Real Estate acquisition has taken on a new twist as it has deepened the use cases of cryptocurrencies.
Digital banking and lending platform Milo, has announced that Bitcoin and Ethereum holders can now secure a 30-year fixed-rate mortgage. The Miami based start-up aims to tap from the pool of crypto enthusiasts who want to participate in the real estate market while holding onto their tokens.
Another area of concern that the lending platform has settled with this move is taxes. Before this time, investors who want to purchase houses bleed from taxes while risking a premature exit. This new development will allow investors to enjoy both markets without relinquishing their crypto holdings
Cryptos Gain More Ground In Real Estate
Before Milo’s innovation, other start-ups have taken bold steps to merge the world of digital assets with landed properties. Companies like BlockFi offer collateralized loans which can be used to purchase properties.
BlockFi facilitated loan acquisition for crypto investors with the need to buy a new home. This process allowed borrowers to access funds with a 4.5% APR. Other facilitators of a similar process include Austin, Texas-based Unchained capital. With a three-year loan offer, the firm allows up to a 14% interest rate.
While cryptocurrencies are making a mark in the real estate sector, some experts have voiced their concerns about the downsides. According to critics, volatility remains the most significant stumbling block in adopting digital assets in mortgages. John Kerschner, head of U.S. securitized products for Janus Henderson Investors, believes it is too much risk for landed properties.
“A crypto mortgage seems inefficient given the volatility,” he said. “People think Bitcoin will go to the moon but nobody thought the great financial crisis or Covid was coming. These things happen.” He said.
Bitcoin enjoyed an over 300% increase in 2020 and has lost 40% of its value from all-time highs. Ether, the second-largest crypto and other altcoins, have also bled substantially from their previous peak. Although a significant portion of the market is still in profit, analysts believe there is room for more rally. In addition, regulatory concerns have also been an issue as policymakers continue to spot loopholes in crypto adoption.
However, Milo has put some measures to check the volatility of crypto assets. Borrowers are made to add to the crypto or cash deposit if the crypto-to-loan ratio falls below 65%. The company will liquidate the asset and store it as cash if this proportion declines below 30%. Bitcoin supporters remain steadfast, arguing that cryptos will prove their worth.
Do you think there will be more crypto integration in Real Estate or it’s just a passing phase? Let us know your thoughts in the comments below.
Kingsley is a fintech writer with over 4 years of experience covering blockchain and cryptocurrency news. Alo first discovered Bitcoin in 2016 and has been passionate about it ever since, particularly the various ways blockchain can help Africa and the world at large. He desires to give the crypto space a more geographically balanced narrative and serve as a bridge between Africa and the rest of the world. His articles have been featured in Cointelegraph, Beincrypto, and Forkast.news, among others.
