I’ve put out a lot of content covering real estate crowdfunding and I’m happy to say that the industry booming!
Today I want to cover one of the newer websites out there that I think can totally transform this industry. It has some really cool cutting edge technology.
The big problem with real estate crowdfunding websites is… there’s no liquidity.
Due to the nature of privately traded REITs, you can’t just go to a public marketplace and trade. The same is true when you own shares in an LLC that owns a particular property.
A new website has emerged to help solve this problem using blockchain technology and tokenization. Let me tell you a bit about them.
What is BitCasas?
BitCasas is a new real estate crowdfunding site that lets you invest in high-grade residential real estate notes.
The team at BitCasas assembles a portfolio of residential loans that pass regular mortgage payments onto the investor. They are high quality and high yield notes that are backed by real estate.
Then, they use blockchain technology to tokenize these notes. They create virtual tokens which can be purchased by investors.
There are a few reasons why they do this:
- Better Liquidity: these tokens can be exchanged easily around the world on token exchanges.
- Improved security: their technology uses Smart Contracts, which enable pass-through of dividends and asset appreciation to security token holders.
- Low volatility: Unlike other virtual currencies and security tokens, these would be backed by real estate.
This approach to real estate crowdfunding is aimed a very particular type of investor.
Who is BitCasas For?
If you’re looking to become a landlord and manage the day-to-day operations of running a real estate property, then BitCasas is NOT for you.
This website is aimed as investors who want a “hands off” approach. If you’d like to earn passive income on your money, then you might consider this website.
Basically, you should be looking to earn appreciation and dividends from your investment. In fancy finance terms, this is called a fixed-income investment.
You’ll get income distributions every time the tenants in the loan portfolio pay off their mortgage. You’re essentially taking on the role of a “bank” that receives regular loan repayments PLUS interest.
Every investor is different. Some investors don’t care about lack of liquidity because they’re investing for the longterm. They don’t mind waiting 8 or 10 years to get their investment back.
BitCasis is for those who value tradability and want to be able to possibly exit a deal or trade in their coins at any point in time.
You’ll be able to trade your BCS security tokens on SEC compliant securities exchanges. This ensures you can exit an investment easily or redeem your ownership in it.
The Problem With ICOs, STOs, and Bitcoin
If you’re thinking about ways to diversify your investment portfolio, likely, you’ve considered the real of alternative finance.
You may have come across ICOs that have raised millions of dollars and STOs that bring new tokens and currencies to the world. Virtual currencies like Bitcoin, which might reward those that get in early, but might also simply be a bubble.
The problem with existing tokens and currencies is that the value of the asset fluctuates wildly!
You could be up one month, ready to cash out and buy a house in the Hamptons. Then, the next week, the value of your investment could severely drop to the point where you lose everything but your shirt.
It’s risky, and pure speculation.
With BitCasas, all issues security tokens are backed my physical real estate. There is an inherent underlying asset or collateral that supports the value of the investment.
This was the vision of the team behind this website. Security tokens that are backed by a real asset and the let international investors sink their teeth into quality real estate assets.
Should You Use BitCasas?
I think that this website could be a great part of a diversified portfolio. I would not recommend putting all your eggs in one basket though.
You can incorporate BitCasas and newer platforms like it as part of your portfolio in the alternative investments category. This will give you some good market exposure to potentially profitable investments, while also limiting your downside.
Of course, it all comes down to your goals as an investor, when you need a return, and your appetite for risk.
Personally, I think that we’re going to see more crowdfunding websites come out in the next few years (along with financial instruments) that harness the power of blockchain technology to tokenize assets.
Not only does it make sense, but it also seems that, judging from historical ICOs and STOs, that there is an appetite for this type of offering.
Who knows, if you get in now, it could be quite profitable in the future.
Hope you enjoyed this article and let me know what you think by joining my newsletter down below.
This article is sponsored by BitCasas.
