Some Investors Using Crypto to Purchase Real Estate: Experts Talk Pros and Cons

LAS VEGAS, NV – Cryptocurrency – a digital currency designed to work through a computer network that is not reliant on any central authority to uphold or maintain it – has become an increasingly popular form of investment in recent years.

The most prevalent form of crypto is Bitcoin, which as of May 8 was once again trading at a price point of over $100,000. And a growing number of individuals are using it – as well as other forms of digital currency – to engage in real-world investments such as real estate.

The first-ever physical purchase using crypto was made in 2010, when a programmer named Laszlo Hanyecz bought two pizza pies for 10,000 Bitcoins. And since then, crypto’s presence in the real world has only grown.

On a recent episode of Yahoo Finance’s Opening Bid podcast, investor Grant Cardone noted that he’s been purchasing real estate with Bitcoin, with his most recent endeavor being a deal made for a piece of property valued at $88 million that he acquired for $72 million in currency and $15 million in Bitcoin. The money he generates from the property, he uses to buy more Bitcoin.

In several years, even if the property merely retains its $88 million value instead of going up, his profits will increase overall due to his purchasing of Bitcoin at today’s current rates, provided its worth continues to go up.

But while Cardone has found success in investing in real estate utilizing digital assets, experts are pointing out both the pros and cons of such financial maneuvering. Ian Kane, CEO and Founder at Firepan, said that the instability of the crypto market could result in short-term losses, but those looking at long-term investments could benefit.

Long-term holders sitting on significant gains may want to convert a portion of Bitcoin to real estate as a way to diversify,” Kane said. “They get peace of mind and don’t run the risk of seeing 6- or 7-figure portfolio swings. Plus, real estate offers passive income opportunities and can be a hedge against crypto’s volatility. However, if Bitcoin’s price pumps shortly after the purchase, you may have buyer’s remorse.”

Something that might be safer than using crypto to buy the property itself, Kane noted, would be using it to finance a loan.

The loan is secured by the real-estate + BTC, and you can make your monthly mortgage payments as a percentage of your BTC, denominated in USD,” he said. “This is the best of both worlds!”

However, Louis Adler, Co-Founder, Principal and Real Estate Broker at REAL New York, was less positive reggarding crypto-backed real estate investments.

While it’s an interesting concept, I don’t believe buying real estate with Bitcoin is practical in most cases – at least not yet,” he said. “Real estate is still a fundamentally traditional asset class, and the volatility of crypto creates too many unknowns for both buyers and sellers.”

Shelter Realty Property Management specializes in the areas of  Henderson, Las Vegas and North Las Vegas, NV. Feel free to give us a call at 702.376.7379 so we can answer any questions you may have.