Purchase Real Estate with Crypto: This is How it Works

The rise of cryptocurrencies such as Bitcoin and Ethereum has not only changed the financial world but also the real estate sector. More and more investors are exploring the possibility of buying real estate with crypto. This is because digital currencies are becoming increasingly accepted internationally and investors want to diversify their crypto profits into tangible assets, such as houses, apartments, and villas.

The good news is: yes, buying real estate with crypto is definitely possible, but unfortunately, it is not so easy to do this in Europe.

Why buying real estate with crypto can be interesting

Buying real estate with crypto can be appealing for several reasons:

• International transactions: crypto makes it easier to buy international real estate without being dependent on traditional banks and exchange rates.
• Fast payments: crypto transactions can be completed within minutes, whereas an international bank transfer can take several days.
• Diversification: crypto investors can convert their digital assets into physical real estate, adding stability to their portfolio.
• Tax advantages in some countries: depending on local laws, it may be tax efficient to use crypto for real estate transactions. Keep in mind that you must always declare your property in the Netherlands.

How buying real estate with crypto works

The process of buying real estate with crypto is largely similar to a regular purchase, but there are some additional steps and considerations:

1. Choose a seller or developer who accepts crypto. Not all real estate agents or developers accept Bitcoin or other digital currencies.
2. Agree on the exchange rate. Because crypto is volatile, an exchange rate is often agreed upon in advance to reduce risks. This is often in favor of the receiving party.
3. Use an escrow service. To ensure security for both parties, a third party often temporarily holds the payment.
4. Record everything in the purchase agreement. Make sure there are clear agreements about the value, the payment method, and the legal implications.

How buying real estate with crypto works in Dubai

Dubai is a global leader when it comes to real estate transactions with crypto. Investors typically have two options here:

• Paying directly to the developer: some developers directly accept Bitcoin, Ethereum, or stablecoins as payment. An exchange rate is agreed upon beforehand, and the payment can often be completed within minutes. The rate is always in favor of the developer.
• Converting crypto into a manager’s cheque: in other cases, the crypto is first converted to dirhams (AED) through a regulated exchange or OTC desk. This amount is then issued in the form of a manager’s cheque, an official bank cheque used for real estate transactions in Dubai. This provides additional security for both buyer and seller and complies with local regulations.

This flexibility makes Dubai particularly attractive for international investors who want to use their crypto to purchase real estate.

Contact Buy Dubai Off-Plan for more information about purchasing real estate with crypto.

Step-by-step plan: buying real estate in Dubai with crypto

1. Research and selection: choose a developer or real estate agent who accepts crypto or has experience with these types of transactions. This is often done with an agent on location in Dubai.
2. Reservation of the property: usually, a reservation agreement is signed first, along with a small deposit to secure the property.
3. Agreeing on the exchange rate: decide whether the payment will be entirely in crypto or if the crypto will be converted into a manager’s cheque. Lock in the exchange rate to minimize volatility.
4. KYC and due diligence: both buyer and seller must comply with anti-money laundering rules and identification procedures. Documents such as passport, proof of income, and source of funds are verified.
5. Drafting the purchase agreement: this is prepared by the developer or a legal advisor and signed by both parties.
6. Executing the payment: the crypto is either sent directly to the developer or converted into a manager’s cheque via a regulated party.
7. Registration with the Dubai Land Department (DLD): the transaction is officially registered, often accompanied by registration fees.
8. Handover and transfer: for completed projects, the buyer receives the keys. For off-plan projects, a payment plan is followed until completion.
9. Title Deed: after full payment and registration, the official title deed is issued by the Dubai Land Department.

Risks of buying real estate with crypto

While buying real estate with crypto offers many advantages, there are also risks:

• Price volatility: the value of crypto can rise or fall sharply within hours, which affects the final price.
• Limited acceptance: not all countries, notaries, or developers accept crypto as a payment method.
• Legal uncertainty: laws and regulations regarding crypto vary significantly by country and can change quickly.
• Security risks: crypto transactions are irreversible and require careful security measures.

Countries where buying real estate with crypto is possible

More and more countries are opening up to the use of crypto in the real estate sector. Examples include:

• Dubai: pioneer in this field, with several developers accepting Bitcoin and other coins.
• United States: in cities like Miami and Los Angeles, several homes have already been sold through crypto transactions.
• Portugal: known for its favorable tax climate for crypto and real estate.
• Spain and Thailand: popular among international investors and increasingly open to crypto payments.

Buying real estate with crypto in Europe

In Europe, buying real estate with crypto is hardly possible for now. Real estate agents do not accept direct payments in Bitcoin or other digital currencies. Moreover, notaries require that transactions take place in euros through a recognized bank account.

This means that a buyer must sell their crypto first and convert it to euros before the transfer can take place. The idea of directly buying real estate with crypto is therefore not yet feasible in Europe.

Tips for buying real estate with crypto

• Always work with a reliable real estate agent and notary who have experience with crypto transactions.
• Check whether the seller or developer is licensed and regulated.
• Always use a secure wallet and escrow service to make safe payments.
• Consult a tax advisor or lawyer to understand the tax implications.

Conclusion

Buying real estate with crypto is no longer a thing of the future but a reality that more and more investors are considering. It offers opportunities for international transactions, fast payments, and portfolio diversification. At the same time, it involves risks related to volatility, legal frameworks, and security. Anyone considering buying real estate with crypto should thoroughly research the process and work with reliable partners.

By skillfully navigating between the benefits and risks, buying real estate with crypto can be an interesting strategy for investors who want to convert their digital wealth into tangible value.