Using Bitcoin to Buy Real Estate

Ever since programmer Laszlo Hanyecz spent 10,000 BTC on two pizzas back in 2010, marking the first real-world transaction using Bitcoin

Segment 1: Grant Cardone's Unique Investment Strategy

In a recent episode of "Opening Bid," Grant Cardone revealed his unconventional investment strategy that combines real estate, Bitcoin, and a twist of fate.

As the conversation flowed, Cardone posed a question to his audience: "What if the real estate bought my Bitcoin, and then I could actually take the whole thing public?"

Seizing an opportunity arising from the current state of the debt market, he purchased an $88 million piece of real estate for $72 million as a correction. To this, he added $15 million in Bitcoin to the transaction, putting the two values — $72 million and $15 million — together in a separate fund.

"I'm putting that in a separate fund, and then I'm giving people a chance to take part of this Bitcoin-real estate fund, which they did."

Since there's no debt on the property or the Bitcoin, the monthly cash flow is around $350,000, which Cardone invests in more Bitcoin.

"And then I take that money, and I buy more Bitcoin with it."

The outcome? In four years, Cardone will still own the real estate, valued at $88 million. However, with today's prices, he'll have purchased more Bitcoin with the cash flow, and his overall investment will increase.

"So, what's better than real estate or Bitcoin? What's better is if I could get Bitcoin out of my real estate and then take the two things…and bring it to the public markets at the end of this year or the first of next year and we're gonna go ring the bell and turn it into a piece of paper."

So far, Cardone has completed this process four times and intends to do ten in total.

Segment 2: Expert Opinion on Investing in Real Estate Using Crypto

With the increasing popularity of cryptocurrency, particularly Bitcoin, as an investment vehicle, alternative investment avenues are being explored.

"Long-term holders sitting on significant gains may want to convert a portion of Bitcoin to real estate as a way to diversify," suggests Ian Kane, CEO and Founder at Firepan. "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."

Highlighting another angle, Kane mentions, "If you're a newer crypto investor and bullish on BTC but struggling to enter the U.S. housing market, you can use some of your crypto to invest in an income-generating asset. But be mindful of crypto's volatility and ensure you're comfortable with the time horizon for seeing a return on your BTC investment."

An alternative that can still pad your investment portfolio is getting a BItcoin-backed mortgage.

"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," explains Kane. "This is the best of both worlds!"

However, Bitcoin also presents challenges, mainly stability and regulation. Its value has soared, but it's still a volatile asset. For some, investing with crypto could complicate making optimal real estate deals, although this could change over time.

"While it's an interesting concept, I don't believe buying real estate with Bitcoin is practical in most cases - at least not yet," maintains Louis Adler, Co-Founder, Principal and Real Estate Broker at REAL New York.

Elaborating on the complexities, Adler explains, "Real estate is still a fundamentally traditional asset class, and the volatility of crypto creates too many unknowns for both buyers and sellers."

He continues, "For example, if a seller accepts a crypto payment, will they be able to handle the reporting requirements for foreign currency transactions? And if a buyer isn't able to fully fund the purchase in fiat currency due to using crypto for a portion of the down payment, will the seller be willing to grant a short-term rent-back to the buyer to enable them to complete the funding? These are just a few of the logistical hurdles that would need to be overcome."

Despite the challenges, the future of investing in real estate using cryptocurrencies is an interesting domain to watch unfold. As both asset classes continue to evolve, it will be interesting to see how these two worlds collide and create new opportunities for investors seeking to expand their portfolios and capitalize on the unique offerings of both real estate and cryptocurrency markets.