My Plan for Bitshares In Real Estate

wesphily · January 26, 2015, 04:27:33 AM

The Solution:
Research forms of ownership in real estate. You will see that each ownership has advantages and disadvantages. One thing that you want see are the forms of ownership a DAC can assume. Once a DAC has the ability to assume a form of ownership it will have the ability to be a legal instrument for real estate. It will take a lot of money, time, and expertise to make this possible.

Bitshares is the first crypto technology to develop the idea of a DAC. If it is able to complete this idea then it will create a new chapter in my real estate book!!!

Thanks all for your time. Good luck to you all.

wesphily · January 25, 2015, 10:31:41 PM

Met with my mentor. He believes that the only way to do this is through a REIT. Unfortunately, REITs cost a lot of money. They are created for multi million dollar deals. I'm not prepared to take on that expense. C-corp is also possible, but that is also more complicated then I want to go.

It is possible to integrate bitshares, but I can't make it trustless or even close to it. This means that most crypto enthusiasts would not be interested.

Sorry for the bad news.

Good News: I plan to post a solution to all this later today.

wesphily · January 25, 2015, 05:54:27 PM

Just messaged my mentor. I'll let you all know what he says.

wesphily · January 25, 2015, 05:39:52 PM

Quote from: Gentso1 on January 25, 2015, 05:12:56 PM
As someone who is all ready involved in rental's and home flipping I am not sure how you can work this.

Will every share holder be a "active" owner or are you operating the fund and everyone else is a passive owner?
What will the legal doc's look like? I understand that the LLC will be listed on the property title but how do you tie the investors of the LLC to the LLC. Typically they would come and sign some documents and verify who they are while getting this notarized.
If every shareholder is a active owner then they also get the tax liabilities associated with the property not to mention the benefits. Who do you determine who gets what where?

I am slightly out of my element here because the business I have done is the past has just been with my money which makes it much easier. I had given everything you stated some thought months ago but I do not know a way you can structure to define clear ownership, roles and tax implications good/bad. I have access to a good real estate lawyer that I have worked with for years and a tax guy that could be straight out of Dragnet.

With the above being said their is money to be made here but how you will structure it and show investor ownership VIA a UIA on a title through a LLC without some paperwork from the owners of the UIA will make any lawyer cringe at the thought.

It is definitely not an easy thing to try to tackle. I am about to message my mentor with this idea to see what he thinks about it. Below are his credentials:
Bank Examiner for FDIC
Owner of a Mortgage Company & Private Mortgage Brokerage/Servicing
Real Estate Broker
Appraised Residential & Commercial
Appraised Privately Held Mortgages/Installment Contracts for the State of Missouri
Note Broker
Creditor's Representative Federal Bankruptcy Court
Commissioner of a Large Public Housing Authority
Executive Director of Non-Profit Housing Development Entity
Chair of Municipal Housing Rehabilitation & Redevelopment
Board of Directors Habitat For Humanity Affiliate
Too many years to touch on here and over a 1,000 deals!
Investing since 1974

The founding UIA will be the simplest part of this whole idea. It will be a LLC where investors use bitshares instead of cash. Also, it will allow people from around the world to participate. The only hard part about it will be securing personal information needed to finalize all the documents. Off the top of my head, utilizing a trusted lawyer may be the only way to do this. I'm still investigating.

The deal UIAs are where things get tricky. I'm still investigating the best way to tie in deal UIA investors. A joint venture is the leader so far.

Gentso1 · January 25, 2015, 05:12:56 PM

As someone who is all ready involved in rental's and home flipping I am not sure how you can work this.

Will every share holder be a "active" owner or are you operating the fund and everyone else is a passive owner?
What will the legal doc's look like? I understand that the LLC will be listed on the property title but how do you tie the investors of the LLC to the LLC. Typically they would come and sign some documents and verify who they are while getting this notarized.
If every shareholder is a active owner then they also get the tax liabilities associated with the property not to mention the benefits. Who do you determine who gets what where?

I am slightly out of my element here because the business I have done is the past has just been with my money which makes it much easier. I had given everything you stated some thought months ago but I do not know a way you can structure to define clear ownership, roles and tax implications good/bad. I have access to a good real estate lawyer that I have worked with for years and a tax guy that could be straight out of Dragnet.

With the above being said their is money to be made here but how you will structure it and show investor ownership VIA a UIA on a title through a LLC without some paperwork from the owners of the UIA will make any lawyer cringe at the thought.

wesphily · January 25, 2015, 04:22:58 PM

Quote from: wesphily on January 25, 2015, 04:12:30 PM
Quote from: mf-tzo 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..

I'll investigate utilizing a cooperative. The key will be the forms if ownership it can do.

Silly me. If I hadn't just woken up I would have responded better.

A co-op is similar to a condo. Tenants are share holders that pay maintenance fees and other fees. There are also a lot of rules/red tape. I don't see where it would be adventagious to use this method of ownership.

wesphily · January 25, 2015, 04:12:30 PM

Quote from: mf-tzo 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..

I'll investigate utilizing a cooperative. The key will be the forms if ownership it can do.

wesphily · January 25, 2015, 04:11:32 PM

Quote from: Pheonike 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

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.

mf-tzo · 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..

Pheonike · 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

xeroc · January 25, 2015, 10:37:56 AM

Quote from: gamey 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 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)

wesphily · January 24, 2015, 11:09:39 PM

Quote from: gamey 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!

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.

gamey · 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!

wesphily · 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.

wesphily · January 24, 2015, 08:13:07 PM

Quote from: toast 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?

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.