Earning rental income by buying a card on the internet. This is what BrikClub will offer on September 30, when it launches its first NFT’s (non-fungible tokens that represent certificates of ownership on a blockchain, a computer network visible to everyone and that allows crypto to be exchanged -currencies) backed by real estate.
The encounter between real estate and cryptocurrencies has already proven itself in the United States, with Arrived Homes and RealT. But in France, Brik, the parent company of BrikClub is one of the pioneers. ” This system makes it possible to give everyone access to rental real estate, regardless of where you come from and how much you have in your portfolio. “, boasts Richard Winckels, the founder and CEO of Brik.
A new way to put your money in stone
The concept of so-called “tokenized” or “fractional” real estate is simple. BrikClub will bring together investors to raise funds and buy real estate. The company will retain ownership of the assets, but BrikClub members who purchase an NFT will enter into a “revenue sharing” contract that entitles them to receive a portion of the rents.
Concretely, the investor who buys one of the 1,010 NFT’s at 100 euros will receive a rent of 4.1 euros per year (since the property on which the NFT’s will be backed will offer a return of 4.1%). He can then wait for BrikClub to resell the property a few years later and repay the NFT with any capital gain.
But the investor can also resell his NFT (also called a brik) at any time on the Brik.com site to other investors, at a free price. ” Soon it will also be possible to withdraw your NFT from the Brik site to send it to a decentralized wallet (which is not held on a company’s servers but on the Ethereum blockchain). He will thus be able to exchange his NFT on other platforms than that of Brik confides the CEO.
BrikClub does not come out of nowhere. Its parent company created in 2020 has already tried real estate tokenization with the subsidiary WinCity created in 2021 and which had bought a first property in Paris while backing NFT’s to the latter. But Richard Winckels wanted to clean up last spring by dedicating WinCity to a game of virtual cards, a Sorare (a collection game of NFT’s of football players) of historical monuments. He then created BrikClub, a new subsidiary devoted entirely to tokenized real estate.
Invest in one asset at a time
Other investment vehicles have already been offering access to real estate for several decades from a few hundred euros. This is the case, for example, of listed property companies (Unibail, Klepierre, Mercialys) and real estate investment companies (SCPI).
But the big difference between BrikClub and these other paper rock vehicles comes from the possibility of investing in only one asset at a time. A choice that will allow investors to better understand what they are investing their money in but that will prevent risk dilution. ” SCPIs and real estate companies precisely concentrate several properties to smooth out the loss of income if there are certain properties that are facing rental vacancies or unpaid rents “, explains Laetitia BO, lawyer at Urban act Avocats, specialized in real estate law.
A problem which, for the startup could easily be circumvented by investors. because they will be able to invest in several properties with 100 euros each time (the price of an NFT on BrikClub) and therefore limit the risk of finding themselves without income because of a property in difficulty retorts Richard Winckels.
Brick takes care of everything
Like listed real estate companies or SCPIs, the company Brik, against a percentage of rental income (39% for the first property) will take care of all the procedures relating to the management of the property and the payment of charges, taxes or other work to be done. Investors will have nothing more to do than withdraw their rents from the Brik site to their bank account.
A comfort which however means that the investors will have no right of decision on the goods. If the teams led by Richard Winckels prove to be poor managers, investors will not be able to intervene, even if they no longer receive their income from rents. In the worst-case scenario, savers may never see their entire initial outlay again if the asset is sold below its purchase price by the startup.
The revenue sharing contract does not (yet) have a legal framework
If the start-up accumulates accreditations (Crowdfunding Intermediary and Insurance or Reinsurance Broker) to move forward within a legal framework, it bases its relationship with its investors on a “revenue sharing” contract which is currently not regulated by law. ” The fact that a contract does not fall within the framework provided by law is quite common. It just has to be done well and that it does not generate risks for investors,” warns Thomas Coeffe, associate lawyer at the firm Squire Patton Boggs, specializing in real estate law, who foresees two types of risk.
“First a risk of nullity of the operation, therefore a cancellation of the transaction. In this case, the money must be returned to the investors but if this decision comes at a time when the company lacks funds, it can be difficult for it to reimburse the investors. There is also a regulatory risk, that is to say that the authorities could deem that the activity of the start-up violates a law. This can lead to criminal convictions or fines which would cause the company to lose money, which would then risk no longer having the funds to reimburse investors”. specifies the lawyer who underlines all the same that these events remain all the same rare.
It is to avoid these setbacks with the law and an unhappy end that Richard Winckels and his associates campaign within the Federation of Revenue Sharing Platforms (F2PR) with other proptech entrepreneurs in order to enshrine this new type of contract in law as soon as possible. But for now, the path to democratizing crypto-real estate is still long and strewn with pitfalls.
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BrikClub, this startup that allows you to invest in rental real estate in…NFT
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