Investing in real estate with cryptocurrencies is still an uncommon practice, but one that is gaining popularity.
Real estate has been the most popular asset class for decades. Cryptocurrency has recently seen a spike in popularity due to projects emerging on the blockchain, the increase in its use as well as drastic movements in its prices.
The two types of assets have opposite characteristics:
Cryptocurrency is very volatile. The expected returns can be very high, so can the price drop. Some cryptocurrencies can generate passive income through staking or lending.
Real estate is a much more stable asset. Its price tends to increase linearly over time. Rental investments can also generate an interesting passive income.
It is important to diversify your portfolio in order to maximize your returns and limit your risk.
Who should consider investing in real estate using crypto?
Many individuals, companies and institutions have been investing in cryptocurrencies since 2017. Some have liquidated all of their investments due to falling prices and inflation, but not everyone did. Others still have a lot of capital in cryptocurrency, which is currently subject to high volatility. Investing some of this crypto capital in real estate can have several benefits:
Protecting yourself from volatility: Real estate provides stability and can therefore counterbalance the volatility risk of cryptocurrencies
Protect against inflation: The price of real estate is generally correlated with inflation. When there is inflation, real estate prices also rise.
Generate passive income: Rental investment allows you to generate interesting passive income.
At Equito, we've noted 5 ways to buy real estate with cryptocurrencies:
1. Convert your cryptocurrency to fiat
For individuals, it is possible to convert their cryptocurrency, even large amounts through centralized exchanges. It is also possible for businesses to convert cryptocurrency into fiat. However, it will be necessary to create a business account on one of the exchanges that allow it.
Binance, Kraken or Coinbase are among the centralized exchanges that allow you to convert your cryptocurrency into fiat. All that will be left for you to do is to follow the usual process for investing in real estate.
2. Buy from a company that accepts cryptocurrenciesas
Some real estate developers are starting to accept cryptocurrencies. The goal of a real estate developer is to sell their projects. In order to attract more buyers, some have started to accept major cryptocurrencies like bitcoin or stable coins like USDC and USDT.
However, the choice remains very limited today.
3. Buy from an individual
You can offer to pay the seller in cryptocurrency. 3 situations are possible:
The seller is a fan of cryptos and believes in the potential, he can directly agree to sell at the price converted into the cryptocurrency of your choice,
The seller is familiar with crypto currencies. He is likely to accept, however, this represents an additional constraint for him. Therefore, he will be more likely to accept in return for an increase in price,
The seller is not familiar with crypto-currencies. Therefore, it will be almost impossible to convince him.
4. Decentralized Finance: Collateralize your cryptos to buy in fiat
This solution is more technical than the previous ones. It is possible to collateralize your crypto-currencies in order to get a loan in fiat that will allow you to invest directly in fiat. First of all, you will have to find the ideal platform that will allow you to borrow against the collateralization of your cryptos with an interesting interest rate.
The platforms Nexo or Blockfi allow you to do this type of operation.
5. Invest in tokenized real estate
Tokenized real estate has many advantages. In part, it reduces the minimum investment and speeds up the transaction.
With Equito App, you can invest in real estate with 5 different cryptos, starting at the equivalent of €100 and in 2 minutes.
In conclusion, there are several methods to buy real estate with cryptocurrencies. This is a practice that is still not widely used, but is gaining popularity. This will speed up the investment process and lower the costs of each transaction.