments Office Buildings Shopping Centers Industrial and Manufacturing Properties Bad Farm Years Situational Enhancements REIT of REITS Condo Quarters Leftover Timeshares Homeless Solutions Buffer Building Sweat Equity Trades Real Estate Games
  • 2. Converting Digital Credits (Barter Dollars) into Cash Community Apartments Undivided Interest in Recreational Developments Space Condos Flow Charts Classified Advertising Forms 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 Wish List Digital Credits and Barter Strategy Links to Barter and Digital Credit Organizations BBC – 3000 Restaurant Delivery Service Plus Barter Book Contact Management Opening Day Cash Conversion Other Case Histories Forms
  • 3. SECTION III – Book of Solutions Universal Problems International Problems National Problems Local Problems Bibliography Internet Links ABOUT THE AUTHOR
  • 4. INTRODUCTION 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 Internet. 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.
  • 6. 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. Conventional Items • 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 Non-conventional Items • Approximately two thousand five hundred genetic designs g • An international political party ( • 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
  • 7. Non-profit Structure 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. g 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. Recreation Vehicles 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
  • 8. 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 and animals. • 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 public building. • 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 population. 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: 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
  • 9. • • Drawing programs • Genetics • Animation • 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 structure. 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
  • 10. 12 Cr e a t i v e Real E state for a B ad Ma r ke t
  • 11. DOM SYNOPSYS 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
  • 12. DOM BUDGET 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. ITEMIZED EXPENSES: *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
  • 13. 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 market again. 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
  • 14. 16 Cr e a t i v e Real E state for a B ad Ma r ke t
  • 15. HOLDOVER SUBDIVISIONS 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 contract. 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 better liquidity. 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
  • 16. 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 process. 18 Cr e a t i v e Real E state for a B ad Ma r ke t
  • 17. Cr e a tive Re a l Esta te f or a Ba d M a r k e t 19
  • 18. EXECOTEL 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: Purchase: $1,800,000 Development costs: $200,000 Total: $2,000,000 Developer resells each unit for $1,000,000 based on the income numbers as a hotel situation for a total of $4,000,000. (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 Execotels. 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
  • 19. Cr e a tive Re a l Esta te f or a Ba d M a r k e t 21
  • 20. CONDO-PLEX 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: 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
  • 21. Cr e a tive Re a l Esta te f or a Ba d M a r k e t 23
  • 22. UPSIDE DOWN 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
  • 23. Cr e a tive Re a l Esta te f or a Ba d M a r k e t 25
  • 24. 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. APARTMENTS 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 slump. 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. SUGESSTED EXAMPLE (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: for coupon examples) OFFICE BUILDINGS 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
  • 25. FIRESALE – A distressed sale for any number of reasons. In this case they were both personal and tax reasons. 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
  • 26. 28 Cr e a t i v e Real E state for a B ad Ma r ke t
  • 27. INCOME EVALUATION 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
  • 28. SHOPPING CENTERS 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. ( 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 promoted. 30 Cr e a t i v e Real E state for a B ad Ma r ke t
  • 29. 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
  • 30. 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 the project. • 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 farms. • 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
  • 31. SITUATIONAL ENHANCEMENTS 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 diversified portfolio. 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: (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
  • 32. R E IT O F R E IT S P o r tf o l io Manager 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 401 K 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
  • 33. CONDO QUARTERS 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 RESALE TOTAL 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
  • 34. 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 W 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 Fall 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
  • 35. LEFTOVER TIMESHARES 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 exchange specialists. 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, California. • 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: players Cr e a tive Re a l Esta te f or a Ba d M a r k e t 37
  • 36. 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 HO USE H ome 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
  • 37. HOMELESS SOLUTIONS 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 commercial use. 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 completed Cr e a tive Re a l Esta te f or a Ba d M a r k e t 39
  • 38. 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 • Games • 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
  • 39. 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
  • 40. BUFFER BUILDING 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 resolve. 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 pollution. INSERT IMAGE HERE Replace the above image with rendering of the Buffer Building concept Some of the possible designs could include: • 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: p p 42 Cr e a t i v e Real E state for a B ad Ma r ke t
  • 41. 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
  • 42. 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
  • 43. 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 qualifies. 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
  • 44. 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 C ondo 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
  • 45. REIT BONDS 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 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: DEVELOPMENT PROFORMA • 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
  • 46. UNDIVIDED INTERESTS IN RECREATION DEVELOPMENTS 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: DEVELOPMENT PROFORMA • 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 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
  • 47. FLOW CHARTS • Legacy Real Estate • First Time Buyer • Holdover Subdivisions • Execotel • Condo-plex • 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
  • 48. CLASSIFIED ADVERTISING • 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
  • 49. FORMS Real Estate Purchase Real Estate Exchange Option to Purchase Real Estate Lease Option to Purchase Real Estate Condo Conversion Timeshares Limited Partnership Limited Liability Corporation Corporation Non-profit Corporation Real Estate Investment Trust Stock Exchange IRS Cr e a tive Re a l Esta te f or a Ba d M a r k e t 51
  • 50. 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 lease option 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 deed. 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 insurance proceeds. 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
  • 51. 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. Optionor: Optionee: State of: County of: 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 (Seal) 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 dollars invested. 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
  • 52. 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. Other Requirements 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 a REIT. 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
  • 53. 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 section 856(d)(8)). 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 day. Cr e a tive Re a l Esta te f or a Ba d M a r k e t 55
  • 54. 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. Note. 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 preparer to: 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
  • 55. 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). Form 4626. Form 4136. 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 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
  • 56. 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 applicable. 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
  • 57. 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 reasonable cause. 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
  • 58. Other penalties. Other penalties can be imposed for negligence, substantial understatement of tax, and fraud. See sections 6662 and 6663. Accounting Methods 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: Cash, Accrual, or Any other method authorized by the Internal Revenue Code. Accrual Method 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
  • 59. Accounting Period 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. Note. 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. 538. 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 $3). 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. Recordkeeping 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 returns. Cr e a tive Re a l Esta te f or a Ba d M a r k e t 61
  • 60. 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 Foreign Entities. 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 related transactions. 62 Cr e a t i v e Real E state for a B ad Ma r ke t
  • 61. 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 partnership). Owned at least a 10% direct or indirect interest in a foreign partnership while U.S. persons controlled that partnership. 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 10%. 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 separate instructions. 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
  • 62. 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 benefits. 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. Note. 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. Statements 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 1.1503-2T(g)(2). 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 Notice 2005-70. 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
  • 63. 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
  • 64. Introduction 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 status. Chapter 4 includes separate sections for specific types of organizations described in section 501(c). 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
  • 65. 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 section. 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, DC 20224 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 correspondence. Cr e a tive Re a l Esta te f or a Ba d M a r k e t 67
  • 66. SECTION II Introduction to Barter 68 Cr e a t i v e Real E state for a B ad Ma r ke t
  • 67. 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 of money. 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 currency. 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 minimum. 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
  • 68. (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
  • 69. 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 madness. 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 exercise. 71 Cr e a t i v e Real E state for a B ad Ma r ke t
  • 70. 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 YOUR LIFE 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
  • 71. 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. WISH LIST 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. BBC-3000 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
  • 72. RESTAURANT DELIVERY SERVICE PLUS Rent, Employees, Gas & Electric, Delivery Vehicles, Tuxedos, Food Containers, Printing FAX machine/modem, Computer Software, Advertising, Telephone, Fees & Permits Signs BARTER BOOK 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 government obligations. 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
  • 73. AGREEMENT 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 _______________________________________________ ___________________ _____________ FIRST PARTY..................DATE ___________________ _____________ SECOND PARTY............ DATE 75 Cr e a t i v e Real E state for a B ad Ma r ke t
  • 74. 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
  • 75. 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 units. 1999 Update: 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: 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
  • 76. 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 Merchants Exchange BBC-3000 * 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
  • 77. * 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 competitive. * 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
  • 78. * 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
  • 79. * 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: * 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
  • 80. 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 up front. BARTER BOOK * 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: Cr e a tive Re a l Esta te f or a Ba d M a r k e t 82
  • 81. CONTACT MANAGEMENT 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 future. 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
  • 82. 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 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
  • 83. * 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 traditional way. * 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: * 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
  • 84. OPENING DAY 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 Credits. 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
  • 85. 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
  • 86. (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
  • 87. 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. CASH CONVERSION 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
  • 88. 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: BBC-3000 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 year. 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
  • 89. 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. BARTER BOOK 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
  • 90. 1999 Update: 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 limited partners. 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 form) 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 Credit Systems: 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
  • 91. 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 failure. All requests for particular vendors from my Digital Credit Systems membership will be found at plizzle. com. 93 Cr e a t i v e Real E state for a B ad Ma r ke t
  • 93. BIBLIOGRAPHY 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, 95 Cr e a t i v e Real E state for a B ad Ma r ke t
  • 94. SECTION III BOOK OF SOLUTIONS UNIVERSAL PROBLEMS INTERNATIONAL PROBLEMS NATIONAL PROBLEMS 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 primary goal. 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
  • 95. UNIVERSAL PROBLEMS How can people learn to accept one another’s common humanity without reservation? 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 evolutionary process? How can over population be turned into a positive human condition? How can industrial growth be reconciled with environmental problems? 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 permanently? 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
  • 96. 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 their group. (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
  • 97. 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 of development. 99 Cr e a t i v e Real E state for a B ad Ma r ke t
  • 98. 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 civilization. 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
  • 99. 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 motive. 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
  • 100. 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 unbelievable beauty. HOW CAN INDUSTRIAL GROWTH BE RECONCILED WITH ENVIRONMENTAL PROBLEMS? 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 ACCOMPLISHED? 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
  • 101. 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 technology. 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 INDIVIDUALS? 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
  • 102. 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 behavior. 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 another. Cr e a tive Re a l Esta te f or a Ba d M a r k e t 104
  • 103. 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
  • 104. INTERNATIONAL PROBLEMS 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 positive capitalism? 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
  • 105. WHAT ARE THE DUTIES OF THE INTERNATIONAL CAPITALIST PARTY IN THE INTERNATIONAL COMMUNITY? 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 estate. 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
  • 106. 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
  • 107. The only other choice is to turn this country into a police state and abandon more of our personal freedoms. 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 economy. (1976) 109 C r e a t i v e Real E state for a B ad Ma r ke t
  • 108. HOW CAN COMMUNIST COUNTRIES BE CONVERTED TO POSITIVE CAPITALISM? 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
  • 109. 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 systems monetarily. 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
  • 110. 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 peacefully. 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 frontier. 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
  • 111. 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
  • 112. 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
  • 113. NATIONAL PROBLEMS 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
  • 114. 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 follows: 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 American institutions. 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
  • 115. 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 Diego, California". 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
  • 116. 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 following: 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 accordingly. 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 abusive altruism. Cr e a tive Re a l Esta te f or a Ba d Ma r k e t 11 8
  • 117. 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 monopoly. CAN AMERICA'S ENVIRONMENTAL PROBLEMS BE SOLVED? 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 negative capitalism. 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
  • 118. 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 SWIFT JUSTICE? 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
  • 119. 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
  • 120. SHOULD WE EXPUNGE ALL COMMUNISM FROM AMERICAN POLITICS? 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
  • 121. 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 SOLVED? 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 participating countries. 123 C r e a t i v e Real E state for a B ad Ma r ke t
  • 122. 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
  • 123. 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
  • 124. LOCAL PROBLEMS 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
  • 125. WHAT CAN BE DONE ABOUT POPULATION GROWTH IN THE AREA? 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
  • 126. 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 POSITIVE SITUATION? 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 home. 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
  • 127. HOW CAN THE PARTY TAP THE RESOURCES OF YOUTH GANGS AND TURN THEIR ACTIVITIES IN POSITIVE DIRECTIONS? 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 mental confusion. 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 obvious solution. 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
  • 128. 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 population. 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
  • 129. 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
  • 130. LOCAL PROBLEMS HOUSTON, TEXAS 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 country. 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 boast about. Cr e a tive Re a l Esta te f or a Ba d M a r k e t 132
  • 131. 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
  • 132. BIBLIOGRAPHY 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 Bible 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
  • 133. 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 example. 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 years. 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
  • 134. 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
  • 135. INTERNET LINKS (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