When we have prosperity in the United States, usually as a result of extended periods during which interest rates are relatively low, it is possible for ANYONE to succeed. Our markets are so vast, our citizens so effluent, our institutions so liberal, that practically every form of commercial activity has a theoretical and statistical chance to succeed.
The problem with that scenario is that good times cause millions of would-be entrepreneurs to enter the market place. Success becomes a very competitive venture in which those with true ability are virtually indistinguishable from those without the skills and knowledge normally required as a prerequisite to prosperity. Thus, our endeavors receive only average returns even though we might be able to contribute above average talent, energy, drive, capital, and imagination.
One of the principal reasons for this is that venture capital abounds in good times. Lenders woo the untried, unskilled, untalented in an effort to place the ever increasing funds deposited within their coffers. Interest rates fall as money chases borrowers. The costs of doing business are reduced correspondingly as the cost of money falls, (then they are raised again as the costs of labor and materials escalate to meet increased demand). The ebb and flow of money and production instills a cyclical rhythm into the economy; and just as Winter follows Summer, so must hard times follow the good.
In hard times, the reverse of the above holds true. Slowing economic activity causes businesses to retrench. The faint of heart drop out, others cut back on costs, materials, labor. They slow down their payments to the banks. They withdraw surplus funds to meet current expenses. Bankers, seeing their reserves beginning to diminish, are faced with increasing loan demand from borrowers who foresee less and less certain profits with which to repay them. Interest rates are increased to meet market demand for money. Loan terms are stiffened to discount increasing risk. Money becomes tighter and tighter.
Now many of us who have been waiting on the sidelines begin to see opportunities. Those builders who need buyers, those buyers who need new homes, those speculators who are stretched thin with negative cash flows, throngs of those who knew how to prosper during times of business expansion become listless and drift during periods of contraction.
Our opportunity derives its strength and vitality from our being able to function in the market place without reliance on any financial institutions. Our competitors, who in prosperity were able to divert many opportunities to themselves, swiftly find themselves “on the ropes” when their lines of credit are withdrawn, because the key to their vigor was less know-how than easy credit.
Without readily available financing, they become ineffective. Phrased another way, those who choose to depend solely upon institutional financing will always find themselves trying to make a profit in a competitive market situation. They will be ‘in phase’ with millions of others and thus condemned to mediocre success; dependent upon good times to afford them enough of a living to be able to weather the slow periods.
FREE-FORM FINANCE FORMULAS
Those who learn how to operate during hard times where there are no bank loans to be had will be able to operate profitably in a non-competitive environment in both good times and in bad by relying upon Free-Form Finance Techniques.
What is meant by ‘Free-Form Finance’? For purposes of this discussion, let’s just say it is the application of creative concepts to generally accepted types of real estate transactions in such a manner as to achieve desired results. By ‘desired results’ we include both Buyer and Seller, since the acceptance of any transaction is conditional on all parties reaching their objectives. Ultimately, this must take us to into counseling techniques which will enable us to define the specific needs and objectives of the Seller in order to assure that we can satisfy them while meeting our own investment goals.
Learn all the details about Free-Form Finance Formulas in Jack Miller's 235 page seminar manual, BUYING HOUSES FROM A TO Z. This seminar was one of Jack's most popular seminars and covers all aspects of buying, negotiating, selling, financing, and leasing real estate. Buying Houses from A to Z
