Over the past 12 months the price of a single Bitcoin has increased by a staggering 2100%.
If you happened to buy just one coin a year ago you paid about $780. At the time of this writing that same Bitcoin is worth $17,640, representing a buy-and-hold gain of nearly $17,000. And if you bought more than one . . . well, the math is pretty easy to do.
With gains like this many purchasers of Bitcoin are thinking about ways to diversify their profits into assets they can actually see and touch. So, they begin looking for real estate investment opportunities.
Buying A House With Bitcoin
Despite the incredible performance of Bitcoin as an asset, most people still have no idea what it is.
If you made a full-price offer to buy a rental house by paying with Bitcoin, chances are the seller would look at you like you were from Mars.
So would their real estate agent, so would your real estate agent, and so would the escrow officer at the title company.
Oddly enough, they’d also react the same way if you offered to pay for the investment property with silver or gold.
Cash Is Still King – At Least For The Time Being
It’s not necessarily that they have something against Bitcoin.
It’s that most people in the real estate business aren’t used to thinking creatively. They still believe that cash – in this case the U.S. dollar – is king.
Because you made your initial offer to buy the house in Bitcoin, the seller probably thinks you’re crazy to begin with. They’ll want you to prove that you actually have the funds to close.
So you would have to convert your Bitcoin into cash before the contract to buy the rental house was accepted.
If you did that, you could risk losing money.
That’s because most escrow closings – even with cash – will run 30-60 days out. This allows time for inspections and due diligence to be done, and for all of the necessary closing documents to be generated.
Time Is Money
This past year the price of Bitcoin has increased by an average of 175% each month.
Assuming this trend continues, the coins you sold today would have more than tripled in value by the time you close escrow two months down the road.
That’s a pretty big loss to take just to convince the seller of the rental real property you want to buy that you’re not crazy.
Fortunately, there are ways to purchase real estate directly using Bitcoin. Next week, we’ll take a look at Initial Coin Offerings that are backed by real estate.
