20th May, 2015
AFTER carving a niche easing the lumpy cash-flow burden of small businesses for more than 20 years, Bartercard is now taking a growing bite of the recovering property market.
Bartercard co-founder and South Gold Coast franchise principal Andrew Federowsky says rising confidence in Gold Coast property has led to an increasing number of property hunters on Barter.
He says property settlements within his franchise alone during the first quarter of 2015 totalled more than $6 million, including land lots purchased in Hervey Bay and Mackay, representing a 23 per cent surge from this time last year.
He says buying property with Bartercard is proving to be a viable alternative for some Bartercard members in a competitive market.
"From the developer's point of view, they can increase their margins significantly through borrowing a proportion of start-up capital through Bartercard or finance many overheads via goods and services available within the Bartercard network via an interest-free line of credit," Federowsky says.
"They then utilise the company's marketing arm to facilitate selling off any remaining properties in the development, which further reduces the overall cost of borrowing and the total cost per sale."
Federowsky says for a developer of a $10 million project it could lead to savings of between $600,000 and $1 million in interest fees and marketing costs if 20 per cent of sales were achieved through the Bartercard system.
"From a buyer's perspective we are removing a great chunk of the existing barrier-to-entry. A proportion of their equity can be financed interest-free and they enjoy lower interest overall for the length of the mortgage," he says.
"On top of that, if they do sell for a capital gain, they're converting Bartercard trade dollars for cash immediately."
Gold Coast-based property developer Peter O'Brien says Bartercard has been a key element of his development strategy for the past six years.
"I've sold around 10 properties all up - about two per year - with a Bartercard component and found it a very useful structure," O'Brien says.
"The properties sold to Bartercard members went at the same price as the others on the market, and the people who bought were very happy, in fact most have gone on to sell and convert trade dollars to cash.
"The last buyer I sold to bought a $79,000 block of land using $39,000 he'd accumulated in trade dollars from his residential solar design business and $40,000 in cash, which makes it a seriously smart way of buying."
Federowsky says the figures also stack up on high-priced sales. A luxury property at Victorian ski resort Mt Buller recently sold for $795,000 in a deal comprised of 50 per cent cash finance and 50 per cent Bartercard trade dollars.
"This becomes really valuable when you are calculating savings from multimillion-dollar investments, but even on a smaller scale it's a very effective strategy," he says.
"An average mortgage of $200,000 over the life of a typical 30-35 year loan would become around $500,000 in total repayments. But if you were to borrow that $200,000 in Bartercard currency you would pay no interest and would also be able to repay that into the Bartercard network in goods and services."
Federowsky concedes that even after more than two decades of operation Bartercard is one of the most "misunderstood" businesses, although it continues to grow largely through referrals from existing members.
"I am a strong believer that the cost of not knowing is always a lot higher than the cost of knowing, and although we've been around for a very long time and most people are aware of us, few really understand the true extent to which the network can positively impact in all areas of business and life," he says.
"Bartercard is limited by the creativity and imagination of business people who are members. It's not about slick sales presentations and offering the earth, it's really just about doing business creatively and collaboratively and helping not only your own industry but others industries also to remain sustainable and on a path of growth."
Source: Gold Coast Business News
Date published: 20th May 2015