RealT - 10% average - Feedback - Real Estate Token

Investing / Others
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Hi,
I would like to cover a topic not really discussed on this forum to my surprise. I’ve been using RealT for several months now. RealT allows you to buy tokenized real estate via the blockchain. To put it simply, properties are bought via LLC companies and this company is divided into several fractions (tokens) which are put up for sale and held by several users. The buyer holds a piece of the company that owns the property. This holding is registered on the blockchain via your personal Wallet address. For the purchase transaction you can either buy via credit card or in crypto. Here’s my feedback :

  1. The returns are very attractive (10% average!)
  2. The crypto world may seem hyper-complicated, but it’s accessible to all.
  3. Tokens are hyper-liquid and there’s a secondary market (the YAM) set up by RealT to enable users to buy and sell tokens among themselves.
  4. The founders are hyper-transparent, and community calls are organized every month.
  5. The weak point is the fact that the majority of properties are based in Detroit, which unfortunately suffers from a bad image, but RealT proposes new cities and countries every year and is exploring the possibility of opening up to Europe.
  6. Possibility of leveraging
  7. Rents are paid weekly
  8. Property revaluations take place every 2 years or so, so it is also possible to benefit from a capital gain

A word of advice: sort out the properties you want to buy, you may have better time buying on the YAM secondary market to find better ones and choose the ones you want. To do this, you need to submit whitelist requests in order to be eligible to buy.

2

I have removed your referral link, but I will keep this thread alive for now.

If you actually care, here is a thread about a similar “investment”

3 Likes
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Investing in Detroit property is notoriously risky and requires expert on the ground knowledge. Advertised returns will likely not equal returns in reality.

Buying a fraction of an LLC owning a property would appear to add to the risk.

What is value add to the investor of having the fraction tokenised via the blockchain?

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The founders have been in the real estate business for some twenty years and have expertise of Detroit (There are also proprieties in Chicago, Cleveland, Maple Heights, Panama, Miami etc). Since the creation of realt, all rents announced are the actual rents received, except in the case of vacancies due to moving or other reasons, which are part of real estate. RealT also revalues properties, so it’s also possible to make a capital gain. No undervaluation noted yet

This doesn’t change the risk, it’s just an administrative step, as it’s not legally possible to hold the property directly. “The deed to each property is owned by a single-purpose LLC or Inc. Each property is owned by a single, specific LLC or Inc. The role of the company created is to do one thing, and one thing only: own the deed to the property”

Transparency, liquidity, the possibility of dividing up a property into small units and investing as little as 50 usd, ease of ownership. You will find all your answer here : Learn More | Tokenized Real Estate Investment | RealT

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There are people who have successfully made a living out of selling properties in Detroit to naive overseas investors for years so this is not a very reassuring statement on its own.

On paper Detroit properties have high monthly rent as a % of a price. In practise rents are often not received, due to vacancies (note: during vacancies a good property manager will likely advise you to board up the property to deter break-ins and squatters, and to remove the furnace and put in storage to avoid it being stolen) or “other reasons” like the tenant stopping paying the rent.

Then there are eviction costs, or the likelihood of the tenant not looking after the property and you having to pay a refurb. As you say these are part of real estate but they are particularly relevant in Detroit.

It is not practical to recover costs from tenants beyond 1 month security deposit. Tenants can drop off the keys and try to rebuild their credit record in a few years.

Q) Why is the tenant renting your property even though rent is 15% or more of price (i.e. your house is only worth 6 years’ rent)? A) usually because he/ she has no money and a poor credit record due to not paying debts in the past so they cannot buy, and have no other choice

Disclaimer: above are all general comments from personal experience, not specific to the site you referred (for a 2nd time @Dr.PI ). These can be managed with a good property manager. Maybe the people behind this site are good managers, I have no idea.

Buying a fraction of a property increases the risk because you do not control the property and face additional challenges to sell and exit the investment.

Is there a liquid market to trade fractions of Detroit property. “I own 5% of a property that went wrong and is bleeding money every month. Does anyone want to buy it? I can prove I own it because I have a token”

1 Like
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Posting a link for the website is okay, these are referral links which are not allowed.

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Have you heard of REITs? (Real Estate Investment Trusts)

They are regulated by the government and audited by legit audit companies as well as by the exchange where they are listed.
They’re very transparent in the 10-K forms, extremely liquid, allow you to buy into a property for as little as the share price (or as little as you want if your broker allows fractional shares), super easy to own, etc.

I own a bunch of US REITs and love them as investment class as they are required to distribute at least 90% of their taxable income into the hands of investors which suits me as a partial consumer of my investment income.

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Yes, of course, but the yield is not 10% and you can’t choose in which proprieties you want to invest in. Since it’s listed on the stock exchange, other factors must be taken into account. RealT is not about crowdfunding and not about REIT it’s a completly different thing

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If you’re interested in the subject, I think you should find out for yourself on their site and watch some youtube videos on the subject to make up your own mind. I just wanted to share my experience and my feelings with the community for those interested. There is also few data here : Pit's BI - Business Intelligence

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This is a free screener for US REITs yielding >10%: Stock Screener - finviz.com.
Currently 46 such REITs, ranging from 36.75% to 10.28% yield.

Indeed, the REIT managers choose the properties you own through the REIT (though through REIT sub-industries could can select what type of real estate you want to invest in). Or you can look at individual REITs and their investor relations material and see exactly what properties they own where.
Frankly, I believe they’re better at selecting properties than I am, but YMMV.

I personally don’t get how the investment model of RealT is different from REITs except that they’ve slapped on crypto slang and they less regulated and audited than REITs.

Also, I assume you are familiar with the risk vs return profile of assets - they highly positively correlated.

Anyway, good luck with your RealT investment!

11

I can see 3 main differences: tokens are available in limited quantities, REITs are exchange-traded assets, and property revaluations on RealT also allow you to benefit from capital gains.

Thanks good luck too !