It’s true: everywhere you look, there are articles about cryptocurrency and blockchain technology. QuantmRE hopes to disrupt real estate investment by using both of those technologies to their advantage.
The company recently launched a solution for equity freedom. The QuantmRE Network provides access to previously illiquid assets without interest to pay, monthly payments, or restrictions on how the money can be spent.
How? The company is purchasing fractions of home equities and tokenizing the money to create a marketplace which bears new financial opportunities for both property owners and investors. The Network allows both sides to transact fractionalized assets directly, without the micromanagement of a third party. QuantmRE’s platform is a trading marketplace which affords both homeowners and investors the ability to access a previously untapped real estate asset class.
Make no mistake; this isn’t a mortgage. According to Matthew Sullivan, founder, and CEO of QuantmRE, “This is not a loan. The homeowner would sell us the future rights.” Here’s how it works: Let’s say a homeowner has $300,000 worth of equity in the home and releases $60,000. QuantmRE would write the homeowner a check for $60,000. “We would own the rights to the future appreciation of the home, so if we look at the amount of value advanced to the homeowner; we advanced the homeowner 10% of the value.”
QuantmRE makes money by getting 25 percent of the increase in value. “In our example, let’s say the house went up in value from $600,000 to $660,000. The amount owed to us would be the initial $60,000 plus 25% of the value, which is $15,000. If the home goes down in value, we may not make any money,” says Sullivan. “That’s the risk we take.”
The issue, says Sullivan, is that the money is tied up in the house. “It’s illiquid. So, we found a way to use the blockchain and cryptocurrency, and the trust inherent in being able to see the path of that cryptocurrency as it changes hands.” Now, he says, if you take a pool of single-family shared equity and apply cryptocurrency, it solves the problem with illiquidity. That’s the other side of QuantmRE, where investors can buy into the shared equity of these homes and trade in their platform. “You can attach real estate assets to those properties using a traditional REIT structure,” says Sullivan. “Rather than issuing shares, we issue tokens, and those tokens have similar characteristics to tokens already flying around the world. We don’t need banks or a third-party company.”
While the product has only been tested in California, the company hopes to expand to the entire United States. “Each state has different restrictions,” says Sullivan. “It [the concept] has been tested in the 9th Circuit in California a few years ago when the plaintiff tried to say it was a mortgage. But, it’s a real estate transaction, not a mortgage. Now we are building it out nationally based on each state’s unique regulations around the transaction.”