Real Estate Firm Propy Is Rolling Out Crypto-Backed Loans to Buy Houses

What if you could put up your bitcoin (BTC) or ether (ETH) as collateral to buy a house?

That’s essentially the idea behind real estate firm Propy’s upcoming sale, a condominium located in Honolulu, Hawaii, which is being sold at a starting price of $250,000. If they so choose, the prospective buyer will be able to take out a loan from Propy to acquire the property — as long as they provide 100% collateral in bitcoin or ether, and pledge the property as well.

“It’s a great proposition for bitcoin holders,” Natalia Karayaneva, CEO of Propy, told CoinDesk in an interview. “It’s not a taxable event. They get a loan and buy real estate with it, instead of exiting bitcoin, paying taxes, and then buying real estate.”

It’s a two-year loan, and it comes with 10% yearly interest. If the given cryptocurrency’s value drops more than 50%, the buyer will face a margin call; in a worst-case scenario, the crypto holdings may end up getting liquidated, and the real estate resold at an auction. However, if the cryptocurrency doubles in price, the buyer could end up paying the loan back simply through their gains. The interest payments, and loan itself, can be paid back in bitcoin, ether or USDC.

Another important aspect of the deal is that the property has been tokenized. Launched in 2017, Propy aims to bring real estate transactions on-chain, thus speeding up settlement times and liquidity. In the case of the Hawaiian property sale, slated for January 29, a potential loan would be processed immediately, and upon completing repayment, a buyer would automatically be able to reclaim their crypto.

“This isn’t just a milestone; it’s a glimpse into the future of real estate,” Karayaneva said. “We’re demonstrating how blockchain technology can simplify home buying, replacing the traditionally lengthy loan approval process with an instant, efficient solution.”

Buying real estate on-chain

Based on Ethereum layer 2 solution Base, Propy hasn’t tokenized properties on a regular basis, at least as of yet. More often that not, the firm simply uses smart contracts to make real estate purchases quicker and reduce attorney fees. “The main business is coming from normal consumers. They even don’t know that we use smart contracts on the back-end, but they love how quickl

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Author: Tom Carreras

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