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Blockchain

Six Things to Consider When Buying Real Estate with Bitcoin

Despite controversy, skepticism, volatility, and naysayers, Bitcoin gains traction every year and is becoming a preferred method of exchanging currency for people all over the world. In recent history, we’ve seen investment in Bitcoin from large institutions, adoption of the currency by mainstream vendors, and rampant media attention for cryptocurrency, in general – with Bitcoin always leading the charge.

With increased adoption and interest, people continually find new use cases for Bitcoin (and other cryptocurrencies). Now, many people are wondering: Can you buy real estate with Bitcoin?

The simple answer is: Yes. But there are six things you should consider if you are thinking of buying real estate with Bitcoin.

1. Will the Seller Accept Bitcoin?

Yes, Bitcoin is being used by enough people that there are, indeed, people and companies that will sell you real estate in exchange for Bitcoin directly. However, these individuals and companies may still represent a minority. As a result, if you are intent on buying real estate with Bitcoin, you may need to either:

  1. Check if the property you want to buy is available for sale with Bitcoin. This option, of course, is pertinent if you already know which real estate you’re looking to buy. Checking if the seller will accept Bitcoin will be as simple as asking. If they will not accept Bitcoin as payment, though, you’re far from out of options. Check consideration #2 for an easy solution in this situation.
  2. Search for individuals or companies selling real estate for Bitcoin. If you haven’t yet selected a property that you want to buy with Bitcoin, you may be interested in searching for sellers that advertise that they’re willing to accept Bitcoin.

Actually, the number of real estate sellers accepting Bitcoin is steadily growing. With Bitcoin’s persistence in the financial world and growing interest in the cryptocurrency, a higher number of people than ever are interested in increasing their Bitcoin holdings. Here’s a shortlist of real estate companies that advertise their willingness to accept Bitcoin:

  • Magnum Real Estate Group attracted media attention in 2021 when it listed three retail condos but stated that it would only accept Bitcoin as payment.
  • Sand Key Realty has become known as a real estate company in Florida that accepts Bitcoin.
  • Bitcoin Real Estate has a name that speaks for itself! The agency lists several properties on its website with prices in Bitcoin, not US dollars.
  • Kuper Sotheby’s International Realty brokered the first sale of real estate for Bitcoin in 2017

This list features a few notable examples to illustrate the point that yes, it is absolutely possible to buy real estate with Bitcoin. The reality today is that there are far too many individuals and agencies that will sell you real estate for Bitcoin to list in an article like this. So if you’re looking to buy real estate with Bitcoin, the first thing you should do is ask if the property you want is available for sale by Bitcoin or simply find a vendor that allows transactions like these.

2. Bitcoin is Easily Sold for Cash

In consideration #1, we acknowledged that there will be many individuals and real estate agencies that will not accept Bitcoin as payment. In this scenario, however, the transaction would only require one extra step: selling your Bitcoin.

As the leading cryptocurrency, there is no shortage of liquidity for Bitcoin. This means that you will be able to sell your Bitcoin whenever you choose to do so. Selling Bitcoin is a simple process with just a few steps:

  • Find an exchange on which you can sell your Bitcoin for the currency that allows you to purchase your chosen real estate. There is no shortage of options for exchanges. Here is a list of some of the most popular:
  • Register an account on your chosen exchange. Depending on the exchange you choose and your location of residence, this may require a couple extra steps like:
    • Identity Verification
    • 2-Factor Authentication
  • Sell your Bitcoin! Yes, it’s that easy.

The fact that Bitcoin is so easily sold for cash may be a reason that so many individuals and real estate agencies are now willing to accept it as payment for real estate.

3. Your Investment Portfolio

Depending on your specific situation, consideration #3 might take a lengthy process of examination – or it might start and end with a simple question:

Are you considering buying real estate to live in yourself – or as an investment?

If you’re considering buying real estate that you intend on living in, then your mind may already be made up: you will buy property. If you’re considering real estate as an investment, however, you’ll probably want to weigh the pros and cons of both Bitcoin and your real estate of choice. Is it worth swapping one investment (Bitcoin) for another investment (real estate)?

Many financial experts recommend that individuals put together an investment portfolio of assets with varying degrees of risk. Your risk tolerance might depend on things like your age, disposition, and future goals. In general most would agree that:

  • Bitcoin represents a fairly high-risk, high-reward investment. As we’ve seen over time, the price of Bitcoin fluctuates wildly year to year, sometimes even month to month.
  • Real estate is a much lower-risk investment.

So, if your goal in buying real estate with Bitcoin is to lower the amount of risk in your portfolio, that type of swap might be very beneficial. Generally speaking, real estate is considered an excellent investment. Bitcoin may also be an extremely good investment, and its potential for returns may be much higher than that of real estate, but it requires greater risk tolerance.

If you do not wish to lower the amount of risk in your portfolio, then buying real estate with Bitcoin may not be the right move for you.

4. Bitcoin’s Value (Price) is Relatively Volatile

Consideration #4 follows in the same theme as consideration #3: Bitcoin’s price volatility. Let’s take a look at Bitcoin’s value every 6 months since 2017:

  • January 3, 2017: $1,018
  • July 3, 2017: $2,511
  • January 3, 2018: $14,762
  • July 2, 2018: $6,348
  • January 2, 2019: $3,823
  • July 5, 2019: $11,150
  • January 1, 2020: $7,167
  • July 3, 2020: $9,090
  • January 3, 2021: $32,216
  • July 3, 2021: $33,811
  • January 3, 2022: $47,317

This brief history of Bitcoin’s price over the last few years tells a story of volatility, and even these numbers do an insufficient job of showing just how rapidly and significantly Bitcoin’s price can fluctuate. Bitcoin’s history has shown that on any given day, it could possibly rise or fall several hundred or thousand dollars in price.

Bitcoin’s price volatility means that if you’re considering buying real estate and using Bitcoin as payment, the price of said real estate must be locked in and agreed upon. Whether this means that the seller is willing to accept Bitcoin’s volatility or that the price will be in another currency and the amount of Bitcoin will be adjusted on the sell date is up to both parties involved. Regardless, there could be significant money at stake. This means that you absolutely must consider Bitcoin’s price volatility during any sale of real estate for Bitcoin.

5. Using Bitcoin for a Mortgage?

Not too long ago, the idea of a lender accepting Bitcoin from an individual looking for a mortgage would have been laughable. Not anymore. Yes, it is actually possible to use Bitcoin – and other cryptocurrencies – as collateral when getting a mortgage. This means that buying real estate with Bitcoin is not limited to people with huge amounts of BTC lying around. Instead, it may be far more accessible.

Milo made headlines in early 2022 when it began offering individuals the opportunity to “leverage crypto to invest in real estate.”

6. Trust

Some of the characteristics that make Bitcoin – and other cryptocurrencies – so attractive as payment methods are the same characteristics that have caused conflict and invited skepticism. Bitcoin is characterized by:

  • Decentralization
  • Lack of regulation
  • Ease of transfer
  • (Relative) anonymity

These characteristics mean that as long as both buyer and seller agree on the sale of real estate for Bitcoin, completing the transaction may be far easier and faster than dealing with banks – or any other methods. At the same time, however, the frictionless nature of Bitcoin may present greater opportunities for scamming or other dishonest behavior.

For this reason, you’ll need to be smart and careful if you do decide to buy real estate with Bitcoin. Ensure that you have contracts in place, have consulted lawyers, and have given yourself every protection against deception. The last thing you’d want is to send a large chunk of BTC over to an anonymous wallet and find out that the house you thought you bought isn’t yours, after all.

Looking to the Future

It’s fascinating to see that some of the above six considerations have changed so recently. If this article were written just one year ago, for example, consideration #5 would read far different; Bitcoin mortgages are brand new!

Indeed, the crypto landscape and the adoption of crypto is so rapid and fluid that we may see huge changes to all of these considerations – very soon. It might not be long, for example, before asking the question, “Can you buy real estate with Bitcoin?” is met with the answer, “Obviously. How else would you do it?”

Please contact us if you have any questions.

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