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Tokenizing Real Estate: Navigating Investments and Innovations with Vez Meas
Sean: Would you say that if you want to enter the property sector, you have to have a significant amount of capital so you could start playing?
Vez: It definitely takes capital, but at the same time, it depends on at what level you want to play at. You can go into your single family residence, three bedroom house, two baths and whatnot, and find a distressed property or a foreclosed property and get it at a good value. Put $20,000 or $30,000 into it, you know, depending where you are and then flip it.
So that can be done, I wouldn’t say easy, but it’s an easier entry to get into. So that’s where you can knock on your friends and family and parents and whatnot just to gather a pool of funds.
For example, let’s say here in Seattle, we know the median house price is around $700,000 to $800,000. But you can pick up some distressed ones for about $400,000 to $500,000. And even then, you have to understand that you can leverage so you only need about 10% to 20% down.
So you’re talking about maybe $150,000 to $200,000, then you have to think about your resources. “Hey, I have ten credit cards. I will make a cash advance.” Let’s say, “My parents got some excess funds.” Or “My friend is a businessman, he can help me with a few thousand.”
So those are easier entry points. But once you start talking about multi family, 100, 200, 500 units, that’s a different ballgame. That’s why we got to look to joint ventures, or private funding, or of course bank funding. There are different entry levels.
Sean: And let’s just say you’re starting small. If you had to sell a property single family unit in a one month time frame, what are some of the things that immediately come to your mind right now for you to be able to sell that quickly?
Vez: Definitely have to look at the environment. The environment, meaning who will be your buyers right now? And like in the US, interest rates have climbed crazy high. So that definitely will pick and choose who your buyers would be. So in this market right now, to say one month is probably quite difficult unless you got a killer deal that you can wholesale.
For me, if I was to put a house on the market now, it’ll be at a pricing strategy and targeting maybe someone that’s the first time homebuyer who just wants to get into a property or knowing that they will get a deal and seeing that in the future, the value would go up.
So I would price a property where it’s slightly below. I would probably offer some discounts to bring their interest rate down. So these small incentives, that’s what I would look for.
Sean: Got it. And Vez before we continue with the show, I just want to ask, is there anything you’d like to promote here?
Vez: Well, you were talking about real estate and we’re talking about entering real estate. So one of the things I’ve been working on right now is actually the tokenization of real estate.
By tokenizing, basically taking one of our buildings, not the whole thing, just 34 units right now. And this building is in Cambodia. A 111 unit condominium building right in the center of the capital city.
So by putting this on the blockchain, now I’m enabling people that want to get into real estate, the accessibility, meaning they don’t have to come up with millions of dollars to come into it. So, you know, like my minimum offering right now is $10,000. So for that $10,000, you get to own a piece of this property and it’s all done through the blockchain.
Sean: Wow. And when you say they own a piece of it, what’s the difference between doing it via blockchain and not doing it via blockchain? Just so that some of our listeners who are not familiar with the Metaverse would be able to understand.
Vez: So if you think of your traditional real estate, you know, I say I have 34 units and you want to own a part of it, I can’t sell you just a piece of those units. You have to buy the units individually.
And by putting a blockchain, I take those units collectively and cut them into shares. So you own a piece of it. It’s kind of like the stock market where people buy stocks and Tesla, Microsoft, Google or whatnot, you’re owning shares of it.
So this is the same idea, whereas putting on a blockchain meaning, which is digitizing it but is backed by a real asset, a real world asset. So your valuation is there, all the revenues are there. It can be touch, seen, or feel. So is your traditional real estate, except it’s embracing technology where people can get in a lot easier than your normal.
Sean: Got it. And is this technology that you have built already out there ready for people to buy?
Vez: It is ready. We’re actually launching this week. We did a pre-launch this past month, which is why I’m in the States.
Sean: That’s awesome.
Vez: But I’ve been working with a team when they’re ready to go so people can just simply go online, go through your accreditation process. Once that’s done, you just find your account, then you’re good to go.
Sean: That’s awesome. Congratulations, dude, That’s big.
Vez: No, it’s been exciting. Just because to me, I see it’s going to open a door for other projects and it’s going to allow people to come in. So when we talk about funding a project like this is one of the new ways to raise funds, instead of your traditional, you know, fundraising route for a project.
Sean: Yeah, for sure, for sure. The blockchain is a whole different ball game and people are just not yet that educated into it. And it’s not that widely embraced because there is a learning curve. There is that learning curve. But the accessibility, the technology itself is very, very good. I’m very happy to hear that it’s being used this way. That’s a very good project.
Vez: And, you know, going back to how we started. This is part of being an entrepreneur. You have to be flexible and adapt to the times. You know, I’m not going to sit here and pretend that I know everything about blockchain.
I recently just learned about it when talking to some friends saying, “Hey, you know, how can I liquidate property or raise funds faster to create a project?” And that’s when I started this. We’re talking maybe a year and a half ago in the making. So in that time, it’s been me learning this whole new world.
Sean: I’m going to ask you questions about that. First off, is the building already built before the technology or did you build the technology first and now you’ve launched it before you start building?
Vez: Well, this building we’ve opened since 2014, so it has been operating for a while. But the technology side of it, we’ve been working on it for the past year and a half. So we’re finally adapting to it.
There’s a lot of back end work to do, meaning the technology side of it, the platform, the custodial account and of course the regulations to make sure that they are compiled by the SEC’s in the US. So all of that took a lot of time.
Sean: Got it. When you opened up this blockchain technology that is tied up to the building, I wonder, did you have to register everything, all the funds that are coming in for that building because you’re selling it a stock? And did you have to register it with the SEC? Did you have to pay taxes for it?
Vez: Yeah, we placed it in a Delaware company in the US here. So I took the asset, transfer it over to a US company. So everything was done properly there. And of course we gotta have to follow all the tax rules and even investors, you can’t just open up to everyone. They have to be accredited. So there’s certain criteria you have to meet before you can invest in the property.
Sean: Got it. For example, for you, the owner of the property, why do you want to do this instead of just, for example, because you’ve been operating it since 2014 instead of just getting the rent revenue for yourself, why do you want to open it to investors so that they’re going to be sharing with the rent revenue?
Vez: Well, two things. One is the building is running, so there’s a track record. If people are investing, they want to know, “Hey, how much yield will I get? You know, what is the occupancy rate?” And instead of you trying to pitch a new project saying it might be 80% occupied, we might be able to rent it for X amount of dollars, we might be able to sell it.
So instead of guessing and estimating what it can be, now we have something like, “Hey, I have historical records from 2014 till now of what the operation has been, who my clientele are, and the occupancy level.” So I think that would bring some comfort to any investor.
And two, I just want to see this technology being used. So it’s easier to do 34 units, $10 million raise versus 44 stories and $50 million raise. You know, once you prove that it works and I think that’s when people will get on board. So that’s why we decided to just do 34 units and see how it goes.
Sean: So these units are 34 new units that you’re building?
Vez: No these are existing. So the first building is called Silvertown, which is 111 units over 14 stories. So we sold a good part of it and now we have 34 units that we didn’t sell that we did keep just for rental. So I’m using those 34 to put on the blockchain.
Sean: Got it. That is amazing. And with building this technology you mentioned you studied it for a year. How were you able to consolidate the talent required to build it? Because programmers are very hard to find and hire right now?
Vez: They are hard, which is why I understand the mechanics of it. But I’m not a programmer, so definitely you have to rely on a team. I was introduced to a team here in Seattle through mutual friends. So I’ve been working with a company called Terrified to build that. But then I’m also guided by a consulting company, Genesis Block.
So they have helped us out through this whole process. And then we got our legal counsel, Seward and Kissel to make sure that we’re legally in compliance. And then of course we need marketing, which previously we worked with Authority Works to get that done.
So basically you have to find the talents, get them all together. And that’s what we did here. So the same thing as building a property or doing a business, you find people that are the experts in their relevant fields and you put them all together.
Sean: It’s amazing. I’m very happy for you being able to launch. That’s a big deal, dude. So you’re working with a lot of people who are experts, right? And it does take a special kind of person to be able to put a project together.
What are some of the leadership skills that you have right now that you would say, “Oh, because I have these things, I have many successful projects under my wing coordinating with all of these suppliers.”?
Vez: You got to have the vision. You need to understand everything I mentioned there and then see who has that expertise to put it and help you get to that goal?. You got to understand to say, if I’m going to build a new project, the first thing you have to think about is, does it make sense? How can we exit? What’s my worst case? If I can’t sell the project, how can I refinance it? Or how can I rent it out? How can I create cash flow from it?
So you have to find who would fit that to say, Okay, you can’t sell, you have to operate a building as a hotel. You got to find the experts at that. So it’s being able to be flexible. It’s the key and to see that, I think that is an important skill set to have. It’s just to look at the macro level, but also understand the nuts and bolts of it and how it worked together.