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Offline wesphily

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My Plan for Bitshares In Real Estate
« on: January 24, 2015, 03:28:11 PM »

Below my initial plan for utilizing bitshares in real estate. Please poke it apart!!

The Company
The focus will be on residential real estate. Each deal will be analyzed to determine the best exit strategies. The company will own rental properties. I will be accompanied by a father & son team to help me find and analyze deals. The father has been a real estate agent for over 30 years. The son has done everything related to real estate. (everything is no exaggeration) More detailed credentials will be given during the official announcement. The company will be a LLC.

The Partnership
I will be a managing partner. A "founding" UIA will be created to allow white listed investors to purchase ownership interest in the company. If an investors wishes to be a managing partner then additional credentials will be required. The funds acquired in this stage will go to a bitshares escrow account. The funds will only be released if all founding investors agree to the cause. Partners will get share dropped interest in "deal" UIAs.

The First Deal
The very first deal will be funded by the founding investors. I will work with the father & son team to locate and analyze deals. Once a good deal is found I will create a workbook on it. The workbook will be reviewed by the founding investors. If the investors agree then the required funds from the escrow account will be released to purchase the property. Profit will be split proportional to ownership interest. A percentage of the deal will be held for future deals, unforeseen costs, and/or administrative requirements. If everything works as planned then we will continue with "deal" UIAs.

The Deal UIA
Same as before, each deal will be located and analyzed by the father & son team. I will create a workbook once we find a good deal. This time, I will post it in the bitshares forum for potential investors to review. Interested investors will need to meet certain qualifications to be whitelisted to purchase shares in the deal. Founding investors will have a percentage of the deal share dropped. They will also have the opportunity to purchase additional shares in each "deal" UIA. All funds will go to a bitshares escrow account. Fund lost due to currency conversion, closings costs, and unforeseen costs will be factored into each "deal" UIA. Target fund goals will be set accordingly. Once the target funding is met the bitshares will be released to purchase the property. Profit will be split proportional to ownership interest in the "deal" UIA. No percentage of the profit will be held for future deals, unforeseen costs, and/or administrative requirements. If the property is a rental then the UIA will live until the rental property is sold. If it is not a rental then the UIA will die once the profit funds are dispersed.

The Jobs
Below are a list of jobs that I would like fulfilled by founding partners.

Fund Manager: This person will be responsible for hedging funds to prevent loss due to negative volatility. Profits realized by the fund manager will be dispersed based on ownership interest in the founding UIA.

Lawyer(s): Needs to be well versed in real estate.

Software Developer: This person will need to be well versed in crypto technology. The goal of this position will be to help our company fully utilize all possible crypto technologies to further decentralize our efforts as well as improve efficiency and success.

The Deal Breaker
The hardest part of this entire idea is the management of personal information. To file as a partner in a LLC a partner has to have an employee identification number. This requires a lot of personal information that has to be given to the IRS for tax and law purposes. I am still investigating possible third party solutions that will allow me to issue identification numbers without having to handle the personal information myself.

The Wesphily Questions
1) Exact numbers and percentages will be determined once the founding investors are determined and the LLC is created. Negotiations will need to happen to determine things like: my ownership interest, how much funds to use for the first deal, ect...
2) I'm doing everything I can to make this trustless. Until the rest of the world agrees, there will be some trust required due to taxes and laws. I can only promise that I'll do everything I can lower the amount of required trust.
3) There are two ways I have thought about handling deals that fall through. I like the second option because if gives us more possibilities on future deals. Either way, funds are held in escrow so it is not like I'll be on a yacht somewhere drinking it up.
     a) Return all funds
     b) Hold funds and share drop accordingly on the next deal found.
4) Name of the company has not been decided
5) The LLC will be held in the state of Missouri. More exact details will be given to founding investors.
6) Currently, the father and son team will not be partners in the LLC. They are semi-retired. I am extremely luck to have them on my side.

I understand the risks of posting this on the forum. I'm doing this because there are a lot of smart people on this forum. Also, trying to explain this to industry experts in real estate/law/business is extremely difficult since most have no idea what crypto technology is! If this idea turns out to be a bust then I'll be doing it all the old fashioned way. Thank you all for your time!


Offline graffenwalder

Re: My Plan for Bitshares In Real Estate
« Reply #1 on: January 24, 2015, 03:41:33 PM »
There are already some centralized real estate Crowdfunding platforms out there.

What is the advantage of doing this with UIA on BTS?

Your proposal has a big trust issue. After funds are released what is to stop you walking away with those funds?

To be honest I would feel more comfortable backing your deals on a centralized platform, so I would have the illusion of holding them responsible.

Edit: how will the white listing of investors work?
« Last Edit: January 24, 2015, 03:45:10 PM by Graffenwalder »

Offline wesphily

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Re: My Plan for Bitshares In Real Estate
« Reply #2 on: January 24, 2015, 03:55:56 PM »
There are already some centralized real estate Crowdfunding platforms out there.

What is the advantage of doing this with UIA on BTS?

Your proposal has a big trust issue. After funds are released what is to stop you walking away with those funds?

To be honest I would feel more comfortable backing your deals on a centralized platform, so I would have the illusion of holding them responsible.

Edit: how will the white listing of investors work?

I'm about to leave to look at a place that I may be getting married at. I will respond to all replies as soon as I get back. Sorry for the inconvenience!!!

Offline wesphily

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Re: My Plan for Bitshares In Real Estate
« Reply #3 on: January 24, 2015, 07:38:18 PM »
There are already some centralized real estate Crowdfunding platforms out there.

What is the advantage of doing this with UIA on BTS?

Your proposal has a big trust issue. After funds are released what is to stop you walking away with those funds?

To be honest I would feel more comfortable backing your deals on a centralized platform, so I would have the illusion of holding them responsible.

Edit: how will the white listing of investors work?

There are actually more disadvantages than advantages. I'm doing this because I'd like to be a pioneer. Also, real estate is not a rigid investment. Investors need to be open to solving problems to make the real money. I feel crypto investors are best suited for this.

The company will be a registered LLC where I'll be a managing partner. If I were to run with the money then people would need to call the police. I'd then have to face court charges. Bitshares will not relieve me of this.

Finally, most people would not feel comfortable doing anything with crypto technology. There are reasons why it is not massively accepted.

Thanks for the response. If I didn't answer your questions fully then please ask what I missed.

Offline eagleeye

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Re: My Plan for Bitshares In Real Estate
« Reply #4 on: January 24, 2015, 07:48:45 PM »
This is awesome, I agree though with the trust issues, how do we make this work?

Do we make it like escrow after a certain block (predetermined) say quarterly or monthly a dividend is pay such as a REIT (Real Estate Investment Trust).

How do we stop this guy from just taking the money, do we put code in place where a person can vote on a certain block being paid out a certain price?

How do we get the UIA to be the owner of the property?

Hes pioneering something that could make bitshares go nuclear in the sense https://bitsharestalk.org/index.php?topic=8072.0

Offline toast

Re: My Plan for Bitshares In Real Estate
« Reply #5 on: January 24, 2015, 08:06:20 PM »
Guys, he's not inviting you all to be the shareholders of his company and make decisions. He doesn't need your trust in how profitable he is or how he manages the company, he just wants to use our ledger system for his shareholders.

I think this is a good idea. Have you been able to talk to someone like stan or DACx about this?
« Last Edit: January 24, 2015, 08:08:01 PM by toast »
Do not use this post as information for making any important decisions. The only agreements I ever make are informal and non-binding. Take the same precautions as when dealing with a compromised account, scammer, sockpuppet, etc.

Offline wesphily

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Re: My Plan for Bitshares In Real Estate
« Reply #6 on: January 24, 2015, 08:08:36 PM »
This is awesome, I agree though with the trust issues, how do we make this work?

Do we make it like escrow after a certain block (predetermined) say quarterly or monthly a dividend is pay such as a REIT (Real Estate Investment Trust).

How do we stop this guy from just taking the money, do we put code in place where a person can vote on a certain block being paid out a certain price?

How do we get the UIA to be the owner of the property?

Hes pioneering something that could make bitshares go nuclear in the sense https://bitsharestalk.org/index.php?topic=8072.0

I had planned on the title(s) being conveyed to the LLC. Could treat each UIA as a joint venture. This would allow investors into a single deal and would be dissolvable after the deal was completed. Also, join ventures can assume any form of ownership.

I don't want to do a REIT. Below are the requirements that might explain why:
1) Trust must be beneficially owned by at least 100 investors
2) 95 percent of the trust's gross income must be derived form investment income
3) 75 percent of the trust's gross income must be derived from real estate investments
Be kind of hard to find crypto investors who meet these qualifications. I myself to not meet these requirements. There are several more. These are just a few of the highlights.

A syndication is another possibility. I'd need to investigate the differences between a syndication and a joint venture.

I'll have to ask my partner how titles are conveyed when joint ventures are used. I'll also ask about the differences between joint venture and syndication.

Keep up the great questions!

Offline wesphily

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Re: My Plan for Bitshares In Real Estate
« Reply #7 on: January 24, 2015, 08:13:07 PM »
Guys, he's not inviting you all to be the shareholders of his company and make decisions. He doesn't need your trust in how profitable he is or how he manages the company, he just wants to use our ledger system for his shareholders.

I think this is a good idea. Have you been able to talk to someone like stan or DACx about this?

I'm not inviting people to be shareholders in the company. That is a correct statement. I'm asking for partners in a LLC and then partners for join ventures in future deals. The legal and tax ramifications are different.

I also plan to use bitshares as a ledger system. That is correct.

I have not spoken to Stan or DACx about this. It all hit me at once so I had to post it before I lost it. I still need to discuss this with my partner.

The exciting part about this for bitshares is that it could create a lot of volatility in bitshares and UIAs. It may also pave the way for others to try to do this with similar or other industries.

Offline wesphily

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Re: My Plan for Bitshares In Real Estate
« Reply #8 on: January 24, 2015, 09:07:07 PM »
Did some research. Syndications have a lot of red tape that requires a very experienced team. I'm going to avoid this for sure.

Join venture is still possible. It also has extra legal/tax ramifications. The positive side is that each venture would have its own LLC. Property can be conveyed to the join venture. So, partners in the joint venture would have ownership in the property.

I'll ask my partner if there is a better way.

Offline gamey

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Re: My Plan for Bitshares In Real Estate
« Reply #9 on: January 24, 2015, 10:37:19 PM »

Yes please pursue this.  If I had to invest crowd-funded type UIAs I'd feel more comfortable with this than most. You seem legitimate. Keep at it!
I speak for myself and only myself.

Offline wesphily

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Re: My Plan for Bitshares In Real Estate
« Reply #10 on: January 24, 2015, 11:09:39 PM »

Yes please pursue this.  If I had to invest crowd-funded type UIAs I'd feel more comfortable with this than most. You seem legitimate. Keep at it!

Thanks for the kind words.

It appears that others agree. I expected a lot more posts with concerns about my idea that I had not thought of.

Offline xeroc

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Re: My Plan for Bitshares In Real Estate
« Reply #11 on: January 25, 2015, 10:37:56 AM »

Yes please pursue this.  If I had to invest crowd-funded type UIAs I'd feel more comfortable with this than most. You seem legitimate. Keep at it!
I 2'nd this! Looking forward to many more custom use of our blockchain! Your approach totally follows the idea of BitSharesME (from what was known about ME)
Give BitShares a try! Use the http://testnet.bitshares.eu provided by http://bitshares.eu powered by ChainSquad GmbH

Offline Pheonike

Re: My Plan for Bitshares In Real Estate
« Reply #12 on: January 25, 2015, 11:42:28 AM »
There was a fund on Havelock that did something simular. It was a Hong Company that worked with a US LLC for investing in properties.


Found it,

https://www.havelockinvestments.com/fund.php?symbol=RENT

« Last Edit: January 25, 2015, 11:46:02 AM by Pheonike »

Offline mf-tzo

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Re: My Plan for Bitshares In Real Estate
« Reply #13 on: January 25, 2015, 03:01:57 PM »
I think that it may be easier if you form a cooperative and use BTS technology rather to form an LLC. I maybe wrong..

Offline wesphily

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Re: My Plan for Bitshares In Real Estate
« Reply #14 on: January 25, 2015, 04:11:32 PM »
There was a fund on Havelock that did something simular. It was a Hong Company that worked with a US LLC for investing in properties.


Found it,

https://www.havelockinvestments.com/fund.php?symbol=RENT

13% cap rate minimum? Most people shoot for 8-10%. 13% would be hitting a home run. Wonder who they are targeting to get such great deals.

 

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