Cryptocurrency Offers Attractive Payment Options To A New Generation Of Renters
Tenants are beginning to pay their rent via a new type of currency.
Bitcoin, ethereum and other cryptocurrencies have taken the business world by storm over the past year as new forms of payment that run on blockchain technology. Now, landlords and property managers are getting a piece of the pie by incorporating the emerging trend into their operations to attract and retain a new generation of tenants.
"Our buyer has evolved, they've moved from mom and pops to young people who want to pay with various forms of payment," Magnum Real Estate Group President Ben Shaoul said to CNBC. "Cryptocurrency is something that has been asked of us — 'Can you take cryptocurrency? Can we pay that way?' — and of course when somebody wants to pay you with a different form of payment, you're going to try to work with them and give them what they want, especially in a very busy real estate market."
Shaoul is among several owners and developers who believe offering cryptocurrency payment plans will give them an edge over their competition. The real estate industry is constantly looking for new ways to connect with an increasingly millennial customer base, and Bitcoin is one way to help them bridge this gap.
As the first generation to grow up using digital technology for everything from hailing a cab to ordering food, millennials have become accustomed to paying for things on their devices. They have embraced emerging technology to make their lives easier, and blockchain is the most recent example.
“Millennials are particularly open to embracing new technology in order to create opportunities for themselves — and blockchain, the tech behind crypto, is no different,” Simon Yu, CEO of blockchain startup StormX, said to Forbes. “As masters of the side hustle and challengers of the traditional 9-5 working lives of previous generations, millennials are welcoming blockchain with open arms.”
Property managers who accept payments in cryptocurrency have two options. They can either keep the payment in the form of cryptocurrency and use it to pay for something else, or they can convert it into dollars. If they opt to convert the payment, it is important to know when to do so.
Bitcoin fluctuates significantly in valuation, reaching $20K at the end of 2017 and beginning 2018 at a mere $14K. Today, it has dropped to almost half of what it was a year ago, but that number could change in a matter of days. Landlords and property managers who decide to convert cryptocurrency need to be strategic about when they cash in to ensure they are getting the most bang for their buck.
PropTech companies are also getting in on the action. ManageGo, a Brooklyn-based company that provides a platform for renters to make online payments, now gives tenants the option to make payments using Bitcoin via the company’s app. When a tenant makes a payment using Bitcoin, ManageGo converts the currency into dollars. This allows tenants to pay the way they want, and landlords to receive payments the way they want.
“Industry players are starting to realize that there is major potential for blockchain technology to challenge the status quo above and beyond accepting cryptocurrency as a form of payment or executing transactions," Mazars USA Digital Asset Group Leader Andre Sterley said. "Other areas being targeted include title management, tokenized ownership and automation through the use of smart contacts around payment and agreements.”
Still, many industry professionals are reluctant to adopt the trend. There is still a stigma around cryptocurrency and blockchain technology because it is so new.
"Currently we have had zero interest in paying rent through Bitcoin," The Bozzuto Group CEO Toby Bozzuto said on CNBC. "You don't know who owns it, and that's the knock on it. It's been considered black market with a dirty reputation.”
Time will tell whether cryptocurrency will continue to transform the commercial real estate landscape, but all signs are pointing up. Slowly but surely, property managers are adopting these new payment methods into their business model. As the next generation of tenants becomes more acquainted with the use of cryptocurrency as a payment method, property managers are making changes to meet their demands.
This feature was produced in collaboration between Bisnow Branded Content and Mazars. Bisnow news staff was not involved in the production of this content.