A strong year 2022 for RealT with many more to come in 2023!

The investment platform that offers tokenized real estate (mainly in Detroit, Chicago and Cleveland) has achieved several milestones in 2022 and expects a new year of growth through 2023.

Full presentation article

New products lauched in 2022 and events

person sitting facing laptop computer with sketch pad
  1. The RMM platform on which tokenholders can borrow xDai in 2 clicks by depositing their property tokens as collateral
  2. Walletless, which allows new investors to participate without the creation of a crypto-wallet (which was a barrier to mass adoption)
  3. YAM (You And Me), the peer-to-peer platform to buy and sell real estate tokens securely
  4. The detokenization of a property (token holders to enjoy the proceeds of the sale)
  5. A meetup in Paris

RealT 2023 figures

airport bank board business
  1. Gross sales increased by 44% year-over-year
  2. Number of token holders grew by 90% year-over-year
  3. 265 properties tokenized since 2019, totalling 1140 units
  4. Average token price of $53.60
  5. Expected average return of 10.56%
  6. $120,000 paid to token holders every Monday
  7. Total Value Locked (TVL) on the RMM platform close to $10 millions
  8. 46% of new investors choose the Walletless option
  9. 14% of Walletless adopters switched to a crypto-wallet to enjoy the full power of DeFi

Proposed assets

RealT has already tokenized 200 properties since its launch in 2019, mainly detached houses at the beginning and now multifamily complex. The assets are located in class C neighborhoods but still with a robustness in the selection of tenants.

RealT’s expertise in select Detroit neighborhoods allows the company to have a waiting list of serious potential tenants. Rents for certain properties are also paid in full or in part by the federal government through housing assistance (Section 8). RealT was also able to tokenize a vacation residence in Florida near Disneyland and a high-end house rented to a company for its executive.

Affiliation

To accelerate its development and expand its investor community, RealT remunerates its business providers via a subscription commission of 2% of the amounts invested by referred clients.

Disclaimers

This information does not constitute an offer to invest in any token, fund or other opportunity and is provided for informational purposes only. Performance results are shown net of all fees, costs and expenses associated with the token. If an investor chooses to redeem a token through RealT or on a secondary market, other processing fees may be assessed which are not factored into the returns presented. Past performance does not guarantee future results. Yields are calculated based on rents spread throughout the year and appreciation in the value of the underlying property. The appreciation in value is based on the difference between the purchase price and the annual revaluations of the property. Returns for individual investors may vary depending on the timing of their investments and redemptions. This site is operated by Cyril Soigneux, who is neither a registered broker nor an investment adviser. Cyril Soigneux does not provide investment advice, endorsement, analysis or recommendations regarding securities. Nothing on this site should be construed as an offer to sell, a solicitation of an offer to buy or a recommendation. You are solely responsible for determining whether any investment, investment strategy, security or related transaction is suitable for you based on your personal investment objectives, financial situation and risk tolerance. You should consult legal professionals and licensed investment advisers for any legal, tax, insurance or investment advice. All securities listed here are offered by the relevant issuer of such securities and all information contained on this site is the responsibility of that issuer. Cyril Soigneux does not guarantee any investment performance, result or return of capital for any investment opportunity published on this site.

Red flags to look for when buying a property

BiggerPockets’ James Dainard (Heaton Dainard Real Estate) shares the most common red flags that could cost you tens of thousands of dollars when buying a house. Walk slow, bring your camera and start taking notes when you check for the following items

The visible parts

desperate evicted male entrepreneur standing near window
  1. Sloped floor (one corner or on both) – may be leveled with sub-floors if the house settled, unless it is caused by a massive foundation problem (very expensive).
  2. Signs of asbestos (HVAC wrapped with tape, popcorn ceiling, type of siding). You can also check the asbestos survey.
  3. Water intrusion (walls, basement, gutters). Check for signs of moisture in the basement, leaking on the window edges, mold or leaking in the attic.
  4. Square footage not matching the tax records (house looking bigger and/or have extra rooms or an atrium) can mean non-permitted work and the property potentially not to code.
  5. Broken concrete or stress cracks in numerous spots can be a sign of a problem with the soil or the house not being framed properly and therefore not structurally sound. Walk all the concrete services and inspect all retaining walls. Check for leaning retaining walls or sunken sidewalk.

The hidden costs of “weekend warrior houses”

friends having barbeque party
  1. “Weekend warrior” refers to owners and their friends doing most of the work themselves not using qualified tradesmen without permits.
  2. To distinguish pro versus amateur remodel, check for the flow of the house such as the location of the rooms, outlets or the mechanical, unequal heights (floors and ceilings), plumbing and electrical
  3. Framing issues such as bedroom walls that do not line up
  4. Decks that lacks an actual footing (not lag bolted to the house structure) and built without pressure treated lumber. Check for moving parts.
  5. Pools – make sure they are not leaking and that they are serviced well (boiler, tiles, surroundings…)
  6. When you notice such red flags, use a home inspector and a license and permit bond professional. Even a contractor can tell what is wrong with the house.
  7. You can also visit the local administration to pull the permits associated with the property
  8. Have a seller’s disclosure statement stating that some of the works were performed personally and without a permit

How to hire contractors and get bids the right way

BiggerPockets’ Tarl Yarber gives his tips to avoid losing money when hiring contractors for renovations

civil engineer planning dam
  1. Cheapest is not always the best: pay trades what they are worth.
  2. Get multiple bids, at least 3 if it is a market you know and have referrals, and between 6 or 10 if you are new to the market and have no referral.
  3. The bids must be broken down by line items.
  4. Depending on the project, you can prioritize speed or pricing but never give up on quality.
  5. Keep in mind the current economic cycle as material and labor are impacted by demand.
  6. Have a clear scope of work and study bids details line by line.
  7. The scope of work can also be broken down and awarded to different contractors.
  8. Have a clear contract with your contractor (draws, escalation of issues, delays, change orders…).
  9. When you grow, you can have your own construction attorney-reviewed contracts.
  10. Have a clear draw schedule based on work completion and do not pay a large deposit upfront (20% maximum).
  11. Keep track of work completion and payments.
  12. Know how to handle change orders and how to effectively approve changes and pricing (always in writing)
  13. Spend the most time planning what you want to do with the property in order to have the clearer scope of work. You will avoid further issues or change orders.

Keys to Rental Property Success and Plans to Consider

Once again, having the right mindset and the right processes should help you achieving your goals

An internal mindset to create

photo of a sign and eyeglasses on table
  1. Write down your goals and read them loud everyday
  2. Flip the switch in your head and have the right attitude “I will do this to achieve this goal”, “I will not give up because I am committed to my goals”
  3. You are who you associate with so hang out with successful people and talented investors and try to rise to their level of success
  4. Think creatively “how can I do this?” instead of “I can’t do it”
  5. Study the right sources and be curious about the mindset of people who took another path or strategy to succeed
  6. Pick the right plan that will help you achieve your goals
  7. Acquire the right assets that fit with your plan, your budget, and your ability to manage
  8. Manage the right metrics as rental properties must be continually maintained and managed. Periodically check how your properties are performing in terms of cash flows, expenses, rents etc…

Create the right plan

notes on board
  1. Your plan is not your business plan, it is your deep-seated belief as to where you are headed
  2. Your plan can change as long as it keep leading to your goal
  3. Have your end game in mind (be specific) when you start your plan
  4. Know your WHY. Knowing your true motivation will help you reaching your goal and staying committed
  5. Have an idea of the type of assets you want to buy and the ones you do not want to buy, even if not clear at first
  6. Estimate how often you will have to buy to stay on track with your goals and the life you envision
  7. Know how you will finance your deals (banks, private money lending, creative financing or extra income from a job)
  8. You can now write your plan : at the end, place you your GOAL and at the beginning you can write TODAY as your journey begins now. Your plan is what will take place between today and the achievement of your goal.

Examples of Plans to Achieve Long-Term Wealth

person with keys for real estate
  1. Growing your net worth exponentially by buying larger and larger residential buildings with the cash flows generated by your rental properties in the span of a decade. The focus is on the first property (eg. a 4-apartment residential property that needs some rehabs, purchased at a discount and that you will stabilize for maximal cash flow generation)
  2. Accumulating single-family houses faster and faster with the cash flows generated by the properties and your work income (after a first year of savings and learning, buy a first house at a discount in year two, two more the year after, then use the compounding effect to buy always more properties each and every year until you can replace your work income)
  3. Combine your investment property with your personal residence : live in one unit and rent the second (and third) one. This is known as “house hacking”. You can benefit from a conventional loan with minimum down payment, low expenses (no property management) and on the job training. Make sure to pick a first property at a discount (fin foreclosure and/or with rehabs), fix it and live in it for a year or two then move out. It can be a terrific investment for a first-time buyer.
  4. Buy, Rehab, Rent, Refinance and Repeat (the BRRR strategy) for maximal cash flow generation. This can be a powerful strategy because you can acquire numerous properties without running out of capital to invest. Make sure to buy the fixer-upper properties at a deep discount and to have the right process for budgeting the renovation work and have the property tenant-proof fast. A good relationship with a local bank is necessary too. Keep repeating the process and start selling a couple of properties per year after five years to enjoy the natural and forced appreciation of the properties.

Source and credits

All explanations and tips come from Brandon Turner’s Book on Rental Investing

Investing in Residential Real Estate : Mindset & Business Case

Residential real estate investing can help you achieve your financial goals. Still, are you committed?

Commitment to have the right mindset

a person starting an online business
  • Lack of money, spare time or knowledge should not serve as excuses not to start. Instead, ask yourself
  • “Am I committed to taking action?”
  • “Am I committed to dedicating my spare time?”
  • “Am I committed to replacing daydreams by strategies?”
  • “Am I committed to investing my money?”
  • If you are truly committed, you can keep reading this article!

The investment journey will challenge yourself

black queen chess piece standing
  • You will start envisioning another life for yourself
  • Friends and family may prevent you from taking action
  • This is when you start to step out and create a whole new path for yourself
  • You will look at life, finance and real estate differently
  • You will be introduced to numerous ideas, paths, strategies, and concepts for achieving your financial goals through rental investing

The business case for rental properties

white and red wooden house with fence
  • Ability to purchase properties with leverage (through banks or private money) to increase your potential return
  • The down payment amount should not be as important as the deal you get
  • Knowledge (to have the right processes in place and know how to react when things go wrong) and reserves (eg. 6 months of expenses) can help reduce the risk involved with leverage
  • Ability to hustle for greater returns and leverage your skills (DYI), time (networking), and knowledge (deal analysis)
  • Ability to manage your investments directly contrary to stocks or mutual funds. You are directly responsible for the outcome of your investments
  • People will always need a place to live so the demand will never ends
  • It has worked for many investors and most private wealth has been created through owning and leasing properties
  • Cash flows are fairly stable and predictable even if boom and bust cycles exist
  • Variety of asset types, markets and strategies to choose from
  • Straightforward process easy to learn and master, with plenty of information available
  • It is possible to buy under market value when you know your market and master some negotiating skills
  • Insider trading is legal in real estate contrary to financial markets so you can leverage your knowledge and your network (eg. knowing in advance that public transportation will be extended to a neighborhood to buy there first)
  • Passive investments if structured the right way so that you do not need to be present 100% of the time

The four ways profits are generated

calculator and notepad placed on usa dollars stack
  1. Appreciation of the property (natural or forced through rehabs)
  2. Cash Flow (from day 1 or soon after). It is the lifeblood of rental investing. Break even or negative cash flows only lead to financial ruins
  3. Tax savings can make good deals better deals as fiscal policies encourage investments and allow depreciation of assets (non-cash charges)
  4. Loan pay-down as each and every month your tenant reimburse your mortgage, consequently your equity increases

The Top 5 difficulties of rental property investing

anxious woman having phone conversation in office
  1. Building wealth takes time so be prepared to get there for the long haul and to face the ups and downs
  2. It can be all-consuming as problems will happen from time to time, even when you are on vacation. However, your business will run the way you set it up to run. Treat your business like a business and not like a hobby.
  3. You have to deal with difficult people such as contractors, bankers, tenants or property managers. Manage effectively by doing your due diligence up front, screening tenants or outsourcing tasks you don’t want to do.
  4. It involves paperwork and bookkeeping but the right processes or the right professionals will help
  5. You can lose your investment. Still, with the right education, networking, and systems in place, you’ll do great.

Why so many rental property owners fail?

beer bottle and statement bills
  1. They take on too much risk. Understand risk and managing it effectively will dictate your success
  2. Not enough education whereas it is easily available (books, videos, podcasts, forums, conferences)
  3. Not enough analysis as bad math makes bad investments
  4. They do not treat their business like a business
  5. They never develop systems to help them as they grow.
  6. They treat their tenants like friends.
  7. They don’t create clear policies for finding good tenants.

Treat your business like a business

Monitor your business’s health, hire the right people to do the right jobs, and continually find ways to improve your bottom line to create a long-lasting business.

Sources and credits

All explanations and tips come from Brandon Turner’s Book on Rental Investing