Cryptocurrency, The Blockchain and Lenders – Yes, It’s a Thing.

“The times, they are a changin’”, as a mid-century poet once stated (yeah, it was Dillon but roll with it).  Since Bitcoin and cryptocurrency hit the mainstream craze, some traditional lenders are beginning to entertain the idea of including crypto holdings as assets when prequalifying clients, as well as working out hybrids such as a crypto down payment and financing the rest of the loan in fiat. The seller doesn’t necessarily need to accept the crypto down payment unless they choose to do so, but as we know a crypto to fiat conversion is just as easy.

To add, crypto lenders are popping up, and they each have their own niche in the space. I’ve listed below what I think are the best ones so far. As Realtors in the new age of crypto, we should all add these to our knowledge base and continually research the new platforms that are consistently being introduced, and by all means, please email me the ones you think we should keep an eye on.

If you’re a savvy crypto investor (or a beginner as well), chances are you’ve heard of SALT Lending. SALT Lending holds blockchain investments as collateral for cash lending. A borrower sends the collateral to the SALT collateral wallet and fiat funds are then transferred to the borrower’s bank account. They maintain portions of the collateral both in hot and cold storage, where it remains the property of the borrower, and any depreciation or appreciation still belonging to the borrower. Once the loan payments are completed, the collateral is returned.  The minimum amount one can borrow is $5,000 with no maximum. No personal guarantees or credit checks involved. Rates are varied due to market conditions, but my guess is they’ll tack on a little more due to the specialty, which I’m almost positive any crypto borrower won’t mind.

I know I’ve mentioned my friends at Homesidekick, and I’ll mention then here again. These guys cut out the middlemen in mortgage funding as loans are directly sourced from other individuals. In other words, your property is crowdfunded. They, along with the other crypto lending platforms, rely on blockchain technology for customer identification, underwriting and title review. The information is transparent to you as the borrower, so you’ll know at any given time where you are in the process, how much each party is receiving along with distribution of funds. Another selling point is that the loan is closed within days, never sold to the secondary market and the folks at Homesidekick will always be the point of contact. Refreshing, isn’t it?

Then there’s the new kid on the block, Block66 (yeah, see what I did there). They’re so new that as of this writing their website isn’t yet completed but will be by the end of May 2018. Block66 has an automated alignment process that will connect potential borrowers and lenders, saving time and costs. CEO Joe Markham is aiming to complete the entire loan process from beginning to end in 48 hours using, yep, you guessed it, blockchain technology and smart contracts. I’m excited about this one because like SALT, I can get my own favorite traditional lenders on board and adapt the loans to fit my clients’ personal needs and get my clients up and running in no time whatsoever.

I’m sure there are many other similar platforms looking to add value to the lending side, as the lending process as we all know it is archaic, time consuming and expensive. As the blockchain-powered real estate platforms grow and secure their footings, I see them partnering with lenders like these for faster, cheaper, transparent and verifiable end-to-end transactions that can be completed in a matter of just days rather than the average 30-60-day escrows. Get ready to see a massive shift in the next two to five years.

AML and KYC – Tales from the Trenches

I get referrals all the time. Some good, some great, some suck. I appreciate all of them and regardless I know it’s all for the good: making the connections, wanting to help a client and hopefully make a few bucks in the meantime.

To my knowledge, there aren’t many real estate agents that are actively in the crypto space. Less than ten, maybe? By active, I mean actively helping buyers and sellers purchase or sell real estate with crypto, not just watching the market and investing. In fact, I think I have agents put into five categories:

1. Agents who don’t care/don’t want to deal/think crypto is a scam
2. Agents who are just jumping on the crypto bandwagon but not knowing a thing about it
3. Agents who are interested and want to be involved but not sure how
4. Agents who are well versed in crypto but have never done a deal
5. Agents who have completed crypto-to-cash or crypto-to-crypto transactions

I get a lot of calls from category number three. Well-meaning, they know it’s not going away anytime soon, but may or may not have time to deal with a client who calls to say they want to buy or sell with cryptocurrency.

To those agents, I say, keep the referrals coming, even though many of them aren’t what they say. There is still a huge learning curve for all of us, and I’ll get to that in a minute, but I’ll share a recent experience first:

I had a referral from a great agent back east who sent me a lady in California who supposedly had a ton of coins and was ready to buy. So far, so good. When I got her on the phone, I asked the usual, basic questions:

1. Which coins are you holding?
2. Are you looking to do an “all cash” transaction or a hybrid?
3. What is your price point?

From these three initial questions, I can tell if they’re bullshitting or not, and a savvy crypto investor will show themselves immediately. In this case, the woman told me she was holding $36M in TBC, was looking to convert it to Bitcoin for either a Bitcoin-to-Bitcoin or a Bitcoin-to-cash purchase, and her price point was in a certain area of Los Angeles county anywhere from $100K to $1M.

Danger, Will Robinson!

Let me state that there are over 1,500 altcoins out there. I’m familiar with MAYBE 50. I had never heard of TBC and when I asked her on which exchange she had it, she couldn’t tell me. Also, you know as well as I do that one can’t purchase a cardboard box for $100K in Sunny SoCal. Not even for $300K.

I politely excused myself from the conversation and said I would do some research and get back with her the following day, and excited as she was, she said she would send me some videos about the coin (um, okay). I then went on to coinmarketcap.com (a must for anyone following coins) and did a search for TBC. Nothing. Then I did a search for “The Billion Coin” (yes, that’s what it’s called) and for some reason it came up on Google under coinmarketcap.com, so go figure. At its heyday back in April of 2016 it was valued at a little more than $4.00, but now it’s worth $0.001. In her mind she had 80 coins valued at $36 Million and was ready to buy her first home. Lawdy. When I watched the videos she sent, I couldn’t believe my eyes. There was a woman with earbuds and a tank top, sitting in front of a crappy apartment building with a cheesy (and loud) fountain, congratulating her viewers for taking the next step to financial freedom. Puke. Mr. Google wasn’t shy in letting me know that the coin was a total pyramid scheme pump-and-dump, preying on people who are desperate to get out of debt. I didn’t have the heart to call her back to tell her she was flat broke, instead I called the referring agent back to let them know (wimp? Yes.) that the coin was bogus. All in a day’s work.

Another fun one: A guy from another country found me on LinkedIn and said he had a billion dollars in DynamiCoin. Cool. Seeing as how its market capped out at $13 million and change, I was still curious. He informed he wanted to buy up all the major Beverly Hills hotels, one by one, and was completely serious. I’m on it. Not. Next time, start a little smaller, K?

Another recent case, another nice person asked if I would promote an island off Croatia, yacht included (or not, if that was your preference) for Bitcoin or whichever preferred currency. I’m all too willing to help, provided they can verify the owner and that it is indeed a legitimate property with land records. They sent me dozens of beautiful drone shots, but when I persisted on verifying, they stressed the owner was very firm on keeping his anonymity. We went back and forth a couple of times, but my gut just said no. No way am I going to help sell some rando island with a yacht – for all I know Elmer Fudd owned it, which would be more information than what they were willing to give me.

Agents: All I’m saying is do your homework. The last thing we want to do is lose our license over some horrible money laundering debacle. Know your customer. Even if you’re not quite sure, better to err on the side of caution. Or call me. If I don’t know, I know people who do.

My whole point to the sad, long-winded stories is that we have a hard enough time vetting regular buyers, and now we’re tasked with vetting the buyers who are wanting to buy with this new crypto stuff. Someday soon, blockchain technology will be able to automatically verify buyers, sellers, properties, etc. and streamline the process but until then, ask. Questions. If it still eludes you and you don’t know what other questions to ask, then email me at piper@thecryptorealtygroup.com.

Facebook and Cryptocurrency

Facebook had some hard-hitting news last week when it announced its ban on ads containing cryptocurrency, ICOs and Bitcoin. As I stated in my vlog, I get what they’re trying to do as Facebook cracks down on advertising, but I feel as if they’re throwing the proverbial baby out with the bathwater due to their lack of discernment of which businesses are actually legit. I know it’s not a small task, but the rest of us who run upstanding businesses based on crypto shouldn’t have to take the brunt of the idiots who claim they can make you a fortune so you can quit your day job.

One snake oil salesman is James Altucher. If I’ve seen him all over the place I’m sure you have as well. According to CCN.com, Mr. Altucher has spent over $2.7M on ads that have turned into the herpes of crypto advertising that follow you everywhere whether you like it or not. He has cracked the “crypto code,” and for a mere $2,000, he’ll send you a newsletter that outlines how you too can jump on and ride the crypto train. He even went on to voice his support for the Facebook ban. You go, James.

Other ads which I find annoying are in my own industry, which kills me. I know that crypto is a hot commodity, not matter what kind of market we’re in week to week. A colleague of mine sent me a link to a Realtor up in NorCal offering a webinar on how to convert Bitcoin to real estate investments, followed up by a free coaching program. Just out of curiosity I found the agent on LinkedIn and sent him a message just to see what experience he had with crypto transactions, and I have yet to hear back. No doubt there’s some sort of hidden sales pitch in there somewhere.

I feel like I have to reiterate this: DON’T GIVE YOUR TIME AND MONEY TO ANYONE in order to learn about cryptocurrency. It’s all right in front of you on the Interwebs. DO YOUR HOMEWORK. Heck, when I have the time I schedule calls with agents all over the country (world, actually) who have reached out to me to help them and answer any questions they may have. I learned by doing (I find myself in the baptism-by-fire scenario frequently ‘cause that’s just how I roll). Converting crypto into a tangible investment like real estate isn’t rocket science, it just takes some ingenuity, creativity and some critical thinking to get the deal done.

Same goes for ICOs. If you get wind of one that piques your interest, do the homework, don’t just buy into it blindly and cross your fingers. Also, any ICO who advertises on Facebook should be banished from the crypto space entirely as well as watching any Breaking Bad episodes for the remainder of the century. That’s how terrible they are.

I’ll step off the soapbox now. Although Facebook is well-meaning most of the time, it will be interesting to see its progression with cryptocurrency itself. Mark Zukerberg announced looking into cryptocurrency as a form of payment and a possible partnership with Litecoin, while Coinbase appointed Facebook exec Marcus Lee to its board of directors. Hmmm…

So where does that leave us, the businesses who still need to get the word out that they’re, well, in business? I found a decent article on Jellymetrics.com about where to begin, and I’m planning to try some of these out (except Snapchat. I would have to turn in my Gen-X card if I snapped, which is too high a price to pay):

Reddit – The most logical alternative to Facebook and possibly better audiences.

Instagram – Linked to Facebook, but so far so good on crypto ads.

Steemit – I’ve included another good article here for reference.

Product Hunt – Completely new to me. Follow up discussion will ensue.

Google Ads – Who clicks on an ad when doing a search? Would love to get your experience with this one.

Also Twitter, LinkedIn, Pinterest (not so much crypto, but I see a lot of traditional real estate shots here), Stumble Upon, Snapchat (shudder) and Quora.

Blockchain and Brokerages – Getting the Conversation Started

We’re still at the forefront of blockchain technology, what it is and how it’s going to disrupt a multitude of industries. There is no “if” in this scenario, only when. While my obvious focus is on real estate, I and my colleagues who are on board are still figuring out the how. No doubt the early adopters will have an advantage, but what I know for sure is that blockchain technology will fast become a necessity in the day-to-day innerworkings of real estate.

Since my involvement in the crypto space, I’ve had the pleasure of meeting several brilliant blockchain experts, most have which opened my eyes to the possibilities of blockchain technology. I’ve blogged about several proptech ICOs in the past, and not to do another shameless plug (who am I kidding, it’s my blog, isn’t it??) for CPROP, but they’re one of the frontrunners in the race for wide-spread adoption in the industry. Powered by blockchain, the concept is to have a ‘one-stop-shop’ for everything needed in a real estate transaction, from selecting an agent, to the purchase agreement, removing contingencies, finding vendors, financing and closing the deal. In theory, Escrow times can be slashed to just days instead of the typical 30-45-60-day escrow.

I also met Oliver Tickner, CEO of StreetWire. Agents will be soon able to update their property statuses on his platform and receive tokens (in a nutshell). Why is this useful? Because blockchain technology can track everything tied to a particular property, saving time and energy while mitigating risk and fraud. He also turned me on to a spectacular idea, and that was being able to verify buyers with a hash number – any potential buyer could be prequalified through their bank, and the coveted prequal information would be sitting on the blockchain for verification through their unique hash number. To any buyer’s agent, this in itself is worth its weight in gold. 

I bet you’re thinking, “Well this is all just great but how in the hell do we implement this in our own office?” Several ways. Once these startups are up and running, there will be portals in place, just like an online database. You wouldn’t need a special IT department with expert blockchain coders or a pool of miners. Other alternatives for smart contracts are AI-based platforms such as Matrix. An agent would be able to enter the rules of the contract in simple language, and the technology codes it on the blockchain.

There are some hurdles, the main one being getting your broker on board. With enough education and real-world applications, I feel like it would be a no-brainer. I’ve taken mine to a couple of blockchain Meetups in our area, just to get the conversation started and for her to meet the people who are using the technology right now.

To delve deeper into the subject, I highly recommend reading The Business Blockchain, by William Mouaygar, or taking the non-technical blockchain course on blockgeeks. And if your company or brokerage is already running its day-to-day applications on the blockchain, I’d certainly love to hear about your experiences!