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Real estate industry is still wary about blockchain and cryptocurrencies

Now Skelley is trying to shake up real estate finance again, but this time he’s betting ... the World Wide Web was in the early ’90s,” said Keller Williams Realty broker Javier Perez-Karam, who has been closely following the technology.

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By Konrad Putzier | February 28, 2018 04:40PM Illustration by Daniel Nyari Entrepreneur William Skelley co-founded iFunding, an investment platform that helped pioneer real estate crowdfunding, in 2012

But the company quietly shuttered last year, while several other crowdfunding startups also fizzled. Now Skelley is trying to shake up real estate finance again, but this time he’s betting on something else: blockchain — electronic records that are encrypted and linked across a network of computers.Skelley recently founded the blockchain consultancy William Christopher and is advising New York developer Ruben Azrak on his real estate-based cryptocurrency, Realecoin

The digital currency launched last year, and Azrak plans to use it as a new tool to help fund his deals. “Blockchain right now is what the World Wide Web was in the early ’90s,” said Keller Williams Realty broker Javier Perez-Karam, who has been closely following the technology

He argued that the electronic ledger — which is resistant to tampering and can expedite transactions— will completely shake up the real estate industry. Its most famous outgrowths are cryptocurrencies that use blockchain technology to establish records of ownership and regulate currency supply without any involvement from a third party, like a bank. As of early January, the combined value of all cryptocurrencies around the globe was at least $700 billion (that number fluctuates second by second)

Bitcoin rose more than 1,600 percent in the past and hit an all-time high of $19,783 on Dec

17 before dropping and hovering around $10,000, according to CoinDesk, which tracks major digital currencies. Looking to tap into that wealth, at least half a dozen companies now allow investors to use cryptocurrencies to buy stakes in U.S

real estate

Azrak, for one, bought an apartment building on Manhattan’s Upper East Side for $19.4 million last year and is now making the property available to investors via Realecoin. Azrak said the fund won’t change his investment decisions, noting that it’s merely a new way of paying for deals

“I’m going to buy whether it’s with the investors involved or not,” he said. For the time being, using cryptocurrencies to buy real estate allows users to easily move money around from online accounts without the transaction costs of converting into dollars first

Skelley said he hopes that it will offer tax advantages as well, once regulations get ironed out. But he acknowledged it could go the other way, and regulators could crack down on the space altogether

“That’s the biggest risk and the biggest opportunity,” Skelley said. Some observers are skeptical that blockchain and cryptocurrencies can really make a difference in real estate

Blockchain “is still a little bit unclear,” said Mike Sroka, founder of the real estate deal management platform Dealpath, who argued that U.S

dollars have worked just fine

“Here we have a solution that is searching for a pain point.” Cryptocurrency “introduces a lot of risk,” he added, citing the potential for a crash if regulators step in. Other industry players are more bullish on blockchain and its potential to change everything from crafting contracts to establishing land titles

Stayawhile, an online vacation rental marketplace, is working on smart contracts backed by blockchain technology, and the rental listings site Rentberry is also using it to facilitate transactions. Tal Kerret, president of Silverstein Properties, said he expects blockchain to be widely adopted for real estate contracts, but cautioned that change may be slow. “It just needs to be something that people are comfortable with,” he said

“How many years did it take for people to stop using fax machines?” Check out the complete version of this cover story in the February 2018 issue Tags: Real Estate Technology Short URL

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