Here late...So it sounds like (one of) the big problem(s) with this project is that REAL team needs to adjust the core operating budget to become more proportionate with what was actually raised at ICO.
They don't need all of the employees they have for 4 years straight, especially when that's soaking up the large majority of the budget.
I don't knock REAL for the budget because they were transparent about it, so there's enough info for any diligent investor to know what they're getting into here. That doesn't condone it though, and to me it looks like, FOR THE GREATER GOOD OF THE REAL COMPANY, positions and/or salaries need to be shaved. REAL should work within their means.
It's more important to have capital to invest on real estate than to use the large majority of the budget on anything that doesn't directly return income.
If REAL is counting on the token to grow in order to invest in real estate, that won't work if the returns to the token holders are laughable.
Assuming I didn't miss it, REAL should address the budget situation for the community in a upcoming blog report of some sort.
You're right in the sense that they have to adjust their budget. Otherwise the business falls apart since they won't have much money to actually buy real estate. However, it's not clear if they'll be able to actually execute their strategy with too small of a budget.
Regarding your last comment about needing the price of REALs to appreciate so they have more money to invest, you're looking at it the wrong way. It has zero impact on how much they can invest since they raised a fixed amount of ETH and that's what will be used. A higher price would help the team members personally (not investors) since that's how they received their 20%That being said, they could sell the reserve tokens, so a higher price could help in that respect.
The budget is really the big question since the REAL token value is highly dependent on this. The higher the budget, the lower the value of REAL tokens. It's a balancing act since they didn't raise as much money as expected, but they still need money to run their business.
It was really a poorly structured ICO because they set it up to disadvantage early investors. That's the opposite of how it should have been run. This is aside from the fact that they didn't provide enough info on the real estate side of the business, which is really what token holders bought in to.
The ONLY things that should matter to token holders is the real estate investment strategy and how any non-investment money is being spent/allocated. They screwed up both, which I suspect is why they didn't raise enough money. There should have also been a minimum amount they need to raise or have everyone refunded. Because they didn't do that, they now have the issue of having to drastically reduce their budget, which is a HUGE problem.
At some point, a real estate company will put together an ICO the right way, so that's what you want to keep an eye out for if you're interested in the space.
Ahhhh...I think I must've misread something in the last few pages because I thought someone mentioned that some of the REAL tokens the team kept would be used above the ETH raised for real estate (push come to shove). I didn't invest in the ICO and I'm just kinda starting to dig into the whitepaper so I was more so going off the convo I interpreted here.
Considering the current financial state of REAL and some of the profit projections they make on investment (I believe 10%), what would you say the tokens are worth in your mind at this time? I mean without a budget change, if we were to project how long it would take to get ROI, it seems like we're talking a pretty long time. I'm starting to think REAL may even touch .20-.30 cents now
It sounds like you were right how you interpreted the conversation. The reserves can be sold to new investors in the future, which would raise additional ETH.
Regarding the valuation, it's impossible to know what's a fair price until we get the following info:
* An updated budget
* More info on how the reserves work and how much is actually set aside for future investment (vs any non-investment expenses)
* Estimated timing on their first property purchase
* Much more detail on their real estate strategy and their previous experience implementing that strategy.
* it would be helpful if they could also confirm how much ETH and fiat they currently hold. I have a pretty good idea based on the ICO results they posted, but confirmation would be helpful.
Without having any of this info, I'd say the max price right now is about $0.20 if the budget is still $8 million and assuming they will acquire their first property very soon.
My guess is that they are working on reducing their budget. That would raise my estimate IF I thought they could still pull off their business plan based on the new budget, so there's a balancing act there.
It doesn't really take many people on the real estate side to acquire and manage just a few properties (in my opinion), but the tech side adds a lot of bloat that most real estate firms don't have to carry.
Of course, if they were to reduce the number of people they hire, you'd expect a commensurate reduction in the amount of REAL set aside for the team. Otherwise all the remaining people end up getting more.
I'm adjusting my price estimate. The team has confirmed there's 15 million tokens that will be in circulation, not counting the ones being reserved for a future sale (or possibly burned). They raised around 37,000 ETH.
Putting the budget issue aside for a moment, the MAX price is 0.0025 ETH/REAL. That's just simple math. 37,000 ETH divided by 15 million tokens.
Of course not all of the 37,000 ETH will be used for investment since they need to set funds aside for the Operating Budget. We know they were originally budgeting $8 million, but that's way too much considering the value of the ETH they are holding is around $11.1 million. I'm assuming an ETH price of $300, even though it's trading lower today.
They haven't released the new budget yet, so that's the big question. The last trade on EtherDelta was at 0.00128. This implies that the company will invest 19,200 ETH and 17,800 is being set aside for the budget. That's $5.3 million, or a little more than $1 million per year.
I can't say if this is a reasonable budget or not, but that's what's being priced if you just look at the amount of ETH they are holding. Of course, there are other considerations, many of which I've outlined in previous posts.
I'm still keeping an eye on this, but I've decided that it's still too expensive for me right now. Until the new budget is released, my buy price is probably around 0.0005.