Topic: [GLBSE] House for sale: RFC - page 2. (Read 4936 times)

Would the bank want to move in to a room if I got a home equity loan? They certainly considered it a security for the years of mortgage and made phenomenal amounts of interest off my back, perhaps you are right that does seem entirely silly.

This method as I have come to realize allows very small risk from the shareholders perspective, since they can buy a small piece of a fund that is backed by collateral which is like the basis of any standard security, isn't it?

Can you elaborate on what you find silly?

Please also understand this document is a request for comment not the actual fund.

As a home owner this is relevent to my interests 

Brendio is one smart cookie.

brendio is the first one to propose realistic terms. That would be a really interesting first for bitcoin. I don't agree with the "a trusted forum member's word would prevent needing to reveal the address". Holding as illiquid an asset as a house requires extra burden in terms of proof. I would require an appraiser and a fully notarized transferal of title.

I also think you'd need to be pretty bearish on bitcoins to think that a house would outpace them at the moment. A house is certainly at less risk for total loss however, so if the right boxes are checked you could possibly find some investors. Not me, but it's not a totally unviable idea.

-bgc

As already pointed out, you are confusing things by mixing investment types. Forget the GLBSE dividend paying investments for a moment. For me to invest I would need to see the following occur.

Get an independent market valuation from a licensed valuer. Provide statements of exact amounts of tax owing. Work out your equity by subtracting tax owing from valuation. Sign a legally binding mortgage to a trusted third party escrow. (If the third party escrow has sufficient reputation in the bitcoin securities world, you would not need to publicly reveal your address. A statement from the escrow that they hold a mortgage would be enough.) Get an independent valuation of the rent that would be payable on an arm's length basis. Either you, or preferably the third party, issues GLBSE assets for no more than 80 % of the equity. You sell at least enough to cover the tax, but more if you like. Proceeds are used first pay off your tax. Each month, you pay to the third party escrow 80 % (or whatever percentage of assets issued) of the market rent for the house, and this rent is distributed as dividends. You may deduct any genuine expenses for the house from the rental income by providing the thrid party escrow with receipts. If you own some of the GLBSE assets yourself, you get some of the rent back. If you issue more assets than is needed to pay the tax, you can invest some of this in dividend paying GLBSE investments. If these go well, you keep all the income yourself and use it to help pay your rent. If your investments bomb, you are still up for rental payments, and if you stop paying rent, the investors can choose to evict you and put someone else in or foreclose on the house.

I would be interested in seeing something like this happen. It would be a novel concept to the bitcoin world (although not the first mortgage). I would need to see the valuations and rent appraisal before deciding whether I would invest in such a venture.

What about setting up a company that does house mortgages or partial mortgages on glbse ?

Dont list the house but instead use it as collateral to set up a mortgage broker

Eventually people will want to pay their house repayments using btc.

See the previous post.
[snip]
That's an interesting question since there can't really be a default with no outstanding mortgage. The only risks are if the house blows up or I decide to spend the dividends on something else other than the taxes and the town then takes the house. My goal in all of this is to keep the house and to do so means paying the taxes and therefore I'd be shooting myself in the foot if I didn't pay them.
[/snip?]


Isn't that a red flag against all GLBSE dividend baring stocks any one of them could stop paying the dividends but then the value of the stock would plummet to everyones misfortune, including mine. The dividends will be based on the returns from the reinvested funds based on their performance.

I'm beginning to see the difficulty in my approach, instead of just one banker I have to appeal to hundreds, but I beleive it's worth it to avoid paying interest for loaned money that does not exist.

The idea is that if the house goes up in value then the shares should be more valuable, is that a problem?

If it's a home equity loan (or even a "fancy/complicated" home equity loan), the investors are not investing in the property. It's just collateral.


You are failing to mention the #1 source of risk, which is that you don't pay out the dividends you own to investors, and/or don't pay back the principle (i.e. buy back the shares). For example, because you invest that principle in GLBSE assets which could underperform.

Seriously, red flags, man.

That's an interesting question since there can't really be a default with no outstanding mortgage. The only risks are if the house blows up, I decide to spend the dividends on something else other than the taxes and the town then takes the house, or the bottom falls out of the Bitcoin market. My goal in all of this is to keep the house and to do so means paying the taxes and therefore I'd be shooting myself in the foot if I didn't pay them.

From an investors perspective I probably need some way to publicly display that the taxes are being paid or at least that town has decided I'm paying enough.

From an investors stand point, since they are investing in a property, shouldn't they share the risk/benefit of the value of the property if that increases then the sell price should be higher, if the property falls in price the price should be lower. None of us can control that except the market and anyone can buy or sell the security at whatever price they want. The initial offering will be pinned to the market price of the property at the time of the IPO.

The question of the value of BTC over time would also seem to effect all GLBSE securities not just this proposal but since all funds are to be reinvested in those funds this would seem to be a mute point.

Also all investments can immediately be reinvested without sojourn into Fiat land since the securities are being sold in BTC.

Since I will pay the taxes etc. from my share of the dividends this is the only place in the IPOs functionality where Fiat will be involved and in reality is of little interest to the investors as pointed out by another poster.

Thank you.
Please understand that I really don't see it as silly risking my livelihood on a venture like this. It's interesting how banks have the ability to make Home Equity loans look so credibile but I'm having a less easy time of it here, perhaps that's a good thing. Another poster commented that I may need a PR firm, this could be true but the fundamentals of this idea are solid. A home equity loan reinvested to the benefit of the shareholders. If I had the money right now I'd invest far more on GLBSE and with the collateral I can. I'm starting to think of this idea as selling real estate in small pieces.

So all home equity loans have no credibility?
People on the forum have already asked me why I'm doing this I thought it prudent to tell the truth.

There's a first time for everything. I've chosen GLBSE since I have come to trust the company. They are developing secure software for compromised environments. Also the original idea was to sell shares to the whole value of the house however that could easily be pared down until the market improves. 300k may sound like a lot but looking at the volume on some of the securities there this is not that huge?

Thanks again for the advice. I have to say I was a somewhat upset when I was typing the original idea in, but one of the good things about this forum software is I can edit it!

Sorry but this is true.

I think this project should go elsewhere. What about Patrick's new baking services?

But I guess it's up to nefario to accept or not this listing on his exchange.

Anyway whish you best of luck  Punningchan

So now it is GLBSE Loan & Pawn? What's next, someone going to IPO their car or their gun collection? If I buy enough shares can I move into a room? How many shares for the garage? There are other mechanisms in place for situations like this (i.e. private lenders and Bitcoin banks). Crowdfunding the mortgaging of your home via GLBSE is just silly and takes away from the credibility of the exchange. Any real world investors looking at Bitcoin for the 1st time and seeing a 'security' like this listed on one of the main exchanges will probably take their money elsewhere, and for good reason.

I think I read a similar thread quite some time ago (like ~1 year ago) with the same characteristics - someone wanted to offer a house or so as security for huge loans, "everyone" starting from the government, the wife, big corporations and whatnot were out to get him and there was a strong emotional appeal to raise money from libertarians.

Also again, with so many other investments on GLBSE:
This investment is denominated in fiat currency and sold in BTC - a bad investment for anyone believing BTC <--> fiat exchange rates will grow faster than the return rates of your investment fund (which is backed by a house).

I agree with mollison: If you want to have a loan on your house, present it like this and also pay dividends/interest accordingly. How you make back this money is completely irrelevant to me as your lender in most cases, if you want to earn it on GLBSE that's fine for me (and probably a lot of others too).

Goat for example suggested a scheme where he pays 1% of interest + 1% of capital back each week, which amounts to a fully paid back loan + 100% interest after 100 weeks. Yes, it sounds like a lot, but with current earning potential on GLBSE you might still have quite a few gains (if you invest smartly that is). The biggest problem is that your collateral is denominated in USD, so either you price everything in USD (and BTC bullish investors risk gaining fewer BTC back than they initially bought in for) or you price it in BTC (paying back 2 BTC for 1 BTC over 100 weeks), risking that your house drops from 60000 BTC @ 5 USD to something far lower, not covering your debt any more.

My advice would be (from an investor's perspective):
Don't raise more than you need, your emotional appeal etc. already caused me to not trust you at all for 300k USD but put up the whole house as collateral. If you need 20k USD, raise 20k USD in BTC at current value, offer some nice returns and earn them back in whatever way you want. This would also make sure even if BTC rises to 10 USD or more, that you still could fully cover the debt in BTC if you sold the house.

Alternatively:
Make sure to make clear your debt is USD denominated and for example issue 20k shares for 20k USD debt. Then integrate a bot that always keeps the ask price up-to-date with MtGox and make clear rules for dividends and which USD <--> BTC rate will be used there. This means BTC bullish people might be driven away, but they still might at least appreciate the straightforwardness and still invest a bit, unlike the recent mining bond crash that cought quite a few people by surprise.

Care to explain?

+1 to that.

nonsense; BTC exchange rate movement will make this a bad investment for both investors and issuer; and I pretty much doubt that there's enough high quality assets on GLBSE to invest such high sums into for long term

A relevant question is also, what steps will you take to give your investors legal recourse in the event of a default? You would essentially be blazing a new trail legally-speaking, so laying a solid legal groundwork is important. If it's an issuance of debt, who holds the note? Who will hold the deed to the house if you get your investors?

-bgc

If that is what you actually want to do (imitate a home equity loan), I think it's an interesting idea (and possibly even a really good idea). That's not really how you represented the investment, though. I did not realize the house was supposed to be collateral. (After all, you said you were "selling" the house.) Your proposal was confusing.

I would be more comfortable as an investor if this were structured as follows. Each share represents a proportion of the house, with a guaranteed date for buyback (by you) and a certain fixed dividend payed out on some schedule (i.e., interest).

For one thing, this is simpler to understand and straightforward, and for another thing, it sheilds the investor from the whole "re-investing money in GLBSE" business. Yes, you can do that if you want as a means to try to generate the money to pay the dividend to your creditors (I say "try" because I'm rather bearish on much of the GLBSE).

Of course, doing it the other way exposes the investor to more GLBSE risk and sheilds you from it. That's also an option.

The shares being pinned to the value of the house only matters if you are unable to make good on the debt you are issuing, if I understand your proposal. Shouldn't you not plan on that happening and not use that as a selling point? I am sure nobody is going to be comforted by that train of thought.

My legality concerns were not from the "conflation" issue, but from your statement at the beginning of the original post (which is still there as of now) that a town in NH plans to take the house. You later state that there are no plans to seize the property, which is a contraditcion. Assuming there are indeed no plans to seize the property, I'm not sure I see anything legally questionable here.

Also, talking about losing assets to a divorce just made things more confusing. That does help explain the backstory, so it's good to know (and you have my condolences), but it just wasn't clear at first to me whether the house could be seized as part of those proceedings.

tl;dr: you may be onto something but you need to hire a PR firm or something.  


Tip o' the hat for not being aggressive in response to the criticism.