How to Convert Bitcoin to Real Estate (With the Government’s Blessing)
Walking through Quincy, you don’t exactly feel like you’re in a wealthy suburb, but it’s not bad. We had a nice lunch at an upscale Japanese restaurant, then took a tour of a new co-working space called QUBIC (Quincy Business Innovation Center), located beneath a huge Citizens Bank branch (one of the conference rooms is literally an old bank vault). You can see Quincy profiting from the Boston boom.
Quincy is also home to these “Opportunity Zones.” So, if Wally Whale believes that Boston is growing (it is), and this growth is pushing out to the suburbs (it is), and Quincy is well-positioned geographically and politically to take advantage of that growth, then this is an Opportunity Zone well worth consideration.
Let’s say Wally sells the bitcoin, reinvests the profit in new real estate development in Quincy (it has to be either new construction, or “significant improvement” to an existing property), and sits on it tax-free for seven years, during which time it benefits from the Boston blockchain boom. Wally gets a more stable investment (real estate), helps build a local economy (Quincy), and enjoys his free money (tax discounts and deferrals).
The ancient alchemists sought to turn metal into gold: Wally is turning bitcoin into buildings.
Please note I am not endorsing any specific investment or city. I’m literally not selling you anything! I am using Quincy as an example of how an investor might think about 1) diversifying investments, 2) doing the homework, and 3) investing for the long term. I’m giving you ideas.
Now, what if we could take this approach to invest in not just one piece of real estate, but to an entire portfolio of properties? That’s our final piece of the puzzle.
Imagine that Wally Whale can now reinvest his profit into a fund that has investments in buildings across the United States, strategically located in promising Opportunity Zones like Quincy. For example, the fund might invest in Ox Fibre Apartments, a historic warehouse in Maryland that’s been converted into residential units. Or The Tappan, a mixed-use building in Cleveland, OH with 95 apartments and a 2,000 square-foot bakery. Anywhere there’s the promise of future growth.
There are already over 150 of these Opportunity Zone Funds, many of which are open to anyone (not just accredited investors). In other words, anyone can cash out a bit of bitcoin, then reinvest it back into one of these funds, tax-free. You can convert bitcoin into buildings.
That’s why this law was passed: to attract investment to these underserved areas. The government doesn’t care where that money comes from. And by offering another place to park your money, you diversify your portfolio, always keeping no more than 2–10% in digital assets, as we explain in our Investor’s Manifesto.
The only thing that hasn’t been done yet is to formalize this with a name. While you can sell your bitcoin or cryptocurrency, then reinvest the profit into any of these funds, I’d love a fund called the “Bitcoin Real Estate Fund,” specifically targeted to investors like us.
In this hypothetical fund, we’ll invest in real estate projects in promising Opportunity Zones located near technology hubs like San Francisco, New York, and Boston — or in promising blockchain hotspots like Wyoming, Miami, and Puerto Rico. In a sense, we’re getting the best of both worlds: betting on the rise in technology, which will in turn lift the value of the surrounding real estate. Anyone can invest, but we’ll make it an easy “off-ramp” for people who want to cash out bitcoin and into real estate.
I am grateful to the Boston blockchain angel investor group Chain Reaction for explaining Opportunity Zones at an excellent Meetup, and for arranging the tour in Quincy. With this idea, we can literally power a new real estate revolution with bitcoin, in the places that need it most. That’s doing well and doing good.
We can convert bitcoin into buildings.
John Hargrave is author of the bestseller BLOCKCHAIN FOR EVERYONE. Sign up for his free weekly blockchain newsletter.
Published at Tue, 28 Jan 2020 15:51:59 +0000
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