How to Buy a House With Crypto?

Key takeaways

  • Buying a house with cryptocurrency can provide benefits such as diversifying investment portfolio, reducing risk, and enjoying potential tax advantages.
  • Using cryptocurrency for real estate transactions can result in lower transaction costs, faster payments, and more secure transactions, benefiting both buyers and sellers.
  • Cryptocurrency offers the potential for higher returns on investment due to its volatility and increased liquidity, allowing for greater flexibility in maximizing profits and minimizing risks.
  • While there are challenges and considerations in buying a house with cryptocurrency, such as market volatility, legal and regulatory issues, and limited acceptance in the real estate market, enhanced security, privacy, and elimination of third-party intermediaries are among the advantages.

Buying a house with cryptocurrency is becoming more and more common, making it easier than ever to own your dream home! This article will walk you through the amazing benefits, potential pitfalls, and steps of buying a house with crypto.

From understanding what factors to consider before taking the plunge to explore examples of successful crypto real estate transactions, this guide has got you covered.

Benefits of buying a house with cryptocurrency

Diversify investment portfolio

Purchasing tangible assets like real estate with digital assets like cryptocurrencies can help you diversify your investment portfolio and reduce the overall risk you are taking. This allows you to access a wider range of markets, while also acquiring a new asset class with great potential to bring higher returns on investment.

A great way to cash out on crypto

If you are tired of digital assets and want to make more tangible purchases, investing in real estate is a smart way to cash out on crypto.

There are some fintech companies like BlockFi and UnchainedCapital that offer crypto-backed loans which can be used as a down payment for a house.  This may sound like an intriguing option to you, especially if you have more dispensable crypto than fiat currency at the moment and would like to use some or all of it to buy real estate.

Of course, you always have the option to convert your cryptocurrency straight to cash and purchase a home. The alternative is to find a seller who accepts cryptocurrency directly and avoids the exchanging hassle.

Faster transactions with blockchain technology

Blockchain technology enables faster transactions than traditional payment methods, making it an attractive option for buyers and sellers. Transactions occur almost instantly with blockchain since the process is automated. This allows buyers to complete a purchase quickly, which can be beneficial when buying a house.

Elimination of third-party intermediaries

When it comes to buying a house with crypto, one of the biggest advantages is the elimination of third-party intermediaries. This means that you can avoid paying unnecessary fees and commissions to brokers, banks, and other financial institutions. With crypto, you can buy and sell directly from seller to buyer without any middleman involved.

Enhanced security and privacy

Using crypto to purchase a home can provide enhanced security and privacy compared to traditional methods. Transactions are securely stored on the blockchain, eliminating the need for third-party intermediaries. The blockchain is an immutable, distributed ledger system that records all cryptocurrency transactions, making it difficult for anyone to alter or tamper with them.

Information regarding the buyer and seller remains private throughout the entire process. Only their public keys are visible in the blockchain, ensuring that no one else has access to personal information or financial data during the transaction.

When using crypto for a real estate transaction, there is no need to worry about fraud. Paper-based documents and cash payments are not necessary, as all funds are transferred directly from buyer to seller. This eliminates the risk of counterfeiting and provides a more secure experience.

Fast and cheap international transactions

With cryptocurrency, you can make real estate transactions globally without the need for currency conversion. This means that no matter where you’re buying a house from in the world, you can use crypto to complete the transaction seamlessly.

Cryptocurrencies also have a much lower cost of transfer than other forms of payment, which makes them much more efficient than traditional methods.

Factors to consider before buying a house with crypto

Buying a house with cryptocurrency comes with its own set of considerations and factors that you should take into account before making the purchase.

Be sure to research these topics thoroughly to ensure you make an informed decision when it comes time to buy a home with cryptocurrency.

The volatility of the cryptocurrency market

Cryptocurrency prices can fluctuate wildly in a single day, and their value is often unpredictable.

Both the buyer and the seller share almost the same level of risk if the value of the cryptocurrency explodes the next day, you effectively cash out on a lower level of value, while if it crashes down to oblivion, you may consider yourself lucky and have made the deal of your life.

Legal and regulatory considerations

Depending on where you live, regulations may require that certain taxes be paid or that certain documents be filed. It’s best to check with your local government to make sure all applicable laws are being followed when purchasing a home using cryptocurrency.

Tax implications

When purchasing a home with cryptocurrency, it’s important to be aware of the tax implications involved. The IRS typically classifies cryptocurrency as property, so when used to buy a house, the sale is treated as if you sold an asset for cash. As such, you may owe capital gains taxes on any profits made from the sale.

Additionally:

  1. When you first purchase crypto for the purpose of buying a house, any increase in value is taxable when converted back to fiat currency.
  2. If you hold onto your crypto and use it to buy a house later on, any gains between acquisition and disposal will be subject to capital gains tax.
  3. Depending on how long you held onto your crypto before exchanging it for a house, long-term capital gain rates would apply.
  4. If you receive payments in crypto for renting out or selling your property, these payments are considered income and should be reported accordingly.

It’s important to understand how different types of transactions can affect your taxes before entering into any agreements related to buying or selling property with cryptocurrency.

Importance of due diligence

You need to be sure to conduct thorough due diligence when considering a cryptocurrency-related property purchase. It’s important to research the seller and their history, as well as any information available about the property you’re looking at buying.

Be sure to ask questions about the title of the property, any liens or encumbrances, and whether there are any outstanding debts associated with it. Additionally, you should verify that all documents related to your purchase are in order before making an offer on the house.

Make sure you also have access to professional help for guidance throughout the process – an experienced real estate lawyer can go a long way in helping ensure a successful transaction.

Lastly, be aware of any local laws or regulations that may affect the ownership of cryptocurrency-related properties. Taking these steps will give you peace of mind knowing that your investment is safe and secure.

Options for Buying a House with Crypto

Using crypto as collateral for real estate is one way, allowing you to transfer your crypto directly to the seller.

Another option is buying a house with an NFT – this has become increasingly popular in recent years.

You can also cash out your crypto and use those funds towards purchasing a property or use an intermediary service that allows you to buy a house with cryptocurrency or fiat currency.

Using Crypto as Collateral for Real Estate

Using crypto as collateral for real estate can be a great way to purchase a home without using traditional currency. This method allows you to use cryptocurrency as security for the loan, and then use the funds from the loan to purchase your home.

Here are some advantages of this approach:

  • You don’t need cash or credit to buy a house
  • You benefit from potential upside in your crypto investment
  • Loan terms are flexible
  • Interest rates may be lower than with fiat-based loans
  • Your cryptocurrency is insured against volatility.

Plus, many lenders now offer digital asset mortgage programs specifically designed for purchasing real estate with cryptocurrency. With this option, you might even get better interest rates and other benefits compared to more traditional financing options.

Transfer crypto directly to the seller

Transferring crypto directly to the seller of a property is an option that can provide a secure way to purchase real estate without involving traditional financing. This method of payment is fast, secure, and offers buyers the ability to buy with anonymity if they so choose. It also eliminates worry about having money tied up in escrow for long periods of time.

However, buyers must make sure they are dealing with reputable sellers and use due diligence when making an offer. Additionally, buyers should be aware that they may need to pay extra fees for using cryptocurrency as payment instead of cash or other forms of currency. There are also tax implications associated with this type of transaction which must be taken into consideration when buying a home using crypto.

Ultimately, it’s important to remember that transferring crypto is just one option available when purchasing real estate, and there may be more suitable alternatives depending on individual needs and preferences.

Buying a House with NFTs

Non-fungible tokens (NFTs) are digital assets with unique identifiers stored on the blockchain that represent real-world objects or abstract concepts. They have become popular in recent years, especially within the world of art and collectibles.

In terms of buying a house, NFTs can be used to store information about a property and transfer ownership from one person to another without needing third party intermediaries. This makes it easier, faster, and more secure for buyers to purchase a house without worrying about fraudulent activity or theft.

Additionally, since the transaction is recorded on the blockchain, it allows both parties involved to view all information related to the sale, which can help prevent any disagreements in the future.

Cashing Out Crypto for Buying a House

You can simply exchange your digital assets for a fiat currency at an exchange and proceed with the purchase of a new home. We at Coinlabz recommend doing your own research when selecting the best exchange, as they can differ in exchange rates, exchange fees, and some not-so-transparent terms and conditions, which may increase the overall cost of the transaction.

Use an intermediary to buy a house with cryptocurrency

Using an intermediary to purchase property with cryptocurrency can be a great way to ensure secure transactions and maximize savings.

By using a broker or real estate agent, you benefit from their experience in the field while taking advantage of the security that cryptocurrencies offer.

The intermediary will convert your crypto into cash, which is then used to buy the property. They will also be able to advice on the best ways to exchange currency without incurring heavy fees or losses due to price fluctuations.

Furthermore, they may even help you find properties that are willing to accept cryptocurrency payments directly, so you don’t have to go through the hassle of cashing out altogether.

Ultimately, having an intermediary involved in your transaction ensures maximum efficiency and peace of mind when making large-scale purchases with cryptocurrency.

Real Estate Companies that accept Crypto

Crypto Real Estate

Crypto Real Estate is a real estate company that specializes in helping customers purchase properties with cryptocurrency. They offer a wide range of real estate types, such as houses, apartments, cabins or even just land. Customers can easily search for a property using the filters provided, such as location, property type, price, size, and additional features. The process of buying a property is simple and straightforward, including legal consulting and a terms & contract agreement. Crypto Real Estate ensures the safety of customers by providing transparent transactions, an experienced legal team, and an AML and KYC process.

Crypto Real Estate operates pretty much all around the globe, including countries such as Spain, Italy, Thailand, Bali, USA, Canada, Mexico and many others.

BitPay

BitPay is a leading cryptocurrency payment service provider which offers a directory of real estate companies that accept Bitcoin and other cryptocurrencies as payment.

They facilitate crypto real estate transactions on behalf of the buyers and sellers. If you are a seller and you don’t want to receive cryptocurrency directly, BitPay can convert the crypto into dollars to complete the purchase. The seller can generate an email invoice, which the buyer receives and pays from their crypto wallet.  BitPay then transfers the funds to the seller via direct deposit.

In addition to private sellers, there are several real estate groups like Magnum Real Estate, Pacaso, and Condos.com, who have partnered with BitPay for property purchases.

You can use your Bitcoin or Ethereum for real estate payments on the BitPay platform. They also accept Bitcoin Cash, Dogecoin, Shiba Inu Coin, Litecoin, XRP, Dai, Binance USD, USD Coin, Wrapped Bitcoin, Pax Dollar, and Gemini Dollar.

Magnum Real Estate Group

Magnum Real Estate Group is a real estate company based in New York that notably accepts Bitcoin as payment for its properties. Part of their $4 billion portfolio are historic buildings, new developments, and commercial properties.  Their acquisition strategies have increased their portfolio to more than 100 New York properties.

One of their most popular assets is on 196 Orchard Street on the Lower East Side, which features 94 luxury condos and ground-floor retail space.

The company’s commitment to accessibility has resulted in a website that is straightforward to navigate.

Redfin

Redfin is a real estate brokerage that was founded in 2004 that accepts cryptocurrencies as payment.  They are also the largest brokerage website in the US, with more than 1 million potential buyers and sellers visiting their site and app on a daily basis.

One of the reasons for their success is that Redfin agents are in the top 1% of real estate agents working nationwide, which assists their clients in making the best possible deals on the current market.

Coinlabz suggests using the safest option, and you can’t go much wrong with Redfin as they are a well-established real estate brokerage with experienced agents and an enormous online presence.

BitcoinWide

The idea of BitcoinWide came to life in Thailand when the company founder wanted to buy a ticket to Singapore using digital currencies.

BitcoinWide is a directory of businesses that accept cryptocurrencies as payment, including real estate companies. Currently, more than 80 real estate companies are listed as accepting Bitcoin and other digital currencies on their platform. As the adoption of cryptocurrencies in real estate is gradually rising and more widespread, expect BitcoinWide to add more real estate companies to their list.

On BitcoinWide, you can list your services for free, create a verified listing for a $9 monthly fee or use the premium listing option for businesses for $20 per month.

Challenges of Buying Real Estate with Cryptocurrency

Buying real estate with cryptocurrency can present some challenges.

Firstly, the acceptance of crypto is still not widespread in the real estate market, so it’s important to be aware of potential fraud or scams.

Additionally, financing a property purchase with cryptocurrency may be difficult, and you may find yourself without many options in case of disputes.

Lastly, it’s also important to consider the uncertain future of cryptocurrency regulations when making any decisions regarding its use for real estate purchases.

Lack of widespread acceptance in the real estate market

Although real estate brokers and agents are beginning to explore the option of accepting crypto payments, there is still a lack of widespread acceptance in the real estate market. Many take a traditional view on transactions and are hesitant to accept cryptocurrency as payment for real estate. This can put potential buyers in a difficult situation, as they must either find an agent or broker who will accept crypto or convert their cryptocurrency into fiat currency in order to make their purchase.

With this option, buyers must also pay fees associated with conversion rates. It’s clear that the real estate industry has not yet fully embraced cryptocurrencies, and until it does, buying a house with crypto may be more challenging than expected.

Potential for fraud and scams

When considering cryptocurrency payments for real estate, it’s important to be aware of the potential for fraud and scams. To help protect yourself, you should:

  • Educate yourself on the basics of cryptocurrency transactions
  • Understand how blockchain works
  • Learn about crypto wallets and security protocols
  • Research the seller thoroughly
  • Check their credentials with friends or advisors in the industry
  • Verify references online and investigate any red flags
  • Process payments through an escrow service
  • Compare fees from multiple services before selecting one
  • Read all terms & conditions carefully before signing any documents

Difficulty in obtaining financing with cryptocurrency

Getting financing for a real estate purchase with cryptocurrency can be difficult. Cryptocurrency is still relatively new and not widely accepted, so finding lenders that will provide financing for it can be tricky.

Some lenders may require additional documentation to demonstrate the source of funds, or they may not accept cryptocurrencies as a form of payment at all. Furthermore, the volatile nature of cryptocurrency means that its value can change rapidly which makes it an unattractive investment for many traditional lenders.

As such, buyers should investigate any potential lender thoroughly before committing to a loan agreement and ensure that they have the resources to pay off the loan in full if necessary.

Limited recourse in case of disputes

If you’re considering purchasing real estate with cryptocurrency, it’s important to be aware that there are limited options for recourse in case of a dispute. When dealing with cryptocurrency-based transactions, there is no centralized authority to help resolve disputes and no protections offered by government or international law. This means that buyers must take extra precautions when entering into an agreement.

Uncertain future of cryptocurrency regulations

Due to the ever-changing regulatory landscape surrounding cryptocurrencies, buyers must be aware of the potential risks and uncertainties associated with these types of transactions.

Cryptocurrency is a new and emerging asset class that has yet to gain widespread acceptance or adoption. Governments around the world are just beginning to grapple with how best to regulate digital currencies, and this could lead to changes in laws that may impact buyers who use cryptocurrency for purchasing real estate.

Furthermore, there may be additional taxes or fees imposed by governments on using cryptocurrencies for purchases, which could add costs and complexity to the transaction process. In addition, most banks do not accept cryptocurrency as a form of payment so it can be difficult for buyers to complete their purchase without taking on significant risk.

It’s essential for potential homebuyers using crypto assets to carry out thorough research before committing funds in order to ensure they understand all applicable regulations and any future changes that could affect their investment.

Examples of Successful Real Estate Transactions with Cryptocurrency

San Francisco

In 2017, the first-ever real estate transaction on the blockchain was completed. It allowed a Ukrainian investor to purchase a property in San Francisco using Bitcoin. The transaction was recorded on the blockchain, which made it tamper-proof and transparent while reducing the risks of fraud and errors and making the transaction process incredibly efficient.

Miami

In a deal in 2020, a penthouse in Miami was sold for the staggering amount of $22.5 million, which was all paid in Bitcoin.

Manhattan

There is one popular case where the owner of a luxury apartment in Manhattan’s upper Eastside wanted only Bitcoin as payment. The price of the apartment was $29 million when it reached the market and was offered by the Magnum Real Estate Group.

Austin

In 2022, a mansion located in Austin, Texas, was sold for $18.5 million in cryptocurrency by Scooter Braun, who is better known as the manager of the stars. Some of his clients are Ariana Grande, J Balvin, Justin Bieber, and many more. Who is the buyer? It was Wayne Vaughan, who is the CEO of Tierion, which is a company focused on using blockchain to verify data or business processes on an international scale.

Conclusion

Buying a house with cryptocurrency can be a great way to invest in real estate. It’s important to consider all the factors involved. While it may take some time and effort, you’ll reap the rewards if done correctly. As the old adage goes, ‘A house is an investment that will pay dividends for years to come.’

With careful planning and research, buying a home with crypto can be a smart option.

1 Comment

  • Pablo
    Posted January 24, 2024 12:37 am 0Likes

    Everything is very open with a very clear clarification of the issues.
    It was truly informative. Your site is extremely
    helpful. Many thanks for sharing!

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