Real estate provides excellent opportunities to invest Trade Dollars that will generate cash profits. Real estate isn’t a particularly liquid asset, but real estate becomes more valuable over time and provides an excellent inflation hedge and tax shelter. Since Trade Dollars come from selling surplus or from additional new business and have a low incremental cash cost, many investors find that they can be more aggressive in pursuing investments such as real estate.
Because barter exchange members can earn Trade Dollars without significantly affecting cash flow, investors can buy speculative properties and wait for values to go up. In some cases, it’s even possible to walk away with a pocket full of cash.
Even if the investor is forced to sell at a paper loss, the sale can still represent a cash profit. Here’s how it works. Let’s say a business has an incremental cost of 35 percent in its Trade Dollars.
The business owner buys a piece of property for $100,000 trade, so the cash cost in the property is $35,000. If he sells it for $70,000 cash, he has still doubled his cash investment while reporting a $30,000 loss on his taxes. The IRS doesn’t care whether you pay for the property in cash or Trade Dollars. The reportable loss is still the same.
Investing Trade Dollars in improvements to a hard asset like real estate is another way to generate cash profits on Trade Dollars, since the investment enhances the cash value of the property. For example, a doctor has paid for replastering and painting of a house, had a new sidewalk put in, has renovated a garage, and made other improvements using Trade Dollars. Since the doctor’s cost of a Trade Dollar is only his time, the actual cost of the improvements is negligible.
Even when a contractor isn’t a member of a barter exchange, members are still able to finance improvements with trade. Vacations, vehicles and building materials can be bought with Trade Dollars, which can then be traded to contractors.
Where electricians, remodelers, plumbers or other contractors are barter exchange members, owners can easily upgrade the cash value their property. If the real estate is income producing property like rentals, the improvements can generate immediate cash through rent increases.Add to Favorites