Michael Jansta: Crypto Investors Need to Diversify into Real Estate
Mike Jansta
PERSON OF THE WEEK: Could Crypto Investors Help Boost the Real Estate Market?
In other words, could the real estate market play a role in crypto investors’ growth strategies?
Find out, mortgageOrb recently interviewed Michael Jansta, Altisource’s Chief Marketing Officer.
Q: Why should real estate investors be interested in crypto?
Jansta: The most obvious reason a growing number of real estate investors are turning to digital currencies is for return on investment. But perhaps the better question is why are a growing number of cryptocurrency investors buying real estate? Real estate news outlet The Real Deal had a story last summer about how 20-year-olds who got rich investing in the crypto markets were buying luxury apartments and houses across the country. You’re not alone, of course – many investors prefer to diversify their wealth, and real estate is a great option. The challenge for crypto investors looking to buy real estate is that they need an easier process for converting their digital currency into real estate. There are currently too many steps involved, but efforts are being made to change this.
Q: If crypto is going up so much, why would investors diversify?
Jansta: For the same reason most investors choose diversification — it reduces your risk. This is particularly good advice for the average crypto investor, as the digital currency markets are young and quite volatile. Digital currency values can go up and down, just like stocks.
For example, most serious crypto investors keep a close eye on Elon Musk’s Twitter account, as markets shift every time the billionaire tweets about Bitcoin or Dogecoin. If an event should occur that sends crypto prices lower, a diversified portfolio that includes precious metals, stocks, bonds, or real estate can help hedge against that volatility. Real estate in particular remains one of the most stable investments of all in the long term. While owning crypto is a great opportunity, savvy investors typically don’t want to put all their eggs in one basket.
Q: How to deal with price volatility in the real estate buying process?
Jansta: With cryptocurrency markets often changing rapidly, you want to be able to convert your digital currency into real estate quickly. A system is needed to lock the cryptocurrency conversion rate for three to five minutes, convert a very specific amount of crypto into exact dollars and cents, and then transfer funds directly to an escrow account. That wasn’t possible until recently. You used to have to first convert cryptocurrency to dollars, transfer the money to your bank account, and then transfer the money to escrow, which could take up to five days. In fact, it still happens that way in most cases.
Q: Do crypto investors have an entrepreneurial spirit like real estate investors, for example?
Jansta: Absolutely. Investing in digital currency is not much different than investing in rare coins, metals, or any other asset, and an entrepreneurial mindset is definitely a plus. The smartest people I know who invest in both the real estate and crypto markets are capable of making firm decisions, taking risks, overcoming difficulties and learning from their experiences. They also do their fair share of homework and due diligence. This is the key to success in cryptos or any other type of investment.
Q: What type of real estate do you recommend for crypto investors who are new to real estate?
Jansta: If you don’t already own a home, buying a primary residence is usually the best option. There are a number of tax benefits and deductions associated with home ownership that many non-owners are unaware of, such as: B. the ability to deduct your mortgage interest payments, as well as property taxes and personal mortgage insurance. If you own your own business and work from home, you can also claim a home office deduction.
My personal preference for a crypto investor diversifying into real estate is to buy a one to four unit residential property that you can rent out to generate cash flow. You can use profits from the rents to invest in more real estate or in more cryptocurrency. There are many more options. With both cryptocurrencies and real estate doing so well, it’s quite an exciting time to be investing in both.
Q: With United Wholesale Mortgage suspending its offer to allow borrowers to make mortgage payments with crypto just two months after launch, what needs to change to make crypto a staple of mortgages?
Jansta: More price stability is needed. While interest in cryptocurrencies is huge, the current market for individual digital assets is still very volatile. When it comes time for a borrower to make their mortgage payment, the value of their cryptocurrency could have fallen. That’s not a problem if you pay in dollars.
That being said, most experts believe that the cryptocurrency market will stabilize over time. Also, the blockchain technology that underlies most digital assets is a far more secure means of exchanging currencies than transferring money. I believe it is only a matter of time before crypto markets mature and the housing industry embraces cryptocurrencies.