I've been thinking about an idea and I wanted to post it on here to see if it would add value in any way. If there was a platform in which you could issue blockchain tokens (Ethereum, Cardano, Matic, etc), with basic functionality for distributing revenue to investors (cashflow split, time based payouts, and sale profit based on a personal stake in a project) programmed into it. would you use it as a means to raise capital for a real estate purchase? Do you think It would make it easier to raise money?
Everyone has money, not everyone has crypto. I think you'd be shrinking your investor pool.
Zero chance I would be happy with losing 40% of my real estate investment last month because Bitcoin crashed. You certainly wouldn’t want to explain or reimburse your investors for that loss. Imagine you collected their money but had yet to close on a property then called and told them you needed 40% more.
Until it fluctuates less than 0.01% per day (even that is probably too much at 3,65% per year) it is not useable as a currency. So if it’s still around 36k, you need at least 100 day trend of it not varying more than $4 per day.
@Bill Brandt I'm not talking about using bitcoin to raise funds. It would most likely be through ethereum and stable coins (tokens on the ethereum blockchain that are pegged to the dollar) the tokens would just be issued as a way of representing ownership and governance over a project I think issuing tokens would be much easier and faster for distributing payout since custom terms can be programmed into the smart contract. this would also help with the issue of trust since the contract's source code can be verified.
If the customer/client can’t take the tokens at anytime it’s not worth any more than a printed statement or an email/website.
It might significantly reduce transaction or “traction” costs, but until it becomes mainstream the market is limited to a relatively small subsection of investors. Since the benefits are extensive, I would expect that this will become mainstream in 10 years or less. My feeling is that individual investor stakes could be more secured when tokenized through the use of blockchain rather than relying on the record keeping of a one or two person real estate syndication company.
In this case a token represents a digitized record of ownership in a real property with the record of such secured on a digitized series of transactions whose history can not be altered called a blockchain, and historically re-recorded with every future transaction. Based on contracts programmed into the system distribution would be automated and triggered by certain events.
This is already happening in the commercial real estate space. At the current time, it is an expensive extra layer on top of creating a real estate security such as a 506(b) offering. As platforms and legal processes become more streamlined - which they will - it will become more widely available.
The simplicity and liquidity of a token representing a limited partnership interest will have a lot of advantages for both investment providers and investors.
@Justin Goodrich there are startups in California a few steps ahead already…