Real Estate

My Real Estate Was Turned into an NFT. I Used that NFT as Collateral for a Loan.

Ooops, I did it again. I bought an NFT that grants me ownership of real land in Arizona in the same manner that I previously bought land in California. But this time I went a step further, I used it as collateral for a loan.

Thanks to a proptech company called Fabrica, the owner of a plot of undeveloped land in rural Sun Valley, AZ transferred the rights to a trust for which control is governed by whomever owns the corresponding NFT. Long story short I bought that NFT. The difference between this NFT and say some digital collectible flavor of the month is that the land has some actual value in the real world. It’s not dependent on the blockchain for its worth and I can go to Sun Valley and build something there if I wanted. But with ownership governed by the NFT, I can also do something that might be a little bit more difficult otherwise for this remote and somewhat illiquid property, and that’s access liquidity in a highly efficient marketplace.

Specifically, I offered this property up as collateral for a loan on NFTfi, a peer-to-peer NFT loan marketplace at a very modest LTV of 32%. My offer was filled and I was able to access the funds with a single click of a button. If I default on the loan, the NFTfi smart contract will transfer the NFT to the lender and with that the lender would become the legitimate owner of the property in Sun Valley. The stakes in this case are real.

If you’re thinking about what kind of person would ever want to make this kind of loan, consider that more than $400 million worth of NFT loans have already been conducted on NFTfi since inception. The most commonly used collateral is digital artwork like cryptopunks and Bored Ape Yacht Club, which collectively represent $164 million of that total volume alone. When borrowers use this digital artwork as collateral the lender may end up stuck with an NFT with no physical connection to the real world. For an entire niche audience of lenders, this doesn’t bother them. However, as someone with a more apprehensive view toward risk in lending, the introduction of real physical collateral, actual property in the United States no less, is a game changer.

I am not the first person to ever engage in this type of transaction. According to Fabrica, the first property-backed NFT loan was transacted in 2021. However, if I might be afforded any claim to fame it is for conducting the first ever domain name loan over Ethereum.

NYC is Back, So is it Time to Buy Here?

Now that New York City is back, opportunity abounds to move in or make money off the dynamic real estate market. You might be able to get in on it even if you’re a first time investor. To size up the market and the common questions to consider, we spoke one on one with Erin Sykes, the Chief Economist of Nest Seekers International.

You can also watch it here on deBanked TV.

Watch More from deBanked’s Real Estate Investing Docuseries Here.

Midtown Dead? No, It’s A Good Time to Buy

When it comes to working from home and the flight from midtown Manhattan offices the past year, one expert on commercial real estate said it isn’t the end of the metro area way of life: it’s a great time to buy.

“There’s some great deals. I mean, on both rents, leases, and purchases in many of these markets. So tremendous opportunities, and there’s a lot of power on the sidelines, who is well aware of it,” CEO Anthony Romano of the Commercial Real Estate analytics firm CREtelligent. “In San Francisco, Manhattan, in Dallas in the Miami marketplace, there’s some incredible opportunities that I think people will seize.”

At CREtelligent, Romano helped launch the Radius platform, an all-in-one automated appraisal platform that draws site data for identifying commercial properties. When he joined the firm, he aimed at making the commercial real estate world as seamless as some residential loans.

“Before, during, and after the commercial real estate transaction, it’s super inefficient,” Smith said. “We wanted to say, how do we fix it? A client of ours, an investor, a broker, a bank, or anybody who’s involved in the transaction, can come to the Radius platform and put in an address and APN, and identify their property.”

Instead of ordering 10 or 12 assessments from a handful of sources, a processor must only visit the CREtelligent site. Based on the know-how it took to create the platform, Romano said the trends like the 10 year Treasury return are directing the CRE market on the up and up in the coming months.

Romano said that most commercial properties have a Loan-to-Value (LTV) ratio of about 70% in his experience. If a large office building or retail store has a $10 million mortgage keeping it open, it would have to drop by $3 million before the bank starts getting uneasy- a point the market is nowhere near.

Doorvest Raises $2.5M in VC Funding

San-Francisco based online real estate investment firm Doorvest announced today it received $2.5 million in VC funding with Mucker Capital leading the round.

Doorvest used the opportunity to announce a “Home Renovation Guarantee,” a pledge to cover all renovation-related repairs and maintenance on a new investment property for the first year.

Doorvest offers users an online platform to invest a range of $20,000 to $100,000 in rental properties. The firm handles everything from purchasing the properties to renovating, and leasing; paying the dividends back to investors.

“The true cost of hidden repairs and maintenance during the first year of homeownership often comes as a surprise as it’s difficult to predict,” CEO and Co-Founder of Doorvest Andrew Luong said. “We’ve found that the biggest mental hurdle to purchasing an investment home is the uncertainty of maintenance costs and repairs.”

The new funding adds to the total $3.6 million the firm has raised to date, aimed toward bringing retail-investor liquidity to the estimated $3 trillion real estate market. William Hsu, the co-founder of Mucker Capital, will be joining Doorvest’s board of directors. According to the Federal Reserve, Americans who invest in real estate are on average worth 40x more than Americans with no skin in the game, Hsu said.

“While real estate is the #1 most favored investment asset class for Americans, only 5% of Americans own investment real estate,” Hsu said. “Doorvest’s platform has hit a nerve since launch. It has seen a 32% month-over-month increase in customers since the pandemic hit. This entirely online model naturally gains more appeal, and customers seek out safe yet easily accessible investment vehicles away from other volatile and inflationary markets.”