S4FE makes Real Estate go Web3
Dear S4FE Community!
We got great news for you:
Today the new S4FE platform https://realestate.s4fe.org/ is launching!
What is this platform exactly doing and how does it work?
In the next few minutes, you can learn more about real estate in general & how we are planning to connect it with our Web3 infrastructure.
But first, a few key points on why we decided to launch a web3 real estate platform — and why we think real estate is as well an important topic for you to do a deeper dive into:
As the name S4FE says — we are all about safety.
We are known for building disruptive technologies in already established areas.
Our original use case consists of securing daily items (luxury items, electronics, sports equipment) and connecting them to the blockchain.
In the last months, we extended that use case to intellectual property and…. yes, real estate.
But let’s take a closer look at the why. A few facts and numbers about real estate
The US real estate market size was estimated at USD 3.69 trillion in 2021 and is expected to reach USD 3.81 trillion in 2022.
According to Millionacres.com, the current national average appreciation rate is 2% month over month and 14.5% year over year.
Real estate generates cash flow. But what Is Cash Flow in Real Estate? In simple terms, cash flow refers to the movement of money in and out of a business. When you’re discussing real estate cash flows, you’re talking about money that’s generated by the property (i.e. rental income) and money that’s spent in association with the property.
Real estate investing has created 90% of the world’s millionaires.
Those are a few facts, but now more on why we decided to provide solutions to tokenize real estate assets, let’s start with a quote from EY:
But what does Tokenization of real estate assets mean?
Tokenization — A complex, but future-oriented technology
By means of tokenization based on the blockchain technology, real estate can be fragmented and then represented by digital tokens. The individual “tokens” represent the underlying property on asset level with all its rights and obligations. Contractual details are defined in so-called “smart contracts”. If a pre-defined contract condition is fulfilled, the algorithm stored in the digital contract triggers the events specified in the code. For example, a transaction or a transfer in the land register can be carried out without any human intervention. After appropriate validation of the action, another block is generated automatically, which is attached to the existing blockchain.
Cash Flow on the blockchain
With our groundbreaking web3 technology, we connect the power of the blockchain and the power of the people together and give investors new tools to hand to participate in asset classes that are usually only reserved for the top 1 %.
We tokenize the real estate assets and move the cash flows to the blockchain. There the profits can be easily distributed to hundreds of people within seconds and at a fractional cost compared to banking solutions.
The best? All completely decentralized!
Connecting the dots between Web3 and real estate
S4FE is disrupting the real estate space with new technological solutions, which were until now not available to the masses.
We are allowing people to get into deals, which are usually reserved for big financial institutions.
But how is S4FE actually making money with the web3 real estate platform?
First, let’s quote an Forbes article:
“Uber, the world’s largest taxi company, owns no vehicles. Facebook, the world’s most popular media owner, creates no content. Alibaba, the most valuable retailer, has no inventory. And Airbnb, the world’s largest accommodation provider, owns no real estate. Something interesting is happening.”
That’s the principle S4FE is built on.
S4FE acts as a platform that tokenizes real estate assets and manages the distribution of the returns.
This means that S4FE is only successful when you are.
Let’s get more into detail: S4FE does not own properties. S4FE acts just as a platform.
Each property is held by an individual property owner & the community.
If a property is provided by the S4FE Team it’s marked as an “S4FE Exclusive Deal” and is owned by a separate LLC which is only utilized to own the specific property.
S4FE charges two different fees:
Transactions Fees at the time of purchase:
Marketing Fee 5 %
Acquisition Fee 1 %
Smart Contract Fee 5 % (At the moment outsourced by Bueno)
Management Fee 5 %
Transaction Fees on monthly turnovers:
20 % Platform Fee
What does S4FE do with those earned Fees?
We are reinvesting into our infrastructure to build better, faster, and more reliable solutions for our customers.
Buyback program of the $S4F token
The principles behind the “S4FE Exclusive Deals”:
In what are we investing?
Our approach is very simple, cash flow is king.
So we are investing in cash-flowing real estate assets with a minimum ROI of 10 %. Rule of thumb, if a property is not cash-flowing 30 days after we buy it, we do not buy it.
We are looking for deals with a minimum unit size of 10 units and + (Apartment size preferred 1bedroom) at top locations in emerging markets with a lot of upsides and very limited downside potential.
We are only acquiring property that we think appreciates in value in the next 5–10 years heavily and we are looking to make money already on the buy by negotiating the terms hard.
We acquire the properties to hold them long-term.
Generally, we have the approach we invest in cash-flowing quality property which is recession resistant.
In what are we not investing?
We are not investing in luxury property.
We are not doing short-term flips.
We are not investing in commercial property.
We are not investing in construction.
How are the S4FE Exclusive Deals bought?
Each property gets acquired by a unique LLC and is managed by a management company. The LLC is responsible for the property and shares with the NFT holder the rights to the specific property.
Every property has a unique serial number that connects the property with the NFT. S4FE is responsible to bridge the gap between the property and the decentralized distribution system.
How do we sell?
We buy property to hodl. We do not plan to sell. We are into building generational wealth. But should the scenario take place that we sell, the following applies.
= Amount which gets shared across all NFT holders of the specific property.
Use case example S4FE Real Estate Offering, 587899
The property gets acquired for USD 470’000
About the S4FE Exclusive deal 587899:
This property is a 16 units apartment complex consisting of 1-bed room apartments. The building is fully rented out. The building is based in the center of Punta Cana, Veron at a very central location. Within the next 6 months, we are aiming to build 8 more apartments on the top of the building. Additionally, we are renovating the building completely.
Expected ROI: 15 % before expenses
Planned Purchase Date: 10.2022
Price per NFT USD 1'170
Earnings with 16 Units — Not Renovated
Gross Rent / Year USD 30'720
Gross Rent / Month USD 2'560
Earnings with 24 Units + Renovated
Gross Rent / Year USD 61'920
Gross Rent / Month USD 5'160
Main targets to achieve with this property: Force appreciation through renovation & increasing rents.
Expected Cost per month
Insurance USD 200
Water USD 125
Electricity USD 100
Total Monthly Costs USD 425
Net Rent per month after renovation USD 4'735
Net Rent Year after renovation USD 56'820
Purchase Price USD 320'000.-
Renovations USD 150'000.-
Total Cost USD 470'000.-
Expected ROI, after expenses 12.08 %
Example for NFT buyers — Let’s assume Max wants to participate with USD 15’000 in this deal:
That’s how the math works for Max
USD 15’000 (equals today, 28 July 2022 8,54 ETH) will buy Max 12 NFT’s (12 x 0.67149 ETH= 8.05 ETH) this means Max owns 12 NFTs out of a supply of 450 NFT’s.
That means Max has 2.666 % equity in the property.
Note: Max invested only USD 14’140.-, he got 0.49 ETH left in his wallet!
Out of the profit from the property Max is earning 2.666 % which is resulting in a yearly payment of USD 1’511.40 or USD 125 a month.
From this USD 125.-, S4FE deducts its fee, which is 20 % (USD 25.-).
The difference of USD 100.- will be transferred in BNB every month into the wallet of Max.
Important, from each transfer 10 % is held back in a property pool.
It’s important for us to keep our properties in the right shape as we are in the real estate game for the long term.
If those reserves are not being utilized to renovate the property within 3 years, we are distributing them equally to the property / NFT holders. The property pool is managed transparently.
After 5 years
USD 6’000 in earnings (USD 1’200 per year x 5 years) and 5 years later, we decide to sell the property (whatever the reason is) and the value of the property has increased by 5 % every year. The property would be worth USD 600’000.-
This is what the math would look like for Max.
Max owns 12 NFTs out of 450 NFT’s (2.666 %)
The selling price of USD 600’000 / 450 NFT = USD 1’333.-
USD 1’333 x 12 NFT’s = Amount transferred to Max =
USD 15’996 — this amount receives Max in his Wallet. Equivalent in ETH
Breakdown of the numbers:
Investment 2022 of Max USD 14’140
Sell 2027 USD 15’996
Payments received USD 6’000
= Total Profit 7’856.- (+55%) = ROI per year 11.11 %
Important — we calculated here with conservative numbers and we did not calculate a rent increase.
But still, those numbers are only assumptions and could vary from future results.
P.S — Maybe you do not want to hodl 5 years (or more), in this scenario you can offer the NFTs on the secondary market (Opensea) for sale.
So enough investment nerd talk — let’s get to the important question:
How can you get started and participate today in six easy steps?
- Visit https://realestate.s4fe.org & create your account
- To participate in our deals we require you to do a KYC & AML check.
- Install Metamask (Secure your private key the right way!)
- Buy ETH and transfer them into your Metamask wallet.
- Mint your NFT
- Congratulation, you own now a piece of property on the blockchain!