All Forum Posts by: Richard Volkov

Quote from @Bill B.:

So the property owner can never sell? At least never to the highest payer. (An owner occupant.) And probably not to an investor. Would you buy a property where you have to give half the profits away for life? it seems like a bad deal for the rights buyer but maybe it’s even worse for the seller? Do all the work to keep half the profits and crush the resale value?

I’m not saying someone won’t get tricked in to either side of the bad deal. I’m just saying it looks like a really bad deal. You’re going to make the deal based on today’s interest rates and today’s returns. If interest rates go down the seller gets hosed for life. If they go up the buyer get hosed. Basically an annuity with 1mor both parties being amateurs. I assume you’re going to have to target just accredited investors as the judge would make you give anyone else their money back. You’re probably selling securities so I’d check the SEC, etc etc. 

You say you “came across this idea” but it sure sounds more like you want to sell people on the idea. I’m just saying get your lawyers lined up and signed off first. I assume there’s zero chance you want to be the buyer of thsi deal. Or are you thinking you’ll be the middle man taking a piece of every deal and making it worse? Again. Go ahead and run with it. Especially if you have good lawyers on retainer or you’re starting with nothing and really don’t have anything to lose in the case of a judgement. Now, let me break this down step by step to address your concerns clearly.

Let me break this down step by step to address your concerns clearly.

Honorable Mention: In the idea, buying income rights is comparable to purchasing dividend-paying stocks. You’re not buying ownership, but you’re securing a share of the cash flow, which can be appealing for passive investors.

For property owners, the trade-off is receiving immediate liquidity in exchange for sharing future cash flow. Owners who choose this option would likely be those who:

1. Need access to capital quickly without taking on additional debt.
2. Don’t want to sell their property outright but are willing to share future income in exchange for immediate funds.

It’s not a one-size-fits-all solution. Owners who prioritize full control of their future profits or plan to sell soon may not find this appealing. However, for long-term holders who need liquidity, it could be a viable alternative.
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1. "The Property Owner Can Never Sell?"
That’s not accurate. In the idea, the property owner can still sell their property, with the event of buyback executed and property being withdrawn from the platform. Buyback event is like a final decision of property owner to get the property sold - first he needs to get 100% of income share tokens back. That means, a very good for holders deal is published, with potential future benefits from the platform for those who accept. Once withdrawn from the platform, owner is free to sell the property. Once withdrawn, resale value will not be affected, and owner will get 100% of profits back.

2. "What About Changes in Interest Rates or Returns?"
The concern about interest rates affecting the deal is valid. Here’s how this can be managed:

Fixed Income Rights Agreements: The terms of the agreement are locked in when the deal is made. Future fluctuations in interest rates don’t change the agreed-upon terms. This means both parties have certainty upfront.
Market Dynamics: Just like with other financial instruments, market changes may benefit one party over the other over time. For example, if property values increase rapidly, the owner may feel they gave away too much, while if values drop, investors may feel short-changed.

That’s a risk inherent in any long-term financial agreement, but it’s worth noting that the same dynamics apply to traditional real estate deals (e.g., buyers and sellers making decisions based on current interest rates or market conditions).

3. "Isn’t This Just an Annuity for Amateurs?"
It does share similarities with annuities, but the structure is designed for a specific audience:

Property Owners: Typically those who already own income-producing properties but need liquidity for renovations, debt repayment, or other opportunities.
Investors: People seeking exposure to real estate cash flow without the complexities of direct ownership, especially those already familiar with stocks or REITs.

Again, the idea of the model isn’t for everyone. It targets individuals who understand the risks and rewards of income-based investments, rather than traditional property ownership.

4. "You’re Taking a Cut as a Middleman, Making It Worse?"
Taking a small cut to cover transaction costs and operational expenses is standard in platforms facilitating financial agreements. The goal is to provide value by simplifying the process, ensuring transparency, and enforcing agreements through smart contracts and legal safeguards.

As for making it “worse,” the platform’s role would be to:

1. Ensure fair terms for both parties.
2. Provide transparency so neither party feels “tricked” into a deal.
Offer tools like secondary markets for token holders to sell their income rights if they wish to exit.

The aim is to facilitate fair, mutually beneficial agreements—not to worsen deals for either side.

This idea is designed for specific types of property owners (long-term holders who need liquidity) and investors (those seeking passive real estate income without ownership complexities).
There are risks, like any financial agreement, but with proper transparency, legal safeguards, and investor education, it can work as a niche alternative to traditional real estate investing.

Would love to hear your thoughts on what else might need to be clarified or improved in such a proposal.

Quote from @Chris Seveney:

Quote from @Richard Volkov:

I came across a new idea in the real estate space that's worth discussing. It's not about buying whole properties or even shares in a REIT, but instead purchasing rights to the income a property generates.

Here’s how it works:

• - Property owners keep full ownership of their property but can sell a portion of the income rights (like rent or a share of appreciation when the property’s value increases).
• - Investors buy those income rights in small amounts, making it possible to invest in real estate without needing a ton of money upfront.
• - Payments to investors are automated, so rental income is distributed directly without much hassle.

What I found interesting is that this solves a couple of common issues:

• - Property owners can raise cash (for renovations as an example, or any other need) without giving up control of their property.
• - Investors get access to real estate cash flow with lower costs and no landlord responsibilities.
• - The whole process is simplified—no co-ownership legal headaches.

I’m curious about the pros and cons of something like this. For investors, would earning passive income through property cash flow (without actually owning the property) be appealing? For property owners, would selling off some of the property’s income rights (without losing ownership) make sense in certain scenarios?

Would love to hear the community’s thoughts—especially from experienced landlords, property investors, or those who’ve explored fractional real estate investing before! Do you see a model like this catching on?

 Is this not the same as getting a loan? Not sure what problem you are trying to solve?

Hi Chris,

Great question. It’s actually different from a loan in some key ways, and the goal here is to solve problems for both property owners and investors. Let me explain:

How It’s Different From a Loan:

1. No Debt to Repay:
   When property owners tokenize part of their income, they aren’t taking on debt like with a loan. There’s no repayment schedule, no interest, and no risk of foreclosure if the property doesn’t generate enough cash flow to cover payments.
2. No Collateral Risk:
   With a loan, your property is often the collateral. If you fail to make payments, the bank could take your property. In this model, the property owner keeps full control and ownership of the property—there’s no risk of losing it.
3. Flexible and Ongoing Funding:
   Instead of getting one lump sum upfront (like with a loan), owners can gradually raise money by selling income rights. It’s more like having a continuous, flexible funding option rather than a one-time transaction.

4. It doesn’t require much effort compared to getting a loan traditionally:
   When you "get a loan," you typically have to go through banks or rely on friends and family. With banks, you face lengthy approval processes, piles of paperwork, and significant time spent waiting—time that could be better spent using the funds to address your initial needs. Selling income rights, on the other hand, allows you to complete everything online, quickly and efficiently

What Problem Does This Solve?

For Property Owners:
Many owners need quick access to cash but don’t want to sell their property or take on debt. This gives them a way to raise funds by “sharing” their property’s rental income, without giving up control or incurring long-term liabilities.

For Investors:
It solves a different problem. Many people want to invest in real estate but can’t afford to buy an entire property or deal with the hassle of being a landlord. This model allows investors to earn passive income from real estate with smaller amounts of money, without having to worry about property management.

It’s not a loan. It’s more like creating a way for property owners and investors to work together: owners get cash when they need it, and investors get access to real estate income without the barriers of traditional ownership.

Does this make sense, or should I clarify further?

Quote from @Bill B.:

It sounds horrible. If I sell off 100% of the income rights what’s my incentive to keep it profitable? Heck, maybe I’ll give the property manager (me) a 100% raise and an all expenses paid vacation 6 times a year. Maybe the manager should have a company Tesla. If the income goes negative do I  ask you to send me money?

It sounds a lot like timeshares or partial ownership plans room the 1990’s and 2000’s. Great for the seller, really bad for the buyer. 

Hi Bill, thanks for raising these points—they’re valid concerns. Here’s how this kind of setup addresses them:

1. Property Owner Incentive to Stay Profitable

Idea outlines that owners are required to keep at least 51% of the income rights, so their earnings are directly tied to the property’s success. Selling 100% of the income rights isn’t allowed to ensure they remain incentivized to manage the property well.

2. Preventing Mismanagement

In the idea, all income distributions follow predefined rules laid out in binding agreements. Operating expenses like property management fees are capped and transparent, ensuring owners can’t inflate costs or misuse funds.

3. What Happens if Income Drops or Goes Negative?

If the property doesn’t generate income, investors won’t receive returns for that period. However, they aren’t responsible for losses, debts, or costs—these remain the property owner’s responsibility. Investors' risks are limited to their initial investment.

4. How This Differs From Timeshares or Fractional Ownership

This isn’t a timeshare or partial ownership plan.

• No Usage Rights or Shared Ownership: Investors don’t own or control the property. They simply earn a share of its income, similar to dividends from stocks.
• Flexibility: Investors can sell their income rights on a secondary market if they want to exit, which is rarely possible with timeshares.

5. Transparency for Investor Trust

The idea is that system is designed for transparency. Income, expenses, and distributions are automated and visible to all investors, minimizing the risk of manipulation.

This model isn’t for everyone, but it’s a way to give people passive exposure to real estate without the complexity of ownership, while allowing property owners to raise funds without giving up control.

Would you see this working in practice? If you have any questions about the idea, I am open to answer; feel free!

I came across a new idea in the real estate space that's worth discussing. It's not about buying whole properties or even shares in a REIT, but instead purchasing rights to the income a property generates.

Here’s how it works:

• - Property owners keep full ownership of their property but can sell a portion of the income rights (like rent or a share of appreciation when the property’s value increases).
• - Investors buy those income rights in small amounts, making it possible to invest in real estate without needing a ton of money upfront.
• - Payments to investors are automated, so rental income is distributed directly without much hassle.

What I found interesting is that this solves a couple of common issues:

• - Property owners can raise cash (for renovations as an example, or any other need) without giving up control of their property.
• - Investors get access to real estate cash flow with lower costs and no landlord responsibilities.
• - The whole process is simplified—no co-ownership legal headaches.

I’m curious about the pros and cons of something like this. For investors, would earning passive income through property cash flow (without actually owning the property) be appealing? For property owners, would selling off some of the property’s income rights (without losing ownership) make sense in certain scenarios?

Would love to hear the community’s thoughts—especially from experienced landlords, property investors, or those who’ve explored fractional real estate investing before! Do you see a model like this catching on?