Flipping with Bitcoin

12 Replies

Legal and illegal money. Where do we draw the line or where should the line be drawn for us? I have plenty of friends using money to fund their projects and really, have no idea where the funds are coming from. Lenders say they do this and do that for a living but at the end of the day, cold hard cash is cold hard cash, is there a cold hard end? Funding projects with Bitcoin, now trending and if you aren't on board than your drowning. Who here has invested with an online currency and is it the future of flipping?

Are you suggesting that people should evade taxes by buying property with crytpo?

As someone who has done tens of millions of dollars worth of real estate deals and millions of dollars worth of crypto investing, I see no good reason to combine the two at this point in time, unless the goal is to commit federal tax crimes.  And I can't speak for others, but that's not one of my goals...

@J Scott Not sure how you picked up evading taxes out of that but not my thoughts at all. I was more on the lines of trading bitcoin for properties and funding rehabs with bitcoin and or bitcoin or crypto currency replacing cash all together. I also dont think one who invests in crypto should refer to it as a “tax evading tool” it may paint an unwanted picture or give others ideas there are some insane people out there. I purchased bitcoin 8 years ago with a few friends when others thought it was a joke, I knew what its worth was and would be. I also purchased 12K in google stocks at $58 a share when the company first went public and still have my stocks. I cant speak for everyone but I hope to one day purchase tons of land legally with my bitcoin #goals.

Originally posted by @Anthony Testino :

J Scott Not sure how you picked up evading taxes out of that but not my thoughts at all. I was more on the lines of trading bitcoin for properties and funding rehabs with bitcoin and or bitcoin or crypto currency replacing cash all together. I also dont think one who invests in crypto should refer to it as a “tax evading tool” it may paint an unwanted picture or give others ideas there are some insane people out there. I purchased bitcoin 8 years ago with a few friends when others thought it was a joke, I knew what its worth was and would be. I also purchased 12K in google stocks at $58 a share when the company first went public and still have my stocks. I cant speak for everyone but I hope to one day purchase tons of land legally with my bitcoin #goals.

So, in your mind, what is the advantage -- or even the difference -- between purchasing property with bitcoin and purchasing property with any fiat currency?

Unless the goal is to evade taxes, I see absolutely no differentiation...and certainly no advantage.

@Anthony Testino Perhaps there is opportunity to use crypto assets as collateral / getting crypto backed loans - however, fees high and the usual caveats about crypto etc etc but you usually do not have to sell your crypto to borrow

Companies already doing this/or serving as lending platforms :  SALT, Unchained Capital ,BlockFi

With regard to flipping.. like others have said unless material suppliers and laborers are willing to accept it.. then it will be impractical . There have been cryptocurrency transactions recorded via blockchain, first one done in Vermont a few months ago, but there are so many components in a flip that using a cryptocurrency is not commonplace or practical just yet.

@Anthony Testino @J Scott There are a variety of advantages (which are legal) to purchasing real estate with certain cryptocurrencies. Some of the basic benefits are transaction speed and the ability for low cost, cross-border payments. The buyer can send their payment directly to the seller within a few minutes, without waiting days (and paying significant fees) for a bank/escrow company to issue a wire transfer. From the sellers perspective, this also opens the door to a global demographic of buyers, since the US allows foreign citizens to purchase RE here in the states. 

While those benefits are useful, my personal interest lies within the application of cryptocurrency as a tool for smart contracts. I have personally sold some properties within my land business using smart contracts. These contracts are facilitated through what is called "double deposit escrow", as opposed to a traditional escrow company. With this method, both buyer and seller place a deposit of cryptocurrency (in this case BAY) into a joint account. If either party does not honor the deal, they must come to some sort of agreement before ending the contract, otherwise their deposits are destroyed. This forces them to work together to find some sort of solution (whether it be a change of terms or agreeing to back out of the deal entirely). It completely eliminates the need for escrow. For my business, I still use a title company for the deed transfer and insurance etc. 

The beauty of double deposit escrow is that you can use ANY currency as payment, including US Dollars. The cryptocurrency simply acts as a collateral of value to enforce the deal, and doesn't change hands. It is really a system that cannot be replicated with traditional fiat currency, as fiat would require some sort of 3rd party to transfer the funds to and from the deposit account. With double deposit escrow smart contract, the deposit account is only generated between the buyer and seller, and is only controlled by them.

I understand that this new technology has gotten a bad rep from criminals evading taxes and rampant speculation from others, but it's simply an unfortunate side effect of any newly emerging technology. We have to look past the news headlines, and see what is really going on here. 

As the internet first became usable, criminals were the first to embrace it as well. Meanwhile there were honest, law-abiding people using it to improve business as we know it. 

@Matt Snow Wow, someone after all this time finally answered my question in full detail with not only legitimate responses but intelligent ones which are cited sources. Im shocked how many people who “invest” in crypto and “flip” so many properties dont have this knowledge. I need to sit back with a few colleagues and just put this response on the big screen and read it out-loud because in 10 years everyone take notes, this guy “Matt” is going places beyond where he is now. I have so much to say but right now im just going to read this a few more times. 

Originally posted by @Matt Snow :

@Anthony Testino @J Scott There are a variety of advantages (which are legal) to purchasing real estate with certain cryptocurrencies. Some of the basic benefits are transaction speed and the ability for low cost, cross-border payments. The buyer can send their payment directly to the seller within a few minutes, without waiting days (and paying significant fees) for a bank/escrow company to issue a wire transfer. From the sellers perspective, this also opens the door to a global demographic of buyers, since the US allows foreign citizens to purchase RE here in the states. 

While those benefits are useful, my personal interest lies within the application of cryptocurrency as a tool for smart contracts. I have personally sold some properties within my land business using smart contracts. These contracts are facilitated through what is called "double deposit escrow", as opposed to a traditional escrow company. With this method, both buyer and seller place a deposit of cryptocurrency (in this case BAY) into a joint account. If either party does not honor the deal, they must come to some sort of agreement before ending the contract, otherwise their deposits are destroyed. This forces them to work together to find some sort of solution (whether it be a change of terms or agreeing to back out of the deal entirely). It completely eliminates the need for escrow. For my business, I still use a title company for the deed transfer and insurance etc. 

The beauty of double deposit escrow is that you can use ANY currency as payment, including US Dollars. The cryptocurrency simply acts as a collateral of value to enforce the deal, and doesn't change hands. It is really a system that cannot be replicated with traditional fiat currency, as fiat would require some sort of 3rd party to transfer the funds to and from the deposit account. With double deposit escrow smart contract, the deposit account is only generated between the buyer and seller, and is only controlled by them.

I understand that this new technology has gotten a bad rep from criminals evading taxes and rampant speculation from others, but it's simply an unfortunate side effect of any newly emerging technology. We have to look past the news headlines, and see what is really going on here. 

As the internet first became usable, criminals were the first to embrace it as well. Meanwhile there were honest, law-abiding people using it to improve business as we know it. 

First, yes i understand how crypto works.   I advise several companies and invest in one of the largest crypto syndicates in the world.  I'm a big fan of crypto. 

That said, bank transfers are generally processed within a few hours, even internationally. So that's not a huge advantage. 

Second, the long pole in most of these transactions is the time it takes to do a title search and the deed recording.

There's a lot of promise for smart contracts in the space, but I wouldn't trust any smart contract for such a large transaction in the short-term. I work with a company called Quantstamp that does auditing of smart contracts, and I can promise you that they are a lot less foolproof than what you would expect that they should be. That's likely to change in the next couple years, but not yet.

Currently, I see little advantage to using crypto for real estate transactions.  That said, if buyer and seller both agree, go for it.

Originally posted by @J Scott

First, yes i understand how crypto works.   I advise several companies and invest in one of the largest crypto syndicates in the world.  I'm a big fan of crypto. 

Bitcoin down another 7% today to about $3700 on avg volume.  I don't know much about it, just catching my interest a little at this price point.  We are investors after all!  If good RE deals are harder to find, why not consider another asset class?

When I see a good drop like today on volume of about 2B, I may buy some.

Curious if you have any thoughts on the price slide of bitcoin since this thread was last active in August, J?  Would appreciate any comments from you especially and others that know more about it than me.  Thank you!