The listing promises “NFT fractional ownership (50%) of this fully gutted rehabbed home,” noting the home had been appraised for $138,000 last year and currently generates $1200 in monthly rental income. The listing concludes:
“Let’s Make History together with the first ever NFT for REAL ESTATE!”
Speaking to Cointelegraph, Malpica said the use of an NFT enabled the property to be purchased with cryptocurrency, but it would be legally backed up with the formation of a Limited Liability Company between the purchaser and him showing 50/50 ownership.
“The NFT doesn’t actually state you own the property legally, but it will once we write up the operating agreement that is recorded,” said Malpica, who works as an Enterprize Risk Management Lead at Verizon,.
“Selling as NFT and half will allow for the easy LLC transaction. Some banks/title companies probably wouldn’t accept a full pay out in cryptocurrencies. At this time you can’t just buy a real rental properties with 100% crypto. This way, selling half as a partnership, it allows for that,” he said.
“Title work is already in place and the new buyer and myself will create a new LLC and complete what’s called a ‘quick claim deed’ with an operating agreement.”
Given that the legal rights and ownership conferred by NFTs are something of a grey area —not to mention to fact Malpica only came up with the idea yesterday — Cointelegraph strongly recommends anyone interested do due diligence and consult a lawyer before investing in real estate through non-fungible tokens.
Malica described himself as a long-term property investor who has entered into 50/50 partnership agreements on 30 previous rentals. He said he’d developed an interest in NFTs after hearing Gary Vaynerchuk, CEO of Vaynermedia, discussing them.
“The investor in me had to dive head first. I never want to be left behind.”
At the time of writing, the auction has attracted fewer than 100 views and no bids. Malpica stated that if this sale was a success he’d expand the concept.
“I believe if this is a success – I can do fractal shares/NFT to allow multiple owners of an asset to own REAL income producing rentals,” he said.
The founder of MyEtherWallet, Kosala Hemachandra, recently told Cointelegraph that NFTs will gradually evolve to cover ownership of real estate.
“I think this current version of non-fungible tokens will continue to evolve into bigger and broader use cases. Things like real estate and proof-of-ownership of tangible property; wherever NFTs can help execute legal actions. That is when things will start to get really interesting.”
Commercial outfits are currently offering tokenized real estate, such as RealT.