Can you buy real estate with crypto? The answer is YES! Let’s talk about all the options you have in terms of buying a property with crypto, as well as all the pros and cons.
First, let’s start with the basic question: “What is cryptocurrency?”. Cryptocurrency is a digital or virtual currency secured by cryptography, impossible to counterfeit. This currency is decentralized and gaining popularity by the day.
The most popular cryptocurrency is Bitcoin, but today there are many more available.
As the world is constantly changing, so is the way we buy real estate. More and more real estate is being listed and sold with cryptocurrency, and it might be a good way to create a stable possession out of a somewhat volatile currency.
There has been a buzz around buying and selling real estate with crypto, but it is getting more socially accepted each day.
How to buy a home with cryptocurrency
Before you buy a property with crypto, you need to watch out for some possible pitfalls.
First, you need to be aware of the liability, the crypto value is unstable and no one can guarantee that the seller will go through with the deed after you make a crypto transaction to their account.
Also, vendors and government entities do not accept crypto as a transaction, so you might get some additional costs that you need to research before buying a home this way.
Another thing that you need to keep in mind is that the buyer in this case is not able to obtain title insurance, so he needs to assume liens or encumbrances against the property.
With all of this in mind, you are probably aware that you need to do your research thoroughly before buying a house with crypto.
Convert cryptocurrency to cash
Converting the crypto to fiat currency (cash) is the simplest way to invest your crypto into real estate. You can use a service like BitPay in which you convert your crypto to cash, which you will use to buy a house.
This way is also better because not many real estate listings accept crypto, but all of them accept cash.
But, you need to keep in mind that after you convert your cryptocurrency into fiat currency, you will need to hold that money in your account for at least two months, because after two months that money is considered an asset that can be used to purchase a home.
Taxing differs from state to state, so make sure to consult with your financial advisor before making the move.
Borrow against cryptocurrency
As cryptocurrencies become more popular, so do crypto loans. A crypto loan is similar to an auto loan, where you pledge an asset to secure the financing.
The difference is, in this case, the asset is the cryptocurrency, in exchange for cash that you’ll pay back. In case of inability to repay the debt, the lender will liquidate or cash out the crypto.
The problem with crypto loans is the unsteady value of crypto. But, as opposed to personal loans, crypto loans don’t require a credit check.
Another issue with borrowing against crypto is that the interest rates can be higher and you have to stake twice the amount of Bitcoins, depending on the lender.
Transfer cryptocurrency directly to the seller
A buyer can transfer crypto directly to the seller, but as we mentioned in the “pitfalls” section of the article, it can be risky, and it can be difficult to find a seller that accepts cryptocurrency.
But, as the cryptos gain popularity, more sellers are starting to accept the idea, which means more listings each day accept crypto. You’ll just need to dig deep!
Pros of buying real estate with cryptocurrency
There are many pros when it comes to buying a home with crypto. First and foremost, you have absolute privacy when making a purchase and the transactions are much faster.
Another good thing is that you’ll convert a volatile or less stable asset into a more stable one, and you might even find a better deal than the ones you might find for fiat currencies. How is that, you might ask?
Well, many sellers that are accepting crypto are offering discounts, as most of the sellers are likely crypto investors so they expect the value of crypto to rise.
Cons of buying real estate with cryptocurrency
There are cons to buying a property with crypto as well. Not many sellers are currently accepting crypto so you might have some trouble finding exactly what you want.
Also, as the value of crypto is constantly changing, it might not be a good idea to “sit” on one listing until it drops the price, as the lower price might not mean less money if the value of crypto descends.
Another thing worth mentioning is the complicated tax situation. Cryptocurrencies are unregulated, so you need to have good knowledge to avoid any visits from the IRS.
We have to face it: cryptocurrencies are here to stay. And not only that, they are expected to grow and maybe one day all we have is crypto.
With that in mind, it is a good idea to start learning about crypto so you don’t fall behind. Get informed and follow trends, because the importance of crypto is growing each day.