Most real estate investors probably think about bitcoin mainly in terms of whether they are going to invest in the currency before it hits its next record high or wait until the volatile cryptocurrency tanks (at least temporarily) before getting in. However, an increasing number of landlords, sellers, and other real estate professionals are also thinking of the currency in terms of accepting it as payment for goods or services rendered. Some property management companies are introducing bitcoin payments as a luxury “amenity” for landlords and tenants in hopes of attracting more clients by demonstrating that they are innovative and modern.
“We lead in innovation, so we saw bitcoin as something that’s going to happen,” said one property management platform executive. Landlords appear to be interested in the ability to accept the currency, but tenants presently have expressed “zero interest” according to another industry player located in New York City. Property managers believe that the option to pay in bitcoin may come to be viewed as a “new amenity beyond a fancy gym or a new couch in the building.”
New Currency, New Considerations
If you are thinking of accepting bitcoin or other virtual currencies as rent in your own real estate business, remember that these currencies come with some complicating factors, including:
- High volatility
- Lack of general public understanding
- Low perceived credibility
You will need to determine how you will collect these payments and, furthermore, how you will protect the currency once payment has been tendered. Cryptocurrencies are notoriously easy to hack and have no recourse options once they are stolen. Because they are highly volatile, you also must determine at what point in the process the value of the currency will be frozen, so to speak, so that neither tenant nor landlord can retract a payment or demand additional payment if the value rises or falls.
Home sellers accepting bitcoin as payment for their homes must deal with a similar set of issues. Homeowners offering to accept it as payment stand to gain if bitcoin continues its meteoric rise, but could find themselves in a bind if they hope to use the bitcoin to purchase a new home and the volatile currency falls in value. Anyone accepting bitcoin could also generate extra interest in their listing since the currency is such a hot global topic. One Australian homeowner said of his decision to accept the currency as payment for his multimillion dollar estate, “I’m banking there is somebody out there who would just love to say, ‘I’m the first in Australia to buy a property via bitcoin.’”