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Cryptocurrency is a digital currency that is secured through the use of cryptography. This type of medium of exchange has made a significant impact on the way people invest and spend money. Many people have taken advantage of this new currency and invested money into it as they predicted the currency’s exchange rate would rise. Today, many people use cryptocurrency to make large investments like homes, cars, and commercial real estate property. Because cryptocurrency is still a new concept, this blog post is going to explain its effect on the real estate industry.
Cryptocurrency and Commercial Real Estate Today
Cryptocurrency is accepted as a form of payment at over 100,000 merchants worldwide. It is often used to pay for big ticket items like jewelry or furniture. The commercial real estate industry has also adapted to this lasting trend by accepting cryptocurrency as a form of payment. Purchasing commercial real estate with a type of cryptocurrency is not the most common way to purchase properties today, but it is becoming more popular.
Many people are starting to use a type of cryptocurrency, like Bitcoin or Ethereum, to purchase real estate properties. In fact, some commercial real estate properties are marketed to Bitcoin buyers, rather than cash buyers. It can be much safer to buy properties with cryptocurrency and then securely transfer it to the seller. The seller is able to convert the cryptocurrency to dollars and get their money from the transactions. There are some complications that exist today when purchasing commercial real estate with cryptocurrency.
The Good Funds Law
Unfortunately, purchasing properties with cryptocurrency is still very uncommon due to issues with title loan companies. Many of these companies do not accept this form of payment due to complications with the Good Funds Law. This law requires the mortgage broker or lender to have a payment of loan funds before or at closing. While this does not completely hinder every real estate transaction, it can occasionally cause problems. Working with a title loan company who is excited to work with cryptocurrency is the best way to avoid this type of issue.
Working With Banks
Many banks have banned their customers from purchasing forms of cryptocurrency with their credit cards. There could be a number of reasons for this, one being security of the cryptocurrency’s website. Considering banks don’t enjoy working with cryptocurrency, if the seller of the property does not own the property without a loan from the bank, issues can arise. In order to avoid this issue, the seller and buyer will have to work with a traditional currency at times. The two parties can work with a third party to convert the money before paying the bank back for the loan, or they can pay a portion in cash and the other portion in cryptocurrency.
As the popularity of cryptocurrency increases, it will become much easier to purchase a property with bitcoin. With most new inventions, it takes time to work out issues and make changes to accommodate the invention. When you work with the right title companies, banks, and real estate agencies, purchasing a commercial real estate property is possible.
How Cryptocurrency Will Be Used in Commercial Real Estate in the Future
Due to the number of people who have switched to paying for large purchases with Bitcoin, it is likely that real estate purchases will be done through cryptocurrency in the future. There can be risks involved when using physical dollars to purchase real estate. Physical dollars are not encrypted or secure when transferring money to other accounts. As technology improves, it will be more important to have a secure way to transfer money. There are many other ways cryptocurrency can be used for commercial real estate in the future. Here are just a couple:
To Collect Rent From Tenants
Cryptocurrency can be an easy way for tenants to pay their landlords in the future. The landlord can give their digital wallet address to their tenants, and then be paid in cryptocurrency. This completely removes the need to collect tenants’ banking information or invest in a payment portal.
Transactions Are Easier
Thanks to blockchains, which are a record of cryptocurrency transactions, many predict real estate transactions will be much easier. As mentioned above, cryptocurrency is completely encrypted and secured against hacking. This makes it the perfect method to transfer property titles and other valuable information.
Cryptocurrency and Commercial Real Estate
The commercial real estate industry is changing because of cryptocurrency. Many property sellers are starting to advertise their ability to accept cryptocurrency because of the trend. Commercial real estate brokers are expecting to see a greater number of clients who want to purchase properties with cryptocurrency. It’s just a matter of time before we see a big shift in currency trends.