Blockchain Project Idea: VirtuState
January 22, 2023
Justin Tsugranes
An Interactive Augmented Reality Real Estate Agency Built on Blockchain Technology
Blockchain
AR/VR
First, imagine this.
Your property is for sale, I have money. I want to buy your property. I trade my money for your property. I own the property and you have a move-out date that is pre-programmed into the deal.
Pretty simple huh? “Well yeah,” you say, “but it’s more complex than that.” But does it have to be? I’m a huge proponent of removing inefficiencies and outdated, redundant processes as quickly as possible. There is the saying, “If it isn’t broken, don’t fix it.” While that is true, I believe in the saying, “If it isn’t broken, don’t fix it, but it can be better, improve upon it.”
So let’s talk improvement, but first…
THE VISION / THE PITCH
- ** INCORPORATE MACHINE LEARNING ASPECT — what furniture you may like and would best maximize the usage of space and give you the best return on investment — giving you the perfect balance of capital expenses (the property and all furnishings), operating expenses (utilities, maintenance, etc.) and return (what you can charge for the rental minus all expenses).
You’re driving through one of your favorite up-and-coming neighborhoods and you happen to see a new house listed for sale; a beautiful single-family home with a guest house. You see a Keller Williams “For Sale” sign out front. You put on your Google glasses or your favorite VR glasses and enter the Keller Williams Metaverse of properties.
You then proceed to go on a virtual tour of the property. You enter through the front door, you go to the mudroom to take off your coat and shoes. You proceed to the kitchen so you can open the fridge, open the cabinets and drawers, and explore all of the appliances and fixtures. You walk over the living room so that you can see the beautiful view out of the back window that overlooks your backyard, your grill area, your saltwater infinity pool, and where you and your family will relax.
You then walk upstairs to see your bathrooms and your bedrooms. You walk into the master bedroom. You don’t like the furniture that is placed on the property so you use the Ethan Allen integrated furniture selector to find the bedroom set you want in there. It’s a beautiful new king bed set with a huge dresser, nightstands, and vanity for your partner. You place your new bed on the other side of the room where you’ll have a better view of the huge oak tree in the window as you wake up. You place your dresser where the current dresser is, but over to the left just a couple of feet so it is more centered on the wall, and add a huge digital picture frame that will show off that one-of-a-kind NFT Artwork you bought.
Then, you walk into your beautiful master bathroom. You love everything except for the showerhead. You want an artificial rain head. So, you use the Lowes home improvement integration to shop for the showers that you want in your new home.
You walk back downstairs and head out to the garage where you also use the Lowes integration again to add organizational shelving and storage solutions to the garage space. You know everything will fit perfectly in the space while allowing ample space for your car because you are placing it directly in your virtual tour.
Then, you visit the guest house and decide it would be perfect as a short-term Airbnb rental, but it needs some new furniture, utensils, plates and bowls, maybe an area rug, and other finishing touches. You use the Ikea integration to fully stock the new space.
While you’re in the space, you use the calculator to calculate the current price of the property, including all of the additions that you have added along the way. It then calculates how much the property could rent for and how much cash flow you can generate from your rental, with all local property taxes and fees.
The numbers work out and you found that not only did you find your dream home, but you also have a great additional cash flow that will help you pay off the property even faster than you originally planned, including all of your additions.
You decide to move ahead with the purchase. You deposit the Bitcoin that you’ve been holding onto as a long-term investment into a decentralized lending and borrowing platform as collateral to finance your own loan. You borrow the funds in the form of USDC and approve the transaction of the home and all tokenizing home furnishings that you added along the way
You have instantly transferred ownership of the house and you receive a delivery and install date for all of the physical items you purchased. you get your bedroom set, you get your garage organization, and all of the furnishings for your brand-new rental. Not only will you have all of the physical items, but you have an exact virtual replica of your property in the Metaverse.
You discover that the property is actually vacant, so you don’t have to worry about the owners moving out. The place is yours. You walk up to the property and scan your phone on the front door lock. You then walk into your brand-new home.
You also immediately list the rental property with renderings of all of the new furnishings for rent so you can start attracting renters that can stay at the space as soon as you move in and everything is delivered.
All of this happened in a matter of 1 hour.
The next day, all of the new furnishings for your home and rental arrive. Your furniture is placed exactly as you placed it on the app. Your fixtures are installed. Your garage is organized and ready for you. Your rental space is set up and beautiful.
The next day, your first renters arrive. The renters have their crypto wallet connected to the rental app and a smart contract binds their commitment. Every 24 hours, their cryptocurrency is transferred from their wallet to yours.
Through a deal that you set up, that cryptocurrency is instantly applied towards paying off your loan balance on the property or wherever else you direct it to be sent. It can be used to purchase other properties, pay down higher-interest debt, or pay off investors that helped you raise funds to purchase the property. You receive the cash flow every day someone is staying in your rental and that cash is automatically routed wherever best suits your financial strategy. You are able to compound your earnings daily
It is frictionless, seamless, and happens at the speed of light. No useless middlemen, title searches, no lawyers, no centralized banks… As Bill Gates might put it, it’s business at the speed of thought.
LET’S TALK ABOUT CURRENT PAIN POINTS
Before we dive into some of the nuts and bolts of the solution, let’s talk about the current pain points in the world of real estate purchasing and investing.
Pain point: There’s a lot of friction in property purchases. I drive past a property that I want to tour or find it online. I scan the QR code or enter the property URL and see the photos/videos/3D tour, but I want to be able to actually take a tour of the property.
Pain Point: I have to set up a time to view it
Pain Point: I may have to bring an agent
Pain Point: I have to work off of other peoples’ schedules,
Pain Point: I have to take extra time out of my day
Pain Point: I have to drive around town
Pain Point: I have to deal with broken lock boxes.
Pain Point: The sellers have to leave the property for every showing.
Pain Point: The sellers have to find somewhere to bring their pets.
Pain Point: The sellers have to constantly keep their home perfectly clean for any impromptu tours
Pain Point: It takes an extremely long time for money to move around the world through multiple financial institutions.
Pain Point; The cost of Title search fees
Pain Point: Dealing with banks, getting loans, and finding creative financing
Pain Point: The cost of loan fees and closing fees
Real Pain Point: The whole real estate purchase experience is just an overall time-consuming, money-consuming, pain in the ass.
THE SOLUTION: AN INTERACTIVE METAVERSE REAL ESTATE AGENCY BUILT ON BLOCKCHAIN TECHNOLOGY
As a buyer, I want to put on my virtual reality goggles and enter the Cardone Capital Metaverse, the Keller Williams Metaverse, or ReMax Metaverse, or even one big MLS Metaverse with all properties listed for sale.
This meta verse is the new “website” and has all of your listed properties
The properties have all been tokenized into NFTs and listed in your metaverse.
As a buyer, I want to walk up to a property that I’m interested in and enter the property.
As a buyer, I want to tour the property inside and out and, if I decide to purchase, I want to be able to instantly trade my bitcoin or another crypto asset that the seller accepts for the NFT property.
The seller can also issue an NFT related to a smart contract on the property that says I have first rights to decide to purchase upon physical inspection of the property and nobody else can swoop in and buy it. Ie, I want to physically tour, and have the tour schedule, but if the owner approves the holding NFT, then nobody can buy the property before your tour.
However, NFTs can also be held in auctions that allow for unlimited bids for a property, so there is still
This purchaser doesn’t just receive a virtual reality NFT for their money. They receive the real property, all deeds and titles included.
Currently, there are also insurance companies that operate in the blockchain space, such as Nexus Mutual, that can insure all transactions.
As a purchaser, I want to instantly collateralize my asset (Bitcoin or other cryptocurrencies) for a self-funded loan to buy a property and instantly be able to put that asset to work generating cash flow daily.
As a purchaser, I want the cash flow from that property to be allocated where I determine daily, not weekly or monthly. I want my money daily so that it is always either paying down the loan on the property or being put to work to buy other assets.
As a market maker, and platform owner, I want to reduce liquidations and instead instantly be able to sell off the equity in over-leveraged companies that brings in limited partners and/or investors.
These people may or may not have voting rights, but they will have a profit share that is determined by their shareholding.
COMPONENTS
NFT REAL ESTATE MINTING
A site that makes it easy for people to mint their property as an NFT
What legal forms would this have to incorporate?
Not only could you offer your own listings, but you could offer the ability for property owners that want to sell to tokenize and sell their house on your platform.
NFT CROWDFUNDING
Fractionalized real estate isn’t a new development in the blockchain space. It is a growing field, but not innovative.
VIRTUAL WORLD NFT REAL ESTATE MARKETPLACE
A Virtual World NFT Real Estate Marketplace where house shoppers can 3D virtual tour properties
MULTI-UNIT RENTALS
Rents are automatically deducted from crypto holders' balance
INSTANT DEFI HOUSING/PROPERTY LOANS / FRACTIONALIZED REBALANCING MORTGAGE NOTES
Think — Discount mortgage note dealing. What role does/can/will blockchain play in the mortgage note business?
- Debt to income ratio is a huge factor when determining if someone is “creditworthy” enough for approval of a housing loan. In the USA, your credit score is also a huge factor in determining whether or not someone is credit-worthy. In 2013, my wife and I were denied a housing loan in a blossoming market due to our debt-to-income ratio. I had 2 college degrees and a 720 credit score. She was a college graduate and we both had full-time jobs. We were also applying for a VA loan. Not only did we miss out on the massive appreciation of housing prices in that we witnessed in the area over the 5 years that we lived there, but we have been stuck in the rent cycle ever since.
- What if, the only thing that mattered in the act of being approved for a housing loan was that you simply pay the housing loan? We will lend you the money and you will benefit from the equity as long as you pay the loan.
- Through Smart Contracts, these
Example:
Say you have a job making only $50,000 a year.
What if you could get a DeFi loan as a specific percentage against your current and future earnings that are automatically deducted from your income before it hits your account?
As long as your account is taking on income then the loan is being paid off.
If your income decreases, then the amount of the payment decreases, and the length of the loan term increases, since you are making smaller payments over a longer period of time. In essence, the loan automatically rebalances based on your income. This is basically what accredited investors do with non-performing notes in the discount mortgage note business. You take a non-performing note, and instead of evicting the owners, you renegotiate the loan terms. ie, payment $, and length of the term.
There could be a feature that, instead of auto-liquidating your asset (your home), fractionalizes the equity share in your home.
So, you start off owning 100% of the equity in the home. The unpaid equity can be placed on an open market in the event of lower payments toward the loan.
You would need some sort of majority share mechanism that keeps the system/investors from “hostile takeovers” of your home and you need to mathematically factor in debt costs and taxes.
The key point that you’re trying to get at is, anyone can automatically get a housing loan if they have income, and they will not lose their home or default on their loan due to economic hardships. They just wouldn’t own the equity in the home anymore. They’re basically renters and not homeowners. That equity would be sold off, either as part of an NFT REIT or as a fractionalized NFT mortgage note.
That in turn creates another business of selling fractionalized equity in the housing market. Most, if not all, companies that I find in my research are using fractionalized real estate crowdfunding for upcoming projects that will share equity. dividends are automatically paid several times a day in the form of cryptocurrency, which is wonderful with regard to compounding interest. However, they aren’t creating the marketplace for decentralized access to equity in the entire global housing market.
I also wonder what you could do with those daily dividends. Besides just collecting dividends or having smart contracts that auto-compound them for the investor. I imagine there are two easy-to-image ideas
- Use the daily dividends in equity to help pay off the loan—ie, a loan that pays itself off over time.
- Use the daily dividends to reinvest the money into other properties.
REAL ESTATE COMP / PORTFOLIO REBALANCING
Additionally, there is a need for real estate comparative analysis (comps). You can probably adapt the code that is being used for comparing current NFT price history and rarity into an application that can compare all properties….. I guess it’s like taking all of the MLS histories, along with Zillow-type of property search data, and funneling it all into a comping mechanism. Some of this is already being done in Web2…. You get data like property price history, “average prices” for a neighborhood, property taxes, and “views on a property (or ‘potential interest’) that come together to give you an Estimated Price….. You could also add things like the average cost of repairs considering the pricing of local vendors/national standards.
PORTFOLIO MANAGEMENT / AUTOMATIC REBALANCING
Ability to swap assets freely based on property value and cash flow
It’ll manage your entire portfolio… integrate Zerion code
Use wormhole to integrate Terra savings on Anchor and also Aave once it moves to Solana.
ALL-ACCESS HOUSING LOANS THAT REPAY THEMSELVES AND OFFER
I think the premise I’m trying to figure out is….. okay, you can take out a mortgage against your crypto, either through DeFi (Aave) or Cefi (BlockFi, Coinbase, Celsius, that Milo company)… but you need to overcollateralize the loan. That’s a good thing as far as not overleveraging a system, but not good if you aren’t and wealthy investor and NEED a collateralized loan in order to afford to buy a house. That’s the biggest problem with crypto right now…. It’s still a rich man’s game…. If I have a Million worth of bitcoin, I can borrow $200K against it and buy a small rental house, or Airbnb/VRBO to create cash flow. You can’t do that unless you already have that money. This perpetuates the high barrier of entry to property ownership that the majority of the world is affected by.
There is/will be some way to use cash inflow (job income, another yield from Defi) to pay off the loan on the house through Flash loans….. Maybe all you need is a downpayment to get the cash flowing…. I deposit $10,000 of TokenA (probably a stablecoin) into a yield-generating platform that is backed by real-world cash flow real estate. I receive an interest-bearing token in return: bTokenA. I lock all of bTokenA into a housing rent-to-own type of platform and receive NFTPropertyA (tokenized house/apartment/condo) There is a flash loan/rebalancing mechanism that takes the yield generated from bTokenA to pay off the loan on NFTPropertyA.
That is enough to give you a “loan term”…. Time it’ll take for the yield generation to pay off the NFTProperty asset. As you deposit more into the yield generator, the loan term goes down. If I decrease the amount of TokenA, then the loan term increases, and I will pay more interest over time, but not lose my home to default.
Like right now, I have dollars in the form of UST (TerraStableCoin) deposited into Anchor. I deposit UST and they give me aUST in return that I hold in my wallet. (interest-bearing UST). The aUST is a liquid asset that I can trade or send to other wallets. As the yield is generated on my UST, more aUST is generated into my wallet, and my UST balance on Anchor increases. That return is around 19.55%. What if, that yield that is generated all day long and compounded continuously is siphoned off to pay my mortgage automatically?
I guess in terms of the Airbnb concept, If you have a property that this was done for, the tenant would pay the rental fee and that rental fee could be automatically on-ramped and auto-deposited into the yield generator part, thus increasing the yield that is generated, increasing the amount that is paid towards the loan, and decreasing the loan term.
FLASH LOAN NFT ARBITRAGE / WHOLESALING
Arbitrage is a strategy that can be used with a short-term rental, such as a vacation rental, long-term rental property (referred to as rental arbitrage), raw land, commercial real estate, or residential real estate. However, it’s most commonly used with residential properties, particularly ones that are distressed and being sold below market price.
If you can recognize a good deal on something based on market values and Supply/Demand, then you can flash loan the deal somehow. Or even just buy it to own the supply and offer it for sale on your own site.
Sites like Priceline, Kayak, and Expedia recognize cheap deals, buy the deals and then sell them as a middleman while taking a cut
If you have a buyer lined up, then you find a seller for them. You get a flash loan, buy from the seller, and sell to the buyer.
I imagine you could create a website that “dropships” tokenized houses…. It simply lists all tokenized assets across Web3 with a slight markup in a central database, a user picks out the property they want to buy or rent, initiates the transaction and your program automatically buys the property from the listing website and sells the property to the buyer on your platform.
Better yet I bet you could
FLASH LOAN FLOW
Algorithmically Recognize Opportunity
Borrow USD
Swap USD for assets on one platform
Swap Asset for USD on a different platform
Payback USD Loan
Keep USD Profit
OR Swap USD for UST (If necessary)
Deposit UST into Anchor Protocol
OR Swap USD for Real Estate NFT
STEPS TO INITIATE THE FLASH LOAN
You have a bunch of properties listed on your site. They can be for sale anywhere, as long as they’re NFTs and are completely liquid
You have a seller on one end = $1 MIL
You have a buyer on the other = $1.05 MIL
You get a flash loan for $1 MIL
You pay the Seller $1 MIL
Now you own the property but have a $1 MIL loan.
The buyer recognizes that you do in fact have possession of the property and releases the $1.05 MIL to buy the property from you
You pay back the $1 MIL flash loan
You keep a $50K profit
NFT REITS
Tokenized NFT Real Estate investments — Or/also housing market — There is massive real estate investment by hedge funds — What are they doing with it and would their asset be better served in a blockchain-based tokenized form in which the value is easily tradable in a liquid NFT marketplace? If so, you could create an automatic portfolio management platform. I guess that would maybe operate like a REIT
COLLATERALIZING ASSETS / ASSET LEGOS
What about Leveraging the Asset?
Liquidity providing to the real estate markets
How do you incorporate Mirror Assets / Synths (stocks, ETFs)….asset lending/borrowing
An asset is an asset, so why can’t we freely change BTC to NFT art to NFT Real Estate to NFT Music to USD to APPL Stock???
Combine, swap, add liquidity, lend, borrow, merge, convert….
Think money legos but with all other types of assets… Asset legos.
Can you do Instant housing loans, swaps, Airbnb, investing, rentals,
ALL OF THE BEST APPS COMBINED TO CREATE
Uniswap: Liquidity
Aave: Lending / Borrowing
Anchor Protocol: Savings
Metaplex / OpenSea: Marketplace — NFT Minting?
Zerion: Portfolio Management
DeFi saver: Portfolio Rebalancing
Decentraland: Virtual Marketplace that mirrors your real-world assets — Take “Virtual Tours” to the next level.
So you want to combine DeFi saver code with Zerion with OpenSea and Anchor Protocol and Metaplex on Solana.
Current Web 2.0 Sites
Zillow
Trulia
Airbnb
VRBO
Expedia
Priceline
Kayak
TripAdvisor
Notable Web 3.0 Sites
Propy
Bacon (and the smart contract hack)
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