Westbury, NY · Member since 2016 · 69 posts · 37 votes
Hello!
Just wanted to reach out to the community and see if anyone had sourced some or all of their down payment funds from cryptocurrency (bitcoin, ether, ltc). As you may know there has been an explosion in prices recently and I would love to purchase another property using some of these funds. Has anyone had any luck with this? Would love to hear your story!
@Taylor L. - yep that is the plan! In my initial property purchases I have had to source where the down payment funds have come from. Since it would be coming from a crypto exchange (Gemini, Coinbase, Kraken) - services which may not be typical for a traditional bank, I was hoping to catch someone that had had some experience doing so and see if there were actual issues or not. I hope that makes sense.
One option might be is to take a loan out it to skip the tax hit. You can get upto 50% or so. Good luck!
Westbury, NY · Member since 2016 · 69 posts · 37 votes
5y
@Taylor L. - yep that is the plan! In my initial property purchases I have had to source where the down payment funds have come from. Since it would be coming from a crypto exchange (Gemini, Coinbase, Kraken) - services which may not be typical for a traditional bank, I was hoping to catch someone that had had some experience doing so and see if there were actual issues or not. I hope that makes sense.
Lender · Phoenix, AZ · Member since 2018 · 440 posts · 256 votes
5y
@Andres Vanegas If you've seen some of the gains that the overall Crypto market has in recent months, you'll definitely want to keep that tax bill in the back of your mind. That said, if it's converted to cash, I don't foresee any issues for qualification. If anything, just let the cash season in your savings account for a few months. All that said, probably best to find a lender you want to do business with, and consult with them. Every underwrite situation might have different quirks. Unfortunately, I don't have any NY lenders in my network, but I'm sure you can find a great option right here on BP. Best of luck!
@Taylor L. - yep that is the plan! In my initial property purchases I have had to source where the down payment funds have come from. Since it would be coming from a crypto exchange (Gemini, Coinbase, Kraken) - services which may not be typical for a traditional bank, I was hoping to catch someone that had had some experience doing so and see if there were actual issues or not. I hope that makes sense.
One option might be is to take a loan out it to skip the tax hit. You can get upto 50% or so. Good luck!
Westbury, NY · Member since 2016 · 69 posts · 37 votes
5y
@Matt R. What service? Coinbase does that for BTC at 8% interest only for a year. Not familiar with any others.
I think the bank may have some more trouble with that no? Maybe since it is an asset secured loan they may let it fly.
60 day seasoning of cash in the bank seems the safest route at the moment. Even though it is fairly straight forward to demonstrate custody through Coinbase now. It also brings a sense of legitimatcy now that they are public.
@Matt R. What service? Coinbase does that for BTC at 8% interest only for a year. Not familiar with any others.
I think the bank may have some more trouble with that no? Maybe since it is an asset secured loan they may let it fly.
60 day seasoning of cash in the bank seems the safest route at the moment. Even though it is fairly straight forward to demonstrate custody through Coinbase now. It also brings a sense of legitimatcy now that they are public.
There are several doing the loans. Check a few perhaps. Nexo is one. No seasoning required. Good luck.
Westbury, NY · Member since 2016 · 69 posts · 37 votes
5y
@Patrick McGuffey awesome! What documents did they request? Did you mention it was crypto at first and was their any additional back and forth from the usual conversations? Did they want to see your cash going into the crypto exchange account? Did you ever take your funds off the exchange into cold storage or another exchange?
Rental Property Investor · Lubbock, TX · Member since 2021 · 13 posts · 10 votes
5y
@Andres Vanegas I never actually mentioned that it was crypto with the credit union. I just moved the money and used it as a down payment. I never took it off the exchange though. I was using Voyager to buy and sell and did run into an issue with trying to get any documentation reflecting my crypto assets. (They have no customer service line only online ticket submission) Quicken loans asked for documentation, they were the first lender I was working with. I did let the local credit union that a large portion of my reserve funds were in crypto and they would not allow me to use it as reserve. Had to use my 401k instead. Every bank seems a bit different so it might be a little trial and error
Westbury, NY · Member since 2016 · 69 posts · 37 votes
5y
@Patrick McGuffey seems like it is really lender to lender with how they source downpayment? Off crypto topic- was the rate better or worse for quicken v. your credit union? Also you mention reserves, was this an investment mortgage?
Investor · OAK BROOK, IL · Member since 2017 · 30 posts · 21 votes
5y
@Andres Vanegas have you looked into depositing some of your crypto with BlockFi or similar service and then borrowing against it? That way you would not need to sell and take a gain and you would still have your crypto as it increases in value.
Westbury, NY · Member since 2016 · 69 posts · 37 votes
5y
@Michael Flight I think at the moment I’m less concerned with gains tax and have a greater concern around just being able to explain what’s going on to the fine folks at the bank! I may go the route of placing some of my BTC with Blockfolio for a loan though so I can play with the rest in DeFi. Clocks ticking and I’m almost ready to make a move.
Rental Property Investor · Lubbock, TX · Member since 2021 · 13 posts · 10 votes
5y
@Andres Vanegas the credit union was better in pretty much every way. This was a conventional loan to house hack a duplex. Reserves are just the cash I have in backup. Idk why they required it or if that is normal
Investor · Boca Raton, FL · Member since 2015 · 234 posts · 103 votes
5y
I would take the loan with Blockfi or similar. No tax hit and you can stay long your crypto (but will have an interest payment). As previously mentioned, when getting the crypto loan if you have it sit in your checking/savings account for 3 months+ then you won't have to source the money (the lender will ask for your 2 most recent bank account statements for underwriting).