Property Management built on Bitcoin (The Better Bitcoin Business Model)
1105 sats \ 9 comments \ @thecommoner 22 Jun bitcoin
let's explore my funding plans/ideas...again I am in no way stating this is the only way to do this, just that it is the way that working for me:
I have a fixed rate 30 year mortgage on a 4 unit building...entered into this agreement back in 2016 somewhere around 3.75% interest - my loan payments are about $1170/month plus about $175/Month for insurance and $900/month for taxes...yes my taxes nearly exceed my loan payment and likely soon will exceed it...my expenses....lights/common area heating/hot water etc...and maintenance (which I do myself) add about another 300/month
Totaling - about 2545/month all in....not too bad for 4 units bring in about 4800/month - I am able to save about $2200/month - or 24,000 year so with one tenant paying me in bitcoin I could easily have another one paying in BTC or all 4 paying half their rent in BTC and meet my FIAT obligations - (this is basically so I don't have to sell BTC to pay FIAT only bills)
I know - I got a steal on my building, I hit the timing just right, I have 27 years of experience in the field...most people will not make out like this....but even so... I am simply trying to use my experience as an example...your debt coverage may be higher or lower...no matter what you are probably thinking the same thing I have about many times.
How to pull some of that money out of my property and put it to better use...cause if you know anything - you know that USD sitting in an investment is still losing its purchasing value in the future so you want to maximize your leverage....and that is a feedback loop I am glad to have never fallen into...as when you maximize your debt you have to maximize your rent...constantly pushing the cycle forward into the future...the debt into the future for future generations to take on...
Bitcoin gives us all the ability to break this cycle - instead of rolling that "surplus cash" into more debt and higher rents you can roll it into Bitcoin and it immediately turns that paradigm 180 degrees and instead of constantly refinancing the debt to pull cash out to do capital improvements or go on vacation...you can pull the value of your Bitcoin reserves out to do these things.
Now this is of course if you believe in the NGU technology of Bitcoin (which has of course proven itself over the its entire life cycle to date....but hey....maybe you want to wait until it has proven itself out over 30 years, or 60 years.... Though you likely won't have that long....as banks figure out this concept the loans you try to get on your "equity" will carry such high costs that you will not pencil out the deal...and you will be forced to begin using Bitcoin and will be that much further behind the early adopters....
I think the key for me was the concept of "Keeping the End in Mind" - what I mean by that is this.... I have drank the kool-aid, I believe in Bitcoin 100% and if Bitcoin is going to do what it does....The future of all value expression will be based on a Bitcoin Standard...if that is true, then this model works....100% of the time and (this is the part I just recently realized) LITERALLY INDEFINITELY INTO THE FUTURE.... Just think about that...If your Bitcoin continues going up indefinitely into the future your business (if not overly leveraged in the FIAT system) will become an indefinite asset so long as it is providing value to others.... In fact you will be able to constantly pull Bitcoin value out of your business or asset as that value in Bitcoin rises.
Just sit with that thought for a few minutes - cause it totally breaks my mind.... The Bitcoin I hold in reserves for my property right now will always increase in value (as long as Bitcoin stays decentralized and secure) and as it continues going up in value I will need less and less of it to fully capitalize the building....which means I can charge less and less for rent as well... If this doesn't "break your mind" I don't know what will...
This literally works for any business, any person, anything.... More to come later.... My mind is melted
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53 sats \ 1 reply \ @Coinsreporter 22 Jun
This literally works for any business, any person, anything...
Yes, it works where you are right now. There are still many places where Bitcoin is not even known to 99.9999% of people so, it's really difficult to realise a business in such places. Can you suggest something on how to start a business that accepts Bitcoin on such places ?
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0 sats \ 0 replies \ @thecommoner OP 22 Jun
You may be right in that Bitcoin might not be known....but I have found in my experience "where there is a will there is a way!"
It all starts with you....or the person you know that is running a business.... I would need a few more details on your specific situation to give you the best information I can...but again if this is something you are interested in the solution is likely built out there already... There are likely people willing to help make it happen for whoever wants it to happen? there are companies out there that are building products for access to the Bitcoin network in all sorts of unique ways... but again it all starts with that 1 person
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42 sats \ 1 reply \ @grayruby 22 Jun
Wow, you got a great deal on your building.
You should be able to keep raising rents as fiat melts and you hedge yourself by owning bitcoin because your biggest risk is the government deciding they want to put their hand in your cookie jar.
Impressive.
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50 sats \ 0 replies \ @thecommoner OP 22 Jun
Thanks... definitely one of those right time right place kind of deals.
Everyone running a business should be able to do this a certain extent and I think this is where the planet is likely to find a more orderly transition (not overly chaotic) onto Bitcoin than a face melting paradigm change (likely more chaotic and dangerous transition) -
As all businesses either find there way to a Bitcoin standard or get bought up by Bitcoin business - they will all eventually be here. The biggest hurdle is this transition period...I don't think people generally like being in "limbo" and they want to see the future in their minds eye and to have it form in front of them as they see it...it is difficult to imagine and manifest a future which is different than what one has been taught.
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42 sats \ 1 reply \ @ov1_kenobi 23 Jun
Property taxes are paid out annually, so storing that $900/month of capital as BTC until the annual extortion comes due will help capture the ongoing bitcoin value gains. Monthly DCA through Swan/River/Unchained through a Trust account can gradually increase your stack. IF structured properly, this Trust can increase your privacy, decrease your tax liabilities, and decrease your likelihood of litigation.
The Bitcoin Real Estate Trust can postpone taxable events indefinitely, while keeping maximum privacy, but you must set them up and operate them carefully. Parking capital in a seige-proof manner as air-gapped UTXOs will make capturing more real estate obsolete. The need for like-kind reinvestment to postpone short term capital gains, for paying off the local mafia with 'property taxes', and dealing with weather, tenants, and zoning/code enforcement will make investing in real estate beyond personal needs a losing proposition.
I am a professional working in residential renovations and maintenance, materials and labor are becoming more scarce and more expensive, even in the best of locations. Seems to me that fiat has artificially driven real estate far higher than its actual value in almost all cases and places in the US. I'd suggest stacking your sats iin the US while the 'getting is good' in order to eventually pay 'cash' prices for real estate in what appears to be the new 'land of the free', South of the border in Mexico.
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0 sats \ 0 replies \ @thecommoner OP 23 Jun
I do like the idea storing the FIAT needed for taxes in the form of BTC - Its just hard not knowing exactly how Ol' uncle sam is going to treat the taxes on the sale of that as well as the volatility of BTC's value in FIAT terms right now makes it a little more uncertain when it comes to pay the extortion fees :)
Guess I have some math homework to work on :)
As for real estate investing becoming obsolete....I believe we will always need other people providing housing to others and as such there will always be a value to it... Given your profession, you understand as much as I, that there are people that simply do not know how to fix their toilet or leaky faucet.... Just as much as I couldn't fix a plane or space ship, but I like flying and would enjoy going on a space adventure someday...I would be willing to exchange "value" with someone that provides me with that opportunity.
Of course the value currently stored in real estate will be extracted over time as more people utilize Bitcoin to store their value....There will be an equilibrium developed over time but the initial transition is likely to be a bit chaotic...I tend to think there will be markets that will crash hard, markets that move slower, and probably some that don't budge much as they are in desirable areas or markets?
No matter what happens though - I know earlier bitcoiners will benefit more on a percentage basis but it will continue for a long time to come...
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42 sats \ 2 replies \ @SatsMate 22 Jun
I've been talking to my landlord for half a decade now trying to pay him in bitcoin and he won't accept - he only wants fiat. He is concerned about taxes and reporting on his side.
I think this scenario is working well, keep in mind the four-year cycle swings (which i'm sure you do).
We live in a world where those who have debt/leverage tend to get further in life than those who don't. I think pulling a Michael Saylor strategy on a Real Estate scale will prove fruitful. Stay solvent - would love updates on this over time.
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21 sats \ 1 reply \ @thecommoner OP 23 Jun
I think the key for me at least is not being over leveraged....My time horizon has always been long, I like slow and steady growth...
I can't make specific recommendations for your LL but if he utilizes any of the money coming from his property for savings - he could consider accepting at least that much in BTC opposed to FIAT...err...at least that's how I handle it. I manage the FIAT cash flow I need to pay my FIAT bills and the rest I can accept in Bitcoin. If more of my residents want to participate by paying in Bitcoin I would simply adjust amount of BTC I accept from everyone to be fair about it... If all 4 of my residents wanted to participate in one building they could each pay about 60% of their rent in BTC and the rest in FIAT... I have a lawyer working on lease language now so I don't find myself in "fair housing" trouble!
I will share that language as well when I have it....should be before the end of the summer I hope.
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42 sats \ 0 replies \ @SatsMate 23 Jun
I would love that! At a minimum, I am like friends with my landlord. Maybe he would be open to it.
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