Tag: closing agent

Invest in real-world, cash-flowing rental properties for as little as $50

 

Rarely does something truly exceptional happen in the business world. That’s especially true of real estate. Acquiring property and renting it out for cash flow? That business model hasn’t changed since the Middle Ages.

 

Well, MartelTurnkey is thrilled to announce something completely new — the MartelInvest Token, the world’s first tokenized real estate fund.

 

What does this mean? It means we’re using the power of blockchain — the disruptive technology behind cryptocurrency, NFTs, and smart contracts — to make it possible for anyone, anyone in the world, to invest in US rental property for as little as $50, regardless of their income, credit, or net worth. 

 

No big deal, right?

 

I’m sure you have a lot of questions, so let’s get into it …

 

What is a token?

A token is simply a discrete digital asset, built on a specific blockchain and defined by a smart contract or specific project.

 

Bitcoin is a kind of token. So is an NFT — in fact, NFT stands for “non-fungible token.”

 

We have created the MartelInvest Token network to include 1 million total tokens.

Is the MartelInvest Token an NFT?

No, it isn’t. “Non-fungible” means it can’t be swapped one for another without any loss of value. Think about swapping one house for another. What if one house has more square footage? Fewer bathrooms? They aren’t equal assets.

 

The MartelInvest Token, on the other hand, is fungible in the same way a dollar bill or a cryptocurrency token is fungible. One dollar bill is worth just as much as any other dollar bill. One bitcoin is worth just as much as any other bitcoin. One MartelInvest Token is worth just as much as any other token on the network.

What am I investing in? Is this “virtual real estate?”

No, it’s not virtual real estate. Much has been made about “virtual real estate” in the “Metaverse.” If you’re leery about buying property that only exists on a computer, I don’t blame you. It’s a very new, unproven business model.

 

But the MartelInvest Token is backed by actual real estate in the real world. We’re building a portfolio of 400-500 rental houses in real US cities — the same business we’ve been in for five years, so we know what we’re doing.

 

Think of owning a MartelInvest Token as being similar to owning a share of a REIT — a share of stock in a company that owns 400-500 rental houses.

How do I make money with the MartelInvest Token?

The portfolio of rental properties in the MartelInvest Token fund produces cash flow. Every month, we divide up the cash flow and distribute it proportionally to the token owners. You can own as many MartelInvest Tokens as you want, and owners of twice as many tokens will get twice as large a share of the cash flow. 

 

When we sell or refinance a property in the fund, token owners get a percentage of the proceeds proportional to the number of tokens they own.

 

We are selling each MartelInvest Token for an initial offering of $50 per token. Yes, that means you can invest in a portfolio of real estate for as little as $50, and your risk is spread out across 400-500 properties. There’s no credit check; you don’t need to apply for a mortgage. 

 

We’re also working on creating an open exchange for the MartelInvest Token by the end of the year. Once active, token owners can buy and sell the tokens to each other. At that point, the price of the MartelInvest Token will be set by the open market. It could end up being worth much more than $50 at that point.

 

Even before the open market goes live, we plan to go the extra mile by having every property in the portfolio appraised monthly and assigning an intrinsic value to the token, based on the total appraised value of the real estate in the portfolio, so you know how much your $50 token is actually worth based on the real assets backing it.

How does MartelInvest make money on the transaction? What’s your end?

Simple — token owners get 80% of the cash flow. Martel gets 20% as a fee for our service of building and managing the portfolio.

Is the MartelInvest Token a liquid asset?

Yes! That’s one of the beauties of it. Real estate is notoriously illiquid — selling a house takes a lot of time and money. 

 

As mentioned earlier, we’re working on an open exchange for our tokens. Until then, if you ever need to liquidate your tokens, you have the option to sell the tokens back to us. 

Why blockchain?

Blockchain technology has many advantages over traditional finance and investing tools. Here are just a few that apply to real estate investment:

Low transaction fees. Tens of thousands of dollars can be transferred anywhere in the world for fees as low as pennies. With the large dollar amounts changing hands in a real estate transaction, this really adds up.

Speed. I can’t tell you how often I have sold a house on Friday and waited until Tuesday to get the money. Blockchain transactions run 24/7 and are usually processed in seconds.

Transparency. Every asset and transaction sits on the blockchain for the world to see. Compare that to REITs or syndications, most of whom do their work behind closed doors.

Trust. Each blockchain exists on thousands, even millions of computers. It’s nearly impossible to do something shady with everything in the public eye with millions of computers to corroborate every transaction.  

Who can buy the MartelInvest Token?

At the moment, we are only authorized by the SEC to sell to accredited investors — net worth of over $1 million excluding the personal residence, or individual income of $200k+ or joint income of $300k+.

 

This does put the kibosh on the idea of “real estate investment for the masses” … but we’re working on it. We hope to make the MartelInvest Token available to anyone, regardless of income or net worth, within six months … so stay tuned!

How can I buy the MartelInvest Token?

Glad you asked! Go to martelinvest.com — the network is live, and the MartelInvest Token can be purchased for $50 apiece and transferred to your wallet within minutes. You can start collecting cash flow as soon as next month!

When we talk about real estate investing, we almost take it for granted that an investor will use a mortgage to buy the property. After all, many people don’t have the available cash needed to buy or renovate a house or commercial property outright.

 

But some do. Some investors do have that much cash. So why do so many of them still take on heavy debt to buy their real estate investments?

 

We don’t like to take anything for granted, so let’s interrogate the assumption — should you invest in real estate with a mortgage? What are the pros and cons?

Pros of Investing with a Mortgage

 

Less Money Down. For investors who don’t have the money for a 20% down payment or renovation costs, the ability to borrow money to buy investment property is a godsend.

 

Diversify. What if you do have the cash to buy the investment outright? Should you? Most investors don’t. If they have $200,000, they won’t buy a $200,000 property outright; they might buy five properties with $40,000 down payments.

 

That way, the risk is spread out. Even if one property underperforms, the others will probably do fine and one might even overperform expectations, pulling up the portfolio overall. But what if you just buy the one property outright and it underperforms? That’s the danger of putting all your eggs in one basket.

 

Leverage. Investors talk about real estate debt as leverage. It can be a tricky concept to grasp, but once you do it’s extremely powerful. Here’s the gist — you put less money down, but the property still appreciates as much as it’s going to appreciate. If you buy a $200,000 property outright and the property appreciates $40,000, you have increased your wealth by 20%. But if you only put $40,000 down and it appreciates $40,000, you have doubled your money. The property got more valuable, but the debt stayed the same size. You can build wealth incredibly quickly by using a mortgage as leverage.

 

Deductible Expenses. Your mortgage interest is a deductible expense. Additionally, your depreciation expense is the same size whether you mortgage the property or not, so you might as well get the most property cost basis you can.

 

Principal Paydown. Over time, your loan balance gets smaller as you pay down the principal with your mortgage payments, increasing your ownership interest in the property even as the mortgage payments stay the same.

Cons of Investing with a Mortgage

 

More Risk. Once you take on a mortgage, you are responsible for the repayment of the debt. If you hit financial hard times and can’t make the mortgage payment, you risk a total loss of the investment in foreclosure. Investing in real estate always entails risk, but there’s no denying that the less you borrow, the less risk you assume.

 

Less Cash Flow. Even if you don’t hit hard times, a mortgage payment is a big expense that takes a big bite out of your cash flow. It might still be positive cash flow … but if your goal is financial freedom, it might take longer to achieve with the smaller cash flow. However, this reduced cash flow can often be offset by the tax advantages of leveraging real estate.

 

 

Overall, we believe the hype — the pros of leveraging investment property with a mortgage far outweigh the cons. MartelTurnkey can help you identify the right mix of property selection, strategy, and financing to generate cash flow from Day One … and then rinse and repeat until you don’t just have one rental property — you have a whole portfolio!

If you have bought a home before, you probably have some impression of a title office — an attractive storefront where you sit at a big conference table, sign a stack of documents, your realtor pops champagne, hands you a gift basket and maybe balloons, maybe asks you to pose with the keys or a gigantic “sold” sign. It’s like Chuck E. Cheese for adults.

 

Believe it or not, champagne is not required to close a real estate transaction. It’s as much for the realtor to celebrate her own commission as to celebrate your new home.

 

The closing process on an investment property is a lot different. At MartelTurnkey, for example, we’re often helping someone in Ft. Lauderdale buy a house in St. Louis. The buyer won’t fly out for the closing. For them, the “closing” is positively anticlimactic — signing a stack of documents in front of the notary public at their local bank branch. If they want to pop champagne, they probably have to bring it themselves and do it in the car.

 

So is the title office just theatre? Not in the least. Whether or not you ever visit it and get the gift basket, many people work behind the scenes at the title office to make your deal close without a hitch, nipping a dozen or more problems in the bud before you ever have to worry about them. 

 

To understand better, let’s look at some of the most important roles in a title office and how they contribute to a successful closing, whether or not you ever get to meet them.

 

1. Escrow Officer

Remember, escrow is a designated “middleman” service that makes sure both parties to a contract fulfill the duties of the contract. The buyer wires all the necessary funds, the seller signs over the title, and no one gets stiffed by someone else skipping out before their end of the contract is done. 

 

The escrow officer has fiduciary duty over funds held in escrow. Fiduciary duty means acting in someone else’s interest rather than your own. 

 

Say you wire a $50,000 down payment to escrow. That money is out of your bank account and inside a bank account controlled by the escrow officer. What’s to stop the escrow officer from flipping around and using your $50k to buy a Tesla Model S for himself rather than closing your real estate transaction? His fiduciary duty, which he agrees to in the escrow contract and can be sued for if he violates. 

2. Title Agent

The title agent is a specialized kind of insurance agent who procures title insurance for the transaction. The premium for this insurance is one of the closing costs on the transaction.

 

What does this policy insure against? The possibility that you might hand over the entire purchase price to the seller … only to discover that you get no property in return. The seller might have no right to sell that property. Maybe there’s a competing title. Maybe the seller is just a charlatan trying to sell the Brooklyn Bridge, take the money, and run.

 

This kind of thing is rare, but it does happen, and a lot of money is at stake. Attorneys and researchers at the title office are supposed to catch these problems before money leaves escrow, but in the event that the title company makes a mistake, the buyer and the lender can claim any losses against the title insurance policy. 

3. Closing Agent

As I mentioned above, attorneys and researchers at the title office are tasked with making sure the property has a clean title and the seller has the right to sell the property, before any money leaves escrow. The buyer must also wire enough funds to escrow to cover the purchase price and all closing costs needed to complete the transaction. 

 

The closing agent (or settlement agent) is the person responsible for reviewing all this title work and the settlement statement to make sure everything is in order before the transaction closes. She is the “last mile,” the final stamp of approval on the documents before they are presented to the buyer. 

 

If you go to your closing in person, the closing agent will be the one presenting you the documents at that big conference table. If not, the agent will courier the documents to you with indications of where to sign and notarize them.

 

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Ideally, the title office takes most of the legal hassle of buying real estate off your plate. If you want even more of the hassle off your plate, reach out to MartelTurnkey. We cover not only the legal due diligence but also the physical and financial due diligence for you. It’s the easiest way to build a portfolio of profitable real estate investments. We’ll even pop some champagne with you if you’re in town!