2 min read

How to buy real estate (or other real-world assets) by leveraging DeFi

Learn how to leverage DeFi tools and staking to purchase real estate and other tangible assets, without selling your crypto or incurring tax implications.
How to buy real estate (or other real-world assets) by leveraging DeFi
Photo by Tech Daily / Unsplash

In today’s article, I’m going to be sharing how you can use your crypto to buy real-world assets without selling your crypto. 

In fact, I’ll walk you through a real estate deal I’m doing and how I plan to fund it using different DeFi protocols. 

Now, this isn’t a new concept… it’s just not something normal people get access to. This type of leverage is only available to the ultra-wealthy. 

Wealthy people don’t need to sell their assets to buy things. They get low-interest loans against their assets (used as collateral) which allow them to buy more assets. All without paying capital gains.

It’s like getting a Home Equity Line of Credit. You’re taking money out of your house which you can use to buy another asset — without ever paying tax on it.

So today, let’s talk about how you can use this same tax strategy to buy real-world assets with your crypto. Without selling a single coin! The great thing about this is you can buy real estate (or another asset) while still maintaining the upside of crypto.

My investment deal:

In early 2020, I put a deposit down for my first investment property here in Austin. It was a pre-construction buy in January 2020 BC (Before COVID). Because of COVID and supply chain issues, the construction has been delayed over a year and won’t close until Q3 or Q4 of 2022.

Although I can’t complain as there’s been over 18 months of appreciation. By the time I close, I’m predicting the value to have increased by 50%

House before renovation
finishing construction Q3 2022

Why borrowing against crypto makes sense:

  • Avoid capital gains (that I’d need to pay if I sold my crypto for the down payment)
  • Earn yield on my crypto (and possibly earn more yield than I’m paying to borrow)
  • Earn upside on my crypto 

If you’ve stumbled on this article and have no idea what I’m talking about, check out my Intro to DeFi article (or my course Zero to DeFi).

There are many different protocols and ways to borrow and earn yield in DeFi. For this example I’m limiting my focus to ETH only and am focused on:

✅ Holding my Ethereum
✅ Earn reliable & low-risk stable yield on ETH
✅ Borrowing stablecoins (USDC) against it for the downpayment ($63,000)

Now there’s no one way to do this. There are many different DeFi investment vehicles I could use for this each with its own pros, cons, and risk levels.

In this video I’ll cover:

  • How to use strategic debt to build wealth while being tax-efficient
  • The investment property I’m buying by leveraging DeFi
  • Why borrowing against crypto makes sense
  • How I plan to buy my investment property while earning more yield than the cost of borrowing
  • 5 DeFi strategies with different risk profiles to do the same thing (while holding Ethereum)

Was this helpful? Let me know in the video comments or on Twitter.