Fractional Property Ownership For The Masses!
It will soon be possible to purchase a fraction of an income property through an app, but there's no mention of blockchain technology just yet.
Login to the app, complete KYC, send an ETF and boom you're now making rental income from a property you partially own!
The upside is this UX will likely open up the possibility of rental income property ownership to many who otherwise couldn't afford the full price tag on a property.
On the downside it's centralized like almost all other old school investment vehicles and doesn't take advantage of blockchain technology.
Fractional Ownership at It's Finest
Two Canadian startups (Addy/BuyProperly) are making headlines right now with their "disruptive" technology that aims to open up income property ownership to the everyday person.
It's called fractional ownership, and it allows individuals to buy a share in a single house, apartment building or industrial park.
Fact is property is becoming more and more expensive every year here in Canada, owning a house in my city has been out of reach for most millennials for quite some time now. The average detached house price here is nearly $2 Million.
With the large population here and steady in flow of immigration there has been a healthy rental market for decades with no signs of slowing down. Many of the city's detached houses include a rental suite that gives the owner an income stream.
If you don't have a massive down payment and C level income it's going to be next to impossible to acquire one of these properties. That's starting to change as we see there's strength in numbers and people can come together to purchase properties online.
Partnerships are not a new thing, and many of us know people who have partnered together to purchase larger properties. These partnerships happen all the time, but they require trust and often times a deep pre-existing relationship or demonstrable history in the property ownership business.
With Apps like Addy the aim is to remove all those barriers, and only requires trust in the apps owners, a private company, and their development team which builds code behind closed doors.
Possible Through a DAO
I think this would be a great fit for a DAO, as it would go one step further in removing the need to trust many of the processes managed by a centralized company with a human(s) in control.
Humans are cable of swindling, of deceit, and fraud. An openly visible smart contract is not! It can only do what the code says it can do, the code is law.
A DAO's smart contracts could accept payments from users, and provide in return a token that represents a share in the rental income, and distribute revenue to it's holders.
Governance could be established that would allow the DAO to choose and pay a property management company for the upkeep of the property, and approve expenditures to maintain the operation of the property.
Governance tokens holders could go further and even submit proposals for example to keep a % of income generated within the DAO to used to purchase additional property in the future. If enough token holders approve then the DAO will be on the path to acquiring additional properties to scale up the business. Those not interested could sell their of tokens on the market.
How Does This Play Out
I'm thinking the fractional ownership market grows and matures to the point where it's ready to be disrupted by crypto. At which point DeFi entrepreneurs look to launch products that compete with established aps while opening up fractional ownership to cryptocurrency holders around the world.
Or perhaps this is something that could be successful now if it was brought to market today.
Would you be interested in purchasing shares of a rental income property in Canada or the US through a DAO?
Ciao for now,
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Certainly an interesting concept, to be sure and a more direct way to be in real estate than being into a conventional REIT.
That said, for some reason the idea of being a tenant in one of these funded projects makes me feel a bit uneasy; like there's a cloud of uncertainty hanging over my living space... these days SO much energy and attention seems to be focused on the investing side of real estate... and pretty much none on those actually living in that real estate.
=^..^=
yeah with a REIT, its a basket of properties and you just buy stocks, you cant choose which property. With this you can choose which property based on the potential return and risks..
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Wow... this is a good idea and it is not really bad.
I think it will catch on!
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It's just funneling money from the "I accept I'm poor, I'll rent forever" to the "I'm poor but in denial, I'll pretend to be an owner"
Facilitated by shark brokers.
Long term the bubble bursts because society isn't increasing in the middle class that can weather the lows. Creating a small group of wealthy, extracting from a stagnant society where the masses consumers themselves need stimulating.
Australia is an example. Interest rates at almost zero pushing property prices up but the renters don't have job security. Every economist sees that as a bubble that will burst.
Feeding on renters in this current world is not a clever system.
Yes, this is pretty close to what I am looking for to put my cash savings into some income property when I can't afford the outrageous market prices at the moment.
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cool, with Addy there's no minimum investment amount but there is a max per property of I think 1,500. With the other one, BuyProperly, I think the minimum is higher, around 2,500 possibly. I think this concept is going to be popular, just hope DAO's can eventually do it better, so we can use crypto to invest in real-estate..
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