The real estate market is undergoing significant changes, marked by an increase in commercial real estate vacancies and a surge in interest rates. In the midst of this transformation, a noteworthy trend has emerged, capturing the attention of investors and home buyers alike: the intersection of cryptocurrency and real estate.
To delve deeper into this trend, Roundtable anchor Rob Nelson recently engaged in an insightful discussion with Tristan Marino, the co-founder of Moon Mortgage, a lending platform centered around cryptocurrency.
Nelson initiated the conversation by highlighting the challenges facing the real estate market. The combination of rising interest rates and growing vacancies in commercial real estate has placed a financial burden on banks, particularly smaller ones, leading to inflated debt. Nelson argued that this debt burden has made banks, even those willing to lend to genuine home buyers, increasingly cautious.
Marino concurred with Nelson, expressing concern that these trends could potentially disrupt the housing market. He underscored the vulnerability of smaller, regional banks in the face of the ongoing commercial real estate crisis, noting that these banks often offer some of the most attractive mortgage deals, and their struggles could have wider implications for the market.
In response to these challenges, Moon Mortgage presents a novel perspective. Marino explained that his company, as a non-bank lender, is at the forefront of a unique proposition. Moon Mortgage enables individuals with substantial cryptocurrency portfolios to use these digital assets as collateral for mortgages. This innovative approach allows individuals to acquire properties without the need to liquidate their cryptocurrency, thereby avoiding taxable consequences.
Addressing the inherent volatility of cryptocurrencies, Marino clarified the operational aspects. If someone intends to purchase a $1 million property and holds an equivalent amount in bitcoin, Moon Mortgage secures custody of the bitcoin through a reputable custodian. This arrangement allows the company to underwrite the mortgage against the total collateral, creating a mortgage that is predominantly asset-backed.
Acknowledging concerns about cryptocurrency volatility, Nelson inquired about safeguards in place. Marino explained that, for a $1 million property, a 30% liquidation level is set. This precaution ensures that the value of the cryptocurrency would need to significantly drop before initiating liquidation, preventing further losses.
Currently collaborating mainly with private debt buyers, Moon Mortgage expresses optimism about future partnerships with more prominent financial institutions. Marino confirmed the company's comfort level with Bitcoin and ethereum, citing relative regulatory clarity around these assets. However, he emphasized openness to other coins as regulations evolve and become more transparent.
Moon Mortgage's mortgage product starts with a minimum loan size of $1 million, but the firm also offers a crypto-only loan product requiring as little as $5,000. As real estate and cryptocurrency converge, innovations like those from Moon Mortgage are paving the way for new financial possibilities, making the dream home potentially just a transaction away for those with significant crypto holdings.
