Could cryptocurrency payments for real estate become another notable way to invest with Bitcoin, or is the learning curve too steep for wider adoption?
Crypto-investors are betting big on real estate this year as the cryptocurrency market continues to grow. New York Digital Investment Group (NYDIG) recently conducted a survey that revealed 46 million Americans own Bitcoin, which equates to 22% of all adults.
Many cryptocurrency holders have begun investing their Bitcoin (BTC) and other cryptocurrencies in lower-risk assets to monetize in the short term, such as real estate. Ben Shaoul, managing partner of Magnum Real Estate Group, told Cointelegraph that the company has recently been receiving more requests to sell real estate to cryptocurrency holders. According to Shaoul, Magnum started doing cryptocurrency transactions for real estate about three years ago:
“We real estate developers understood what it meant and how we could structure a sale for cryptocurrencies. With the help of our legal team, we figured out how to transact with cryptocurrencies with the consent of the regulators. We first sold some residential units and then sold a commercial condo in New York about three years ago for cryptocurrencies.”
Eric Hedvat, COO of Jet Real Estate and special consultant for Magnum, further said that given the rapid growth of the current cryptocurrency market, BTC payments for real estate are more important than ever, as they offer crypto-investors the opportunity to grow with cash flow: “The cryptocurrency market has created a wide net of new wealth that wants to find traditional assets to invest in, such as real estate. There is also not a lot of commercial property for sale to buy with Bitcoin.”
With particular reference, Shaoul noted that the revenue generated by the retail condo building that Magnum sold for $15.3 million dollars in BTC during 2019 is all credit. “M&T Bank has been a tenant in this building since it was built. They are a multi-billion-dollar bank.” This is an important detail, as Shaoul further commented that people who have created new wealth with cryptocurrencies have no simple way to monetize it or create a steady income stream.
This has especially become the case due to interest rates in the U.S. “In an environment where interest rates are where they are now, you can’t monetize in cash and leave your money in the bank and convert it,” Shaoul said, adding that as a result, Magnum has been seeing a lot of cash flowing out of both the cryptocurrency and equity markets into hard assets such as real estate.
Piper Moretti, CEO and founder of The Crypto Realty Group, told Cointelegraph that cryptocurrencies for real estate transactions are becoming more common. Moretti shared that her firm currently has real estate listings available for Bitcoin in Panama, Tulum, Uruguay, Puerto Rico and Costa Rica.
While this is the case, Moretti mentioned that many buyers purchasing real estate with cryptocurrencies are taking out loans against their cryptocurrencies. “Because of capital appreciation issues and the projection that the Bitcoin price will have long-term price records, people are taking out loans against their cryptocurrencies. This way, they can hold their cryptos and continue to monetize,” he noted.
Joseph Kelly, CEO of Unchained Capital – a Bitcoin financial services firm – confirmed this, noting that the firm has seen 30% to 40% of its loan originations go into real estate.
Buying Real Estate in Panama with Cryptocurrencies
In the Panamanian mountains, near the border with Costa Rica, there is a real estate project that allows buyers to purchase a plot of land of up to one hectare, paid entirely with cryptocurrencies.
The project called Agrorismo is an eco-friendly development, that integrates solar energy, spring water, with a perfect mountain climate, where the best coffee plantations, outdoor activities and a flourishing gastronomy proliferate.
In terms of business, Panama is considered the hub of the Americas for many reasons: it has a modern airport with direct flights to the main cities of the world; a powerful international business center, regional headquarters of important multinationals such as Adidas, Movistar, Nestlé, Under Armour, Huawei, Samsung, LG, among many others. You can include heavenly beaches, a large community of foreigners from all over the world, low taxes and a solid health system to the list of positive reasons.
In addition, when investing in Agrorismo, you can choose to automatically obtain residency by investment in Panama. A second residency that grants a passport and the possibility of having a fiscal domicile in the country.