Earn rental income by purchasing a card on the internet. That’s what BrikClub will offer on September 30th, 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 the exchange of cryptocurrencies – currencies) backed by properties .
The meeting between real estate and cryptocurrencies has already been proven 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 allows everyone to have access to rental properties, regardless of their origin and how much you have in your portfolio. “, is proud Richard Winckels, founder and CEO of Brik.
A new way to put your money in stone
The concept of so-called “tokenized” or “fractional” properties 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 share” agreement that entitles them to receive a portion of the rents.
Specifically, the investor who buys one of the 1,010 NFT’s at 100 euros will receive an income of 4.1 euros per year (since the property on which the NFT’s will be backed will have 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 gains.
But the investor can also resell their NFT (also called a brik) at any time on the Brik.com website to other investors, at a free price. ” It will soon also be possible to withdraw your NFT from the Brik website to send it to a decentralized wallet (which is not kept on a company’s servers, but on the Ethereum blockchain). He will thus be able to exchange his NFT on platforms other than Brik’s confides the CEO.
BrikClub doesn’t come out of nowhere. Its parent created in 2020 has already attempted property tokenization with the subsidiary WinCity created in 2021 and which had purchased a first property in Paris while supporting NFTs for the latter. But Richard Winckels wanted to clean up last spring, dedicating WinCity to a virtual card game, a Sorare (a football player NFT collection game) of historic monuments. He then created BrikClub, a new subsidiary dedicated entirely to tokenized real estate.
Invest in one asset at a time
Other investment vehicles have been offering access to real estate for several decades from a few hundred euros. This is the case, for example, of listed real estate companies (Unibail, Klepierre, Mercialys) and real estate investment companies (SCPI).
But the big difference between BrikClub and these other paper stone 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 which will avoid risk dilution. ” SCPIs and real estate companies precisely concentrate several properties to mitigate the loss of revenue if there are certain properties that are facing rent vacancies or unpaid rents. “, explains Laetitia BO, a lawyer at Urban Act Avocats, specializing in real estate law.
A problem that, for start could easily be bypassed by investors. because they will be able to invest in several properties with 100 euros at a time (the price of an NFT on BrikClub) and thus limit the risk of being left without income because of a property in difficulty retorts Richard Winckels.
The brick takes care of everything
As with listed real estate companies or SCPIs, the company Brik, through a percentage of the rental income (39% for the first property) will take care of all the procedures related 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 website to their bank account.
A comfort that, however, means that investors will not have the right to decide on the goods. If the teams led by Richard Winckels prove to be bad managers, investors will not be able to intervene, even if they no longer receive their rental income. At worst, savers may never see their entire initial outlay again if the asset is sold below the startup’s purchase price.
The revenue sharing agreement (yet) does not have a legal framework
If the start-up accumulates accreditations (Crowdfunding Intermediary and Insurance or Reinsurance Broker) to advance within a legal framework, it bases its connection with its investors on a “revenue sharing” contract not yet regulated by law. ” The fact that a contract does not fit into the framework provided by law is quite common. It just has to be done well and that it doesn’t create risks for investors,” he said. warns Thomas Coeffe, associate attorney at Squire Patton Boggs, specializing in real estate law, which predicts two types of risk.
“First one risk of nullity of the operation, therefore, the cancellation of the operation. In this case, the money must be returned to investors, but if this decision comes at a time when the company has no resources, it can be difficult to repay investors. There is also a regulatory risk, that is, authorities may consider that the start-up’s activity violates a law. This could lead to criminal convictions or fines that would cause the company to lose money, which would run the risk of not having the resources to repay investors.” specifies the lawyer who underlines while these events remain all the same rare.
It is to avoid these setbacks with the law and an unhappy ending 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 into law as quickly as possible. But for now, the road to democratizing cryptocurrency is still long and fraught with pitfalls.