The Real Deal Los Angeles

The first real estate-backed cryptocurrency is here

In an already speculative market, Aperture's Property Coin lets investors in on home fix-and-flip model
February 12, 2018 11:00AM

(Credit: Pexels)

El Segundo-based startup Aperture Real Estate Ventures plans to launch a real estate-backed cryptocurrency by the end of February.

The company said it will give investors an “opportunity to own a professionally managed portfolio of real estate assets via the blockchain.”

When an investor buys Aperture’s so-called Property Coin, the person is buying into a fund backed by the company’s fix-and-flip portfolio.

Money raised in the initial coin offering will be invested in properties around the country selected by Aperture’s staff and its own algorithm, according to a report in Inman. Property Coin is built on Ethereum, a blockchain platform with an $84 billion market cap, second to Bitcoin worldwide.

Wildly volatile Bitcoin has seen little use in the real estate business, but it has been involved in a handful of transactions. Some in the world of luxury residential worry about the inherent difficulty tracking the source of funds in Bitcoin transactions. Others have taken the plunge.

Investor Michael Komaransky completed the most expensive Bitcoin-to-Bitcoin real estate sale in late January, when he sold a 9,400-square-foot Miami mansion for 455 Bitcoin. That factored to roughly $6 million at the time.

Aperture Co-CEO Andrew Jewett said each Property Coin holder “owns a fractionalized piece of assets owned by that entity, and as we reinvest profits into property, the underlying value will go up.”

That in itself isn’t a new concept. But Aperture said it’s the first company to do so via cryptocurrency. The firm called it an attempt to democratize “country club” style fix-and-flip home investment deals that are typically only available to investors with big wallets.

It also sees the cryptocurrency as transparent, because investors can see what backs its value and aren’t subject “to the wild fluctuations in the belief of the value of that asset,” Jewett said. That’s a common criticism of Bitcoin — its value is largely speculative.

When it comes to Aperture’s Property Coin, there are some restrictions for investors. Property Coin will sell for $50 per coin at its initial offering on February 26, and U.S. investors must purchase a minimum of $1,000 worth of coins. Outside the U.S., investors can get in with just a $100 investment. [Inman] – Dennis Lynch