Despite being a relatively new technology, crypto has exploded in popularity in recent years. As more people have become interested, the use cases for cryptos have also increased. These days, there's a range of things people can use crypto for.
One example of this is that you can now buy a property with crypto. Most people don't know how to do this, or even why they should. In this guide, we'll go through everything you need to know about buying a property with crypto.
How to Buy Property With Crypto
Buying property with crypto is a new concept, and as such, it's still not completely normalized. That said, you can do it either through a financial institution or simply between yourself and the seller. If you choose to do this, there are two main ways you can go about it.
Crypto as Collateral
Down payments are very typical for property purchases, and the same can be done with crypto. Various platforms have developed products to allow people to do this. With The Asset Advisors, you can invest in a property with just 10% of the total cost for the deposit.
You can also make a crypto real estate purchase with a direct transfer to the seller. With such a purchase, you can make the entire transfer in one go if you have enough funds. If you use this method you should take some precautions.
Sign an agreement that specifies the details of the deal. You should run this by a real estate agent, as well as an attorney that has experience with crypto.
Benefits of Buying Property With Crypto
More and more people are using crypto for large purchases such as buying property. This is because it provides several benefits that you don't get with traditional payment methods.
One of the main reasons for the popularity of crypto is the level of security it provides. Property can be very expensive, so when spending such large amounts of money, security is paramount.
Using crypto for a real estate investment is one of the most secure options available. Many investors now prefer it for this reason.
Property settlements can take a long time, and people often want to get things done as quickly as possible. Using crypto for such payments is one of the best ways to save time. Transfers are instant, and you don't have to worry about any of the checks or paperwork that might be needed for purchases with fiat currency.
Another major benefit of using cryptocurrencies is there are no international transfer fees. This makes buying properties this way even more ideal for international buyers.
With the amount that Dubai real estate can cost, bank fees can add a sizeable amount to the overall amount. There also won't be any extra transfers that might sometimes come with buying property. You also have a range of locations to choose from, such as Business Bay, Downtown Dubai, and Dubai Creek Harbour.
Acquiring a More Secure Asset
Many people invest in crypto as an asset with the hopes that it will increase in value. While this is entirely possible, cryptocurrencies can be highly volatile, so their value may also go down.
Real estate is typically one of the most secure asset types available. Using crypto to buy a property will give you a much safer asset, so you're less likely to lose money.
The UAE is somewhat like crypto, in that it's seen a huge amount of advancement in a small amount of time. It's now one of the most desirable places in the world to live. It offers things like low taxes, low crime rates, and perhaps most importantly, low property costs.
The UAE has a range of real estate associations offering all different kinds of luxury property. Whether you're after an apartment, a townhouse, or a commercial property, you'll be able to find something that's just right.
Tips for Buying a Property With Crypto
While it may be tempting to move quickly to purchase a property, you shouldn't rush into it. There are some things that you can do beforehand to ensure you have the best experience.
Learn How Crypto Works
The world of crypto is a complicated one. While it provides many benefits, you can only make the most out of these if you understand how everything works.
One of the first things to bear in mind is that you have various options for cryptocurrencies. While Bitcoin is the most well know, there are thousands available, so it's worth taking the time to look at some other options.
Various other cryptos such as Ethereum, Cardano, and Ripple have become incredibly popular, and people prefer different coins for different reasons. You also want to be aware of what a seller wants to make sure you can provide the right crypto.
Hire a Reliable Estate Agent
While it's becoming more common, there are still plenty of real estate agents that don't have much experience with cryptocurrencies. If you want to use crypto for your purchase, this is essential. Having someone that understands how crypto works will ensure things go smoothly, and they can help you with any aspects of the process that you don't fully understand.
Capital Gains Tax
Cryptocurrencies are treated as property when it comes to taxes. If you make profits on your crypto and then decide to sell it, you'll need to pay tax on it. Make sure you bear this in mind when converting any crypto back to fiat currencies, be it to purchase a property, or for any other reason.
Get Some Experience First
You should never make any kind of transaction with crypto if you don't know exactly what you're doing. There's a wide range of scams out there, and falling victim to one could be devastating. Being aware of the risks will help prevent any major losses.
It's also a good idea to have an understanding of how the market works, and the best ways to handle your funds. Developing a good crypto trading strategy and knowing the difference between the various coins can help you get the most out of your money.
Take Volatility Into Account
One of the risks associated with crypto is its volatility. It can quickly go up or down in value, and this can be a factor when purchasing a property. Ensure things are laid out clearly in your agreement so that both the buyer and the seller are on the same page about the payment.
Let's say you make a $1 million purchase with Bitcoin, you need to determine how things will be handled if the changes before the end of escrow. Also bear in mind that this means that the property might end up costing you more or less than you had originally expected.
Use Bitpay if the Seller Wants Cash
You might find a property you want, but the seller doesn't want to use crypto. You can use a platform like Bitpay to pay with your Bitcoin, and it will convert it to cash for the buyer. While this might not be as ideal as paying purely with crypto, it might be the best solution if you've found the perfect property but they won't accept a crypto payment.
Paying a Mortgage With Crypto
Many people get mortgages to buy properties, but unfortunately, this isn't yet possible with crypto. Major banks don't accept cryptocurrencies, so don't have a system in place to support this.
Another thing to bear in mind is that the UAE technically doesn't consider Bitcoin to be legal tender. Despite this, the government still allows people to buy and sell property using crypto - this does, however, mean that it's not likely to be possible to pay mortgages in this way any time soon.
Should You Buy Property With Crypto?
Cryptocurrencies are becoming more popular every year. With the way things are going, the possibilities are only increasing. Based on the advantages, you might want to buy a property with crypto. It can be more secure, more cost-effective, and much faster.
If so, just make sure you're aware of the risks involved, and that you understand how everything works. Seek the help of an experienced real estate agent, and don't make any transfers without 100% confidence.