Can bitcoin be utilized in real estate?
Investor · Atlanta, GA · Member since 2013 · 3k+ posts · 3k+ votes
Can bitcoin be utilized in real estate?
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Denver, CO · Member since 2013 · 409 posts · 105 votes
12yYou know a bubble has reached its peak when...
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- Rental Property Investor · Sacramento, CA · Member since 2011 · 2k+ posts · 1k+ votes12y
Great question. I read one BP blog post regarding accepting bitcoin for rent.
This is on my radar now. Looking for others to chime in.
- Investor · Atlanta, GA · Member since 2013 · 3k+ posts · 3k+ votes12y
Would this be a way to sell properties to foreign investors, who might have some difficulties getting funds out of their countries? I understand that that is a reason why so many properties are being sold to Chinese with cash these days.
Germany has given bitcoin legitimacy
- Investor · Saint Louis, MO · Member since 2013 · 87 posts · 32 votes12y
this is very interesting I read an article several months about this currency and it seemed something abstract or underground. I didn't think it could be used as currency to make real estate transaction. I'd love to know more?
- Investor · Atlanta, GA · Member since 2013 · 3k+ posts · 3k+ votes12y
@Kizzy Robb , I don't know a whole lot about it, but have started looking into it.
The first time a lot of us probably heard about it is, when they closed down "Silk road' , which was/is a website selling drugs and other things. That's why I, until recently thought that this was just related to illegal business.
I have since heard about it from the guy, who's been acquiring bitcoin as an investment. I also just heard about a guy in Norway, who bought $ 27 worth of BC in '09, as part of an experiment and forgot about it. He recently was reminded when it was in the news and found out that his wallet now had the equivalent of $ 850,000 , due to the increase in value. He sold 10% and bought a condo.
It's kind of a bartering system and there are +12,000 worldwide merchants that accept BC. It's anonymous and is presently not taxed. But I'm sure as there's more and more acceptance, the treasury will come up with a way to want their share of it.
Retailers like Amazon, Sears, WHole Foods, Staples etc are all accepting bitcoins. It looks as if you can buy giftcards, which you can then trade for merchandise.
- Urbana, IL · Member since 2012 · 1k+ posts · 425 votes12y
I nearly asked this same thing yesterday. I had a long discussion about bit coins and was baffled as to how it worked. I got tons of info from him but I need to do some actual research.
As far as I can tell from the little bit of information I have it is very similar to a ponzi scheme. There is a limit to how many coins are in the world, 21 million or billion. Bit coins are developed from an algorithum that computers calculate over a long period of time. If you get lucky enough to find the next bit coin you have just won the lottery. Here's where its a bit ponzi.
Because not everyone has a high speed computer that can't run the calculations people join a pool of others who bring their computers together to act as a data mining farm. With 1000 computers working together to mine out the next batch of bit coins the probability of finding that next batch is much higher than if you were to do it by yourself. Problem is you have 1000 computers splitting that profit. Over time, as more and more people get involved, the profits get split more and more. And from what I can tell its a falsely adjusted market.
Let me add, I know nothing of this yet and haven't done the research. I'm excited to follow this thread!
- Investor · Atlanta, GA · Member since 2013 · 3k+ posts · 3k+ votes12y
The 'Ponzi scheme' idea was brought up at another article, that I just read and this is what someone answered:
A ponzi scheme by definition is a scheme where
1) Money isn't actually invested as the operator of the scheme claims it is. It is fraudulently kept by the scheme operator.
2) Fraudulent profits are paid to early investors from funds obtained by new investors that also aren't actually invested in the method the scheme operator claims.
Neither of these two criteria are met if you buy and take posession your bitcoins:
1) The person who sold you the bitcoins actually physically (or virtually) delivered the bitcoins to you. They didn't fraudulently take your money and claim that they're holding on to bitcoins for you. You have them. You posses them. They exist.
2) When you sell your bitcoins at a profit, they are actually physically (or virtually) delivered to the person who bought them. There is not a scheme operator who takes their money, gives you some, and just says "Okay you own bitcoins now" without actually having any bitcoins. - Real Estate Investor · Sioux Falls, SD · Member since 2013 · 415 posts · 84 votes12y
Very interesting.
I read a little about it.
As far as using it goes, if I am understanding correctly. If you sold a property to a foreign investor via bitcoin would you leave the funds in "Virtual money" or would you cash out back into the ole paperback?
I guess whats your thought of wanting to use it?
Like I said I have only just started reading a little bit about it and to me I would be concerned bc what happens to peoples current money that they exchange for this bitcoin and then some day people go to exchange their bitcoins in for a different currency and the person that made this drained all the accounts and has everyones $$$... Am I missing something here??? Virtual currency??
- Investor · Atlanta, GA · Member since 2013 · 3k+ posts · 3k+ votes12y
Only some people trade, but the value of the 'stock' does not have any actual influence on your income, which will be sent to your account within 2 days.
If you set a price of $ 10, then the 'purchaser' pays $ 10 and you get $ 10.00, minus processing fees,which are 1% + $ 0.15. But that's not per incoming transaction. So, if you have 20 transactions @ $ 10, you'll get into your account $ $ 200 - $ 2.15 = $ 197.85 .
With paypal you'll pay $ 2.00 + $ 30 per each incoming $ 10.00 = $ 154.00
Also, it's not taxed. So, this can be a very viable alternative to accepting funds
- Denver, CO · Member since 2013 · 409 posts · 105 votes12y
You know a bubble has reached its peak when...
- Investor · Atlanta, GA · Member since 2013 · 3k+ posts · 3k+ votes12y
I've been reading these past 45 minutes or so.
The funds you receive will be sent to your bank account, which is attached to the Bitcoin wallet. It will be sent in US$ , unless you give them instructions to hold it in your BT wallet.
There's a transaction fee of 1% + $ 0.15 . It's anonymous and not taxed, while it's held in the wallet, but once it pays out, I'm sure your bank reports it, which requires you to report it (unless you're able to utilize it to buy another property also with bitcoin ;-) )
- Real Estate Investor · Sioux Falls, SD · Member since 2013 · 415 posts · 84 votes12y
Wow ! Crazy stuff!
So say you want to sell your place to someone wanting to pay w/ bitcoin for $100,000 you end up getting $98,999.85 ? Unless you leave it in the bitcoin wallet, then its value floats with the going rate of the bitcoin itself?
- Investor · Atlanta, GA · Member since 2013 · 3k+ posts · 3k+ votes12y
So, since this is legal tender for many occasions, I bet if a smart real estate attorney would set him/herself up for bitcoin transactions - what would keep this from being the next tax free '1031 exchange'?
Selling a property with bitcoins and then buying another one?
My wheels are turning and I'm just brain storming.
- 12yMarc RamsayPro MemberInvestor · Ojochal, Costa Rica · Member since 2013 · 287 posts · 164 votes
Bitcoin's first ATM was installed in Vancouver, BC, Canada about a month ago. The government is still trying to figure out what to do about Bitcoin. I don't think they're smart enough to figure it out.
- Specialist · Kirkland, WA · Member since 2013 · 1k+ posts · 817 votes12y
I wouldn't use a highly speculative alternative currency that is not pegged to the US dollar to transact any real estate including accepting rent. What happens when someone pays rent with a bit coin on Monday, and on Tuesday they shut down silk road and that bit coin has lost 50% of it's value?
We operate in one of the highest audit businesses in the Country, opening ourselves up to using alternative currency that is being used for money laundering, and drug dealing seems unwise to me.
Also don't believe that it will stay 'tax free' we transact in the US any RE transaction (sale or trade) is going to bring you real dollar tax consequences. Barter Systems and Alternate Currencies already need to be accounted for in your taxes.
We’ve seen the same kinds of initial challenges with respect to (from Second Life) and Bitcoin (digital currency). While these types of currencies have markedly different implementations, they raise similar questions about how the IRS may treat alternative currencies as a whole.
We know that alternative currencies are definitely on the IRS’ radar following the in May 2013. Liberty Reserve, an offshore alternative currency exchange – which handled more than six billion dollars during its brief run – was able to exploit the key advantage of using its own currency (anonymity) to an economic underground. No identifying data, no forms W-2 or other tax documents made it easy to launder money and evade taxes, a fact that didn’t go unnoticed.
This isn’t to say that Equal Dollars currency is the same as Liberty Reserve. I understand that the two couldn’t be more different when it comes to audience, community and goals. But the notion of alternative currencies is the same. And when it comes to IRS, the tax implications are likewise, the same. As public interest in these kinds of alternative currencies – whether for community growth or international businesses – appears to grow, expect the IRS to have increased interest, too.It's a shame you missed the San Fran meeting last month, @J. Martin brought up Bit Coins!
- 12yJ. MartinPro MemberRental Property Investor · Oakland, CA · Member since 2011 · 3k+ posts · 2k+ votes
@Michaela G. , you always have the most interesting questions!
I'll start by disclaimer that I do own some BlTCOlN (BTC) and a warning:
**** This is a highly speculative and highly volatile commodity /cryptocurrency/medium of exchange - whatever you want to call it. Every second you hold it, it can be gyrating wildly in value. There are also risks regarding storage and the "wallet." I do not recommend holding any funds in BTC that you cannot afford to lose completely at a moment's notice.***** Having said that, I own some and am buying some relatively small amounts of other "cryptocurrencies" with some highly speculative funds I have on the side, since I haven't been to a casino in a while.. if you're interested, look up litecoin, ripple, and the rest.. I'm very interested in this idea! - thanks for the mention @Troy Fisher .Can you accept it for rent? Of course. You can accept whatever you would like: US dollars, goat's milk, BTC, 30hrs of work, etc etc. Is it a good idea and are there enough people to have it make sense? Maybe a different answer.. But it apparently has already been done! (See link at bottom). You may have to be able to show where you got it from when your bank sees large transactions from BTC to USD - and you might get a lot of questions. The Senate had a hearing on it a couple weeks and all regulators noted it's legitimate purpose, while expressing the need to ensure it is not used for illicit purposes. Many BSA/AML concerns are similar to cash. Hard to trace. But the legit exchanges all ask for identity documentation now. You can buy and sell it just like a stock. If you constantly changed the BTC rent payment based on the then-asking price for USD, you could theoretically accept the payment and IMMEDIATELY exchange for USD. But transaction costs and timing risks there too.
For buying property, it would be very difficult to find someone willing to accept BTC. But, you could of course sell your BTC for USD on one of the exchanges (BTC-e, Coinbase) and purchase the property in USD (again you may have the Bank asking you all kinds of questions about where these funds came from, ESPECIALLY from another bank if you are getting a loan also.) Branson announced they'll be accepting BTC for Virgin space flights next year, but beyond that and a few restaurants, it's mostly just accepted at certain online retailers you've never heard of (although you could get most anything you would need probably - see link)
Regarding a Ponzi Scheme and its (un?)usefulness for transactions, is that it is more like gold. It has value today because of it's somewhat limited supply (21 million bitcoins maximum ever, currently ~12MM. Gold is difficult to find and extract), and because people believe that someone is later willing to purchase it for a similar or greater amount because it is viewed as a store of value. (Sometimes referred to as the "greater fool" principal). Neither have much usefulness beyond that (but gold is physical and shinier..) Both are traded on multiple exchanges with private parties (in fact the decentralization of BTC is one of it's favored properties - making the Ponzi difficult..)
But a big difference!: BTC hasn't been used as a medium of exchange for thousands of years across the world! My play here (again, with very speculative money), is that investment advisers and the Winklevoss twins are rushing to set up investment funds to buy the stuff and it's just getting on the public radar. If it gains any sort of small foothold, the value could be in a different universe from what it is right now. Plus China and India love it, and there's lots of people in those countries (and only 21MM bitcoins for the rest of time!). Or everyone could forget about it next year, like the Dutch tulip bulb craze from centuries ago and be worth zero!! But that's why you have to use your play money..
This link is straight from the people promoting its usage, so probably has a positive spin, but very informative. Plenty of criticism out there too online.
http://bitcoin.org/en/faq#what-is-bitcoin..and the property manager accepting BTC..
http://www.prweb.com/releases/2013/4/prweb10608334.htm..shops accepting bitcoin
https://www.spendbitcoins.com/places/Michaela, if you're really interested, skip going out to dinner one night, transfer $20 to coinbase.com, and purchase a fraction of a BitCoin! But remember my warning.. Only with play money! Have fun!
- 12yJ. MartinPro MemberRental Property Investor · Oakland, CA · Member since 2011 · 3k+ posts · 2k+ votes
Sorry, noticed you were asking about selling a property rather than just buying.. Can you sell your property for gold? Property swap? Services rendered? BTC? There are currently no laws against any of these. In fact, there are guidelines for valuing various different types of "consideration" in the IRS code. There is readily-determinable price in publicly traded markets, so your real issue could just be with the Bank crawling up your *ahem* about where the funds came from and was their source illicit? Slightly more scrutiny than bringing in piles of paper bills, depending on what kind of volume you are talking about and your bank. Untested waters (but getting on the radar). Having said that, there's some inherent risk here. Consult a "professional!"
@Aaron Junck , it's always in the "wallet". It will continue to fluctuate relative to USD and all other fiat currencies until you exchange it back to USD on the exchange and wire the money to your bank account (people also actually meet up and exchange the "wallet" on a USB for cash sometimes.. but watch out!). Not for the faint of heart!!! Regarding the creator "draining" the accounts with the software, it's decentralized, and all those algorithms that are being solved in the "mining" are also verifying and recording transactions in multiple layers that get added to the "chain block" and create security/integrity for the system. It's part of the design. But there is an issue if someone gets over 50% of all bitcoins! Having said all that, again, buyer beware! Highly speculative and unproven! More info here: http://en.wikipedia.org/wiki/Bitcoin
@John Rooster , when everyday folks start talking about it at the water cooler, you know it's getting bubbly. If and when all these people start buying instead of talking about it over a short period of time, then it's absolutely frothy.. But for now, I'm letting the "gambling" money ride on black. It can only go to zero, but it's far more than doubled.. parabolic.. ps. I like your profile pic!
http://www.coindesk.com/price/@Steven J. , your questions are legitimate! 21 million is the most that will ever be 'mined' and exist. When they are mined in a pool, everyone gets the share of the bitcoin that they contributed to solve the algorithms that give the system the strength and integrity through verifying and recording transactions. But no central authority pays them for this. Sort of like mining and trying to find the last deposit of gold. If you think someone out there on a stock market will pay you for it, you can buy some mining equipment and agree to split the profits of any find with other miners out there.. the wikipedia link above is pretty good if you're interested.
I'm not sure about the "falsely adjusted market." I see it like a stock market for a wildly speculative penny stock in an embryonic company in an embryonic industry, trading on thin volume. It's wildly volatile and no one knows exactly what will happen to it. It would be easy to manipulate the prices in the short-medium term with relatively small amounts of capital in the investment world due to the thin volume. But some people view the upside as so potentially large, that it might be worth taking a look at.. Something tells me you're going to see it more and more in the news in the future, investment funds being set up for it, some people perhaps making loads, and maybe many shedding a lot of tears at the end of the day.. That's why I stick with real estate to make my real money! lol
- 12yEngelo RumoraBusiness MemberInvestor · Toledo, OH · Member since 2013 · 4k+ posts · 2k+ votes
Thanks for starting this thread.
I have also been intrigued by this Bitcoin stuff haha.
Litecoin has caught my eye more as they say its silver to Bitcoin's gold and still relatively cheap (whatever that means lol)
Anyway I actually bought a domain name www.litecoinadvisor.com even tho I don't know much about it but if this thing really takes off I thought I might jump in board at least in a small way.
Does anyone know how a Litecoin can be purchased with USD without buying a Bitcoin first and then trading it for Litecoin's?
Thanks and have a great day.
- Investor · Appleton, WI · Member since 2012 · 1k+ posts · 464 votes12y
I think there is a little confusion on this on the tax side. I could sell my house for gold or silver or Euros or bitcoins but the tax will be owed in US Dollars. The primary and fundamental function of taxation is to ensure demand and use of the US Dollar in the US. Even those selling books and seminars that say the US Dollar is going to crash and we should all invest in gold yesterday still charge US Dollars for their products and services.
As for bitcoins. I have read a number of articles on them but not enough to claim to be informed. I do think it is a very interesting phenomenon although I do think it will be a footnote in history although it might lead to something else down the road. One interesting thing I did read earlier was based on the mining and maybe that was what the ponzi scheme sthing was about. From what I got out of it these bitcoins are "mined" by computing some algorithm. Once and algorithm is solved creating the bitcion to the miner the algorithm becomes public knowledge and is needed to figure out the next one. I read that a group of folks could get together and fifure out the algorithm but not "cash it in" thereby hoarding all the next steps and amassing a large pile of bitcoins and maintain a head start on acquiring more.
Good topic!!
- Investor · Atlanta, GA · Member since 2013 · 3k+ posts · 3k+ votes12y
@J. Martin thank you for all that good information. I knew there'd be people here who know more about this topic than I do.
Let me say upfront, that I'm not trying to do anything that's illegal. But I like to think about ways to utilize this in a legal way.
Is there a 'craigslist of Bitcoin'? I wouldn't want to do anything through silk road, even if it's legal - it's just too tainted with drug sales. But is there a website with legal stuff for purchase and sale?
And if not, why not? I can't code or else I'd be happy to start it. I think there's a great potential for it. I'm sure it's already there.
So, what if I had a nicely renovated house for sale for $ 100,000 - I suspect that being able to offer it to potential bitcoin holders can tremendously widen my pool. And I want to do it all legal, report my sale to the IRS and pay taxes on it. Show my bank that the money came from the sale of a property an whatever else is necessary.
I've never done a tabletop sale, so I don't know - Is it my responsibility to find out where the buyer got the money from? Do I have to get a social security # from the buyer and report this to the IRS? Foreigners can buy real estate here, so ss# are not necessary to buy.
So, let's say there's a website where to advertise real estate and there are people, who have bitcoins that they'd like to use - they might be happy to buy a nice piece of property for full market value. No brokerage commission to pay. They might not try very hard to bargain the price down. Heck, there might even be competition, if there aren't many people utilizing this for real estate now.
And if I didn't keep the money in my wallet, but get it paid right away - then I'd be willing to take the risk, as I don't expect the fluctuation to be huge for 1 day (unless something major happens. But then we could have a major terrorist attack in the U.S. and the $ might go down).
I'm willing to explore the possibilities
- Specialist · Kirkland, WA · Member since 2013 · 1k+ posts · 817 votes12y
Originally posted by Michaela Graham:
So, what if I had a nicely renovated house for sale for $ 100,000 - I suspect that being able to offer it to potential bitcoin holders can tremendously widen my pool. And I want to do it all legal, report my sale to the IRS and pay taxes on it. Show my bank that the money came from the sale of a property an whatever else is necessary.
So, let's say there's a website where to advertise real estate and there are people, who have bitcoins that they'd like to use - they might be happy to buy a nice piece of property for full market value. No brokerage commission to pay. They might not try very hard to bargain the price down. Heck, there might even be competition, if there aren't many people utilizing this for real estate now.
And if I didn't keep the money in my wallet, but get it paid right away - then I'd be willing to take the risk, as I don't expect the fluctuation to be huge for 1 day (unless something major happens. But then we could have a major terrorist attack in the U.S. and the $ might go down).
I'm willing to explore the possibilities
1) How does offering your property to BTC holders widen your pool of potential buyers? As far as I know there aren't any persons who only use BTC as their only currency. You pool is going to be the same. Maybe you are thinking as a marketing strategy? There are other less speculative ways to widen you marketing. Of course you'd get lots of media attention for selling properties via BTC! Ready to do a Media Tour?
2) If you start doing your own sales with a sales contract with a lawyer you could do away with brokerage fees too. Which is basically what you'd be doing going the BTC way. And vice-versa if you were buying. It's possible to buy/sell without that sickening 3-6%. A lot of markets are getting multiple offers right now, I don't see how changing to BTC is going to increase how many offers.
3) Ahh, speculation. Of course that's what most REI people said in 2006, 2007. And then they couldn't find anyone to buy their properties... You could have the same problem with a BTC.
Mind you my replies may sound a little snarky but I'm really interested to see your thought process and why they are tied to BTC. Seems to me most of the things you are addressing can be accomplished by investing slightly differently than down the center of the highway path.
- 12yJ. MartinPro MemberRental Property Investor · Oakland, CA · Member since 2011 · 3k+ posts · 2k+ votes
Engelo,
You can buy litecoin on BTC-e for USD I believe, or deposit bitcoin there from coinbase, bitstamp, or any other site. Be careful! I believe they are based in Bulgaria and not sure what the oversight is over there!
Michaela, I like your idea. You'll have to figure out who wants to buy your piece of real estate in BTC, but does not want to or cannot exchange the BTC for USD. I believe BTC-e charges .2%, plus some wire fees, so its not too bad. As a BTC holder, why not just sell BTC for USD, euros, whatever and buy any property on the market? Maybe there's some aspect of the anonymity, but I'm not sure if or what the responsibilities of the seller would be. I have loans on all my properties, and they require 2 months of bank statements showing where the money came from.. I like that the wheels are turning though, and it would be a great marketing gimmick! But you'd have to change the price almost daily!
- Investor · Atlanta, GA · Member since 2013 · 3k+ posts · 3k+ votes12y
@Troy Fisher I believe that I'd widen my buyer pool, because there are people that are dealing with bitcoin, who may not want to convert their bitcoin to US$ yet and are looking for ways to utilize the bitcoin that they're holding.
I've done most of my real estate transactions without agents, but they were mostly in Georgia and in California I see most retail buyers walking around with buyer's agent. I'm not sure I've ever seen a 'for sale' sign in anyone's yard here, that wasn't attached to an agent. But I've always had a closing attorney involved.
@J. Martin Bitcoin charges 1% plus $ 0.15 per transfer. Right now they have a special, where the first $ 1,000,000 transfer is free.
Would I really have to change my price? I saw where Staples and CVS are selling giftcards through bitcoin in US$ 5 increments and they set a price in US$ and you pay US$.
- Specialist · Kirkland, WA · Member since 2013 · 1k+ posts · 817 votes12y
Why can't you accept foreign currency at closing? I don't see why you couldn't offer your listing in Japan for example and accept Yuen for the deal. You'd just have a bank account flush with Yuen for your next visit to Japan!
With a hard number of 21mil bitcoins I don't see it as a currency, but as a speculative investment. As @J. Martin said. It's like gold. And with people setting up investment funds around it, it'll start to lose it's currency value and become more of a investment vehicle.
- Investor · Atlanta, GA · Member since 2013 · 3k+ posts · 3k+ votes12y
@Troy Fisher because there are people that are already trading in bitcoin, who don't want to cash out, yet. This would allow them to buy things with their bitcoin. It's not the same as accepting foreign currency, because my bank account would receive US$ and I don't have to worry about currency conversion.
So, let's say there was a Craigslist of Bitcoin. The website could be set up in a way that sellers list their wares in their own country currency and then that website converts it into Bitcoin and automatically readjusts every 15 minutes to the present bitcoin value vs that particular currency.
And as you said before, it's a marketing gimmick, and I see marketing as a big part of anything that you want to sell. Whatever gets the word out about your property, whether it's media writing about the first house sold with Bitcoin, or because you have an open house - it's all good in my book
- 12yEngelo RumoraBusiness MemberInvestor · Toledo, OH · Member since 2013 · 4k+ posts · 2k+ votes
Originally posted by J Martin:
Engelo,
You can buy litecoin on BTC-e for USD I believe, or deposit bitcoin there from coinbase, bitstamp, or any other site. Be careful! I believe they are based in Bulgaria and not sure what the oversight is over there!
Michaela, I like your idea. You'll have to figure out who wants to buy your piece of real estate in BTC, but does not want to or cannot exchange the BTC for USD. I believe BTC-e charges .2%, plus some wire fees, so its not too bad. As a BTC holder, why not just sell BTC for USD, euros, whatever and buy any property on the market? Maybe there's some aspect of the anonymity, but I'm not sure if or what the responsibilities of the seller would be. I have loans on all my properties, and they require 2 months of bank statements showing where the money came from.. I like that the wheels are turning though, and it would be a great marketing gimmick! But you'd have to change the price almost daily!
Thanks @J. Martin
Much appreciated. I just found this site where you can buy the top 3 Crypto currencies with USD.
https://www.vaultofsatoshi.com/
Thanks
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