Real Estate: Buy your house using your crypto as collateral

Property: Instead of selling their crypto assets to buy a house, crypto investors can use them as collateral, explains Troy Huertamanaging director of By Brix.

After several months of rising prices, the US real estate market may soon calm down. Fed Chairman Jerome Powell revealed last week that activity in the real estate sector has weakened.

In contrast, the recent rate hike by the Fed had a positive impact on cryptocurrency prices. This is a good sign for the crypto market, which has been subject to high volatility over the past few months.

Although their trajectories are likely to be different, these two seemingly disparate sectors have one thing in common: opportunity. Currently, the real estate market offers crypto investors an unprecedented opportunity to enter the underserved crypto mortgage market. Now they can use their digital assets to buy real estate.

Real Estate and Crypto

Long-term investors who have accumulated crypto assets over the years have weathered many storms, including the current market turmoil. Now is probably not the time to sell your crypto assets. But savvy investors must find ways to make their crypto reserves work. Certain types of home loans allow investors to use this crypto as collateral to purchase a home.

Gradually, players in the sector are building the necessary infrastructure to allow this type of transaction. This is to allow crypto holders to maximize the potential of their holdings.

ByBrix is ​​one of those players. This is a recently launched joint venture between crypto app Blimp Homes and DeFi incubator AQRU. ByBrix guarantees the digital assets and allows their holders to use them in their real estate purchases in the UK, Canada, Australia and the US.

Use your crypto as collateral

Instead of selling their crypto assets to buy a house, crypto investors can use them as collateral. This way, they can continue to benefit from any future appreciation of their crypto investments. Plus, they will avoid paying transaction costs associated with the sale, as well as any potential capital gains taxes. In fact, instead of converting the crypto into fiat currency, the platform keeps it safe until the borrower repays the loan.

With this solution, the crypto plays the role of security for the deposit paid to the seller of the house. There are also other loans that cover the rest of the purchase amount (provided by specialist service providers via ByBrix). This distinguishes the mortgage from the crypto security. Therefore, if the house is foreclosed, the secured cryptocurrency is not affected.

To be fully grasped, the opportunity presented by crypto lending will require a great deal of education in the real estate and digital asset sectors. In fact, the mechanics of these instruments are nuanced. All stakeholders – from potential borrowers looking to spend their crypto wealth, to intermediaries such as brokers and even regulators – will need time and help to embrace this new mindset. In the same way that cryptocurrencies have changed our definitions of money and currency, crypto lending can redefine the value proposition of the real estate industry.

About the author

Troy Huerta is the CEO of ByBrix, a financing platform that specializes in the purchase of real estate secured by crypto assets.


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