Trading Real Estate on the Blockchain has begun. Opinions?

Question

Here we go! (i guess?)

This company is slicing up commercial real estate and giving investors the option to trade it on the blockchain! They are "unlocking liquidity" as they say.

https://harbor.com/investors

https://www.bisnow.com/national/news/technology/no...

I'm curious what people think about this? I personally could go either way but it kind of rings a bell back to 10 years ago. (Slicing up mortgages and selling them off) A new fancy derivative yes?

How is Harbor going control the potential mis-pricing and mis-accounting of these derivatives so that they don't become the next "financial weapons of mass destruction" down the road?

I own a building that probably has a market value of 1.2 million. But that is market value. I bought the building last year for 875k. What if I "unlock" the value at 1.2 million, sell it off, investors leverage it, everyone accounts and books the profits, and then the real estate market crashes?

And what if this happens on this scale? This is straight from the Harbor White paper.

"the value of professionally managed global real estate alone was $7.4 trillion[14] and all developed real estate globally amounted to about $217 trillion."

Any thoughts out there?

Account Closed · Answer

The regulatory landscape really is the biggest question mark.

How do you tokenize this equity without it being classified as a security?

I think it will all be ironed out eventually, but it may take some time.

Nicholas Lohr · Answer

I also wonder how they are getting past the SEC rules and the Howey test one this one?

Regulation A+ maybe, but it's so expensive to run a reg A+ offering.

Account Closed · Answer

It's only a matter of time before blockchain technology penetrates the real estate market.

The days of intermediaries in this space are limited in my opinion.

I really see the tokenziation of equity will quickly gain traction as an alternative to using delayed financing or refinancing to get money back out of your deals.

This thing is still in its infancy, but I intend to be on the forefront of it.

John Corey · Answer

Blockchain is technology. A token that represents an ownership stake and produces financial returns is a security (instrument0. In the USA, the SEC regulates securities. Calling something a token when it walks like a duck, quacks like a duck and swims like a duck does not change the facts.

There is administration overhead a digital process can improve.

Fractional ownership can be real estate or it can be securities. It depends on if you own part of the title to real estate or if you own an income stream. In addition, if you have no ability to control, manage and otherwise deal with your real estate, it is likely you have a security interest rather than a piece of real estate.

Harinath Pottam · Answer

Let me share a use case and please comment pros and cons:
I have 4 plex in FL. The concept is to raise funds and pay-off the Bank loan. Use Reg. CF to raise funds to pay off the bank loan. The investors will get a 4% on a monthly basis and 50% of ownership and so 50% of appreciation when the property is sold.

Love to hear from all.

Garan Kama · Answer

I agree. Regulation and implementation is key.

Garan Kama · Answer

Yeah, eager to see what kind of business models are derived by this innovation. There are quite a few companies doing different things with blockchain. Lending/selling equity in your house, borrowing against your equity via tokenization, asset backed tokens (apartments, condos, in a building). The list goes on.

Nicholas Lohr · Answer

these guys too... https://www.meridio.co/

Trading Real Estate on the Blockchain has begun. Opinions?

Trading Real Estate on the Blockchain has begun. Opinions?

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