Mind Mastery

1. Seller Financing

When starting a new business, purchasing land and housing, or buying a vehicle, seller finance—often referred to as rent-to-buy—stands out as a compelling choice. This method allows buyers to pay sellers directly through installments, bypassing traditional third-party loans. A conveyancer can assist with the legal contract and is normally preferred, but isn't required. 

Sometimes called vendor, merchant or owner financing, the seller provides financing to the buyer, allowing them to pay for the property or asset over time. Garry may list his property for 350,000 FC over 15 years and can also offer a "discount rate" to buy it now for just 300,000 FC. If Greg prefers to pay using rent to buy, he'll pay 350,000 FC in 180 monthly installments of 1,944.44 FC p/m. Until the full amount is paid, Garry retains the title and rights to the property.

Benefits for Sellers

• Higher Overall Profit: Sellers can charge a higher price for their property compared to a traditional sale, as buyers are willing to pay a premium for the flexibility of installment payments.
• Retained Rights: Sellers maintain ownership rights until the buyer completes the payment, allowing them to reclaim the property if the buyer defaults, whilst keeping all previous payments.
• Steady Income Stream: Seller financing provides a consistent income stream over time, which can be beneficial for retirement planning or reinvestment.
• Reduced Selling Costs: By avoiding traditional real estate commissions and fees associated with banks, sellers can keep more of the sale proceeds.
• Speed Of Sale: Bypassing banks and intermediaries can significantly speed up the sale process.

Benefits for Buyers

• Immediate Access: Buyers can acquire properties or assets without needing to save for a large down payment or qualify for a traditional loan, making homeownership more accessible. Provided the buyer can demonstrate a reliable income, many sellers will be happy to deal with them.
• Flexible Terms: Financing terms can be negotiated directly between the buyer and seller, allowing for customized payment plans that suit both parties’ needs.
• Lower Costs: Buyers may save on interest compared to traditional bank loans, especially if they can negotiate favorable terms with the seller.
• Property Alterations: If the contract allows, the buyer can alter the property unlike a normal rental. Like painting the bedroom or adding a verandah, which can add equity.

Conclusion: A Win-Win Solution

Seller financing allows for flexible, direct transactions that can lead to better financial outcomes for both parties. By enabling private individuals to engage in financing without the need for banks, this method can help stabilize the economy and reduce inflationary pressures associated with traditional loans. The only ones who lose in this scenario are the banks, as individuals take control of their financial futures through mutually beneficial agreements.

2. High Yield Deferred Convertible Bonds

Consider an entrepreneur seeking capital for a startup that sells innovative med beds designed for healing. Unable to use seller financing due to immediate needs for salaries and extensive R&D, and wanting to avoid diluting ownership through traditional stock issuance, the entrepreneur opts for High Yield Deferred Convertible Bonds (HYDCBs).

For example, the entrepreneur offers 100 FC bonds, promising to repay 200 FC's after two years, effectively raising 1 million FC's. This deferred payment structure allows the entrepreneur to retain all capital for reinvestment in salaries, equipment, and marketing without the burden of regular interest payments or shareholder influence.

If the startup fails to repay the bonds, investors can convert them into equity as shares, allowing them to regain their initial investment by taking control of the company. This financing method uses stocks as a last resort to minimizes risk for the entrepreneur, while providing a safety net for investors, making it a balanced and strategic approach to startup funding with FC's.

3. Marketplace Loans

Wealthy individuals and groups with a surplus of FC's can offer loans with flexible contracts.

These are fair, honest and reasonable ways that finance is possible, without the need for banks creating credit and debt, inflating the money supply and debasing the value of your savings. Because new money can't be created on demand by anyone (like it is today with banks), the capital available for standard loans will decrease. The interest rates for loans may increase as there may be higher borrower demand than lending supply. 

The transition to seller finance will likely increase, saving borrowers money and increasing sellers profits, whilst saving both parties time. The prices of homes will likely stabilize, then fall, making it easier for young people to enter the housing market whilst having minimal impact on current home owners. This is because in today's system, most new money is made via home loans. More newly made money in circulation means higher prices. Using The FC, finance becomes fairer and more profitable for everyone, except the banks.