Can You Convert Your Crypto Into Real Estate?

best real estate agency in dubai riseup holding

The cryptocurrency boom cannot be ignored by anyone at this point. Unless you have escaped to a far-off forest without any phone reception or no access to international media or people for that matter, you already know the numbers we are talking about on a daily basis. It wouldn’t be a wrong theory to say that perhaps the last 6 months have made more millionaires due to the cryptocurrency boom than any other industry has. This is the market gain of cryptocurrencies over the last 3 years. (Dated April 2021)

  • BITCOIN (BTC) – 6,220% Gain
  • ETHEREUM (ETH) – 30,060% Gain
  • RIPPLE (XRP) – 25,717% Gain

That means for every $100 invested into the above cryptocurrencies on 1st January 2017 without selling anything till date, the profit would be $6,220 for BTC investment, $30,060 for ETH investment and $25,717 for XRP investment. These are tremendous and honestly, scary numbers. Although the individuals betting big on these cryptocurrencies during that time were limited, but with an investment of $10,000 into either ETH or XRP at that stage, the profit one would be sitting on right now would be $3,000,000 and $2,500,000 respectively. 

Now that such investments have yielded incredible returns, what do the investors do? Do they continue to hold cryptocurrencies in the hope that they will further rise exponentially in the future or do they aim to liquidate some of their holdings and put them into other asset classes, such as Real Estate or Gold? A healthy mix of the above would probably be the most sought-after option and this is where we, at RiseUp Holding will aim to assist you*. Through a joint-partnership with a cryptocurrency exchange platform, we are now able to accept property investments from the recently formed millionaires from the cryptocurrency boom. The seller will still have the option to receive their proceeds in the form of fiat currency (AED or USD) through the exchange platform, but the buyer will have the comfort of paying directly in their crypto holdings without the need to first liquidate them to convert them into fiat currency. 

The transactions flow can be understood in further details from our team members since there is heavy volatility in these currencies and the price of the transaction needs to be agreed upon in fiat currency, it only takes one transaction to get used to this new and exciting times we are in. Time is of the essence in these transactions and the fee associated with the transaction is relatively low. The transactional currencies are not only limited to BTC, ETH & XRP. There are multiple currencies which can be used for the transactions and buyers have the option to pay in a combination of such currencies. Are you keen to learn more about this? Contact our team here and let us assist you.


*KYC is critical when it comes to investing with crypto currencies keeping in line with the AML policies. 

THE MATH BEHIND A HOME INVESTMENT in 2021

I often get asked about HOME INVESTMENT, “I’m earning Dh20,000 per month – can I buy a property in Dubai in 2021?”

My answer is determined on a stream of questions which is what I’m going to elaborate on. There are more factors that come into play when determining if we are able to buy a property than just our income. All these aspects are different for every individual.

For argument’s sake, let’s consider a purchase through bank financing, as most buyers are looking for a mortgage when buying ready properties. As a starting point, an income of Dh20,000 per month certainly crosses the minimum threshold to obtain a mortgage.

Generally, your monthly salary needs to be 4x higher than your monthly mortgage payments, which can further vary based on current liabilities. There are a few requirements the bank will ask to get started on the pre-approval.

● Salary Certificate

● Six-Month Salary Slip

● Six-month Bank Statement

● Loan Application Document

● ID Copies

Depending on the bank, the pre-approval validity can vary between 30-60 days and the cost from Dh500-Dh1,000. Once the pre-approval is in hand, make a point to understand how much the bank will lend and how much down payment to have in hand.

This pre-approval helps get immediate offers on distress assets that might be in the market for a short period of time. With a pre-approval, the seller gains more confidence in your ability to obtain the required finance to buy a property.

FIXING THE RATE… OR NOT

Since bank lending can go up to a maximum of 80 per cent, the buyer should have in hand 27.5 per cent of the property value to cover the down payment and all transfer-related expenses. At this point, decide if you want a fixed rate or a variable.

If the pre-approvals are sorted and based on the mortgage type, let’s start onthe fun part – property hunting.

HOMING IN

Based on a salary of Dh20,000 and not having any other liabilities, the bank will lend about 40x the monthly salary, which means Dh800,000. Since that is the maximum lending amount, let’s consider it to be 80 per cent of our target property value, therein allowing us to buy a property of up to Dh1 million.

The down payment along with closing costs would be about 27.5 per cent, which would equate to Dh275,000 out of which Dh200,000 would go towards down payment and Dh75,000 on closing expenses related to Land Department fees, the no-objection certificate, agency costs, mortgage registration, valuation and processing.

Let’s calculate what will the monthly repayments will be. Let’s consider we opted for the fixed rate mortgage for 20 years and at an interest rate of 3.5 per cent. Based on our borrowing of Dh800,000, we are looking at Dh4,640 a month, which is principal plus interest payment.

ADDING UP THE COSTS

On a two-bedroom apartment in Dubai for Dh1 million, which is about 1,200 square foot with an average service charge of Dh 12 per square foot. That means a monthly maintenance cost equates to Dh 1,200.

Factoring in mortgage repayments as well, we are looking at expenses of Dh 5,840 per month. If our purpose for buying the property is an investment for rental yield, then let’s see how much income we are able to generate. Let’s consider our property to be rented out at Dh 80,000, which equates to Dh 6,600 per month.

After deducting monthly outgoing in terms of mortgage payments and service charges, we are still looking at a positive income of Dh760 per month. Upon completion of mortgage payments over the next 20 years, we are now sitting on a fully-paid-up property generating rental yield with only the monthly service charges as outgoing.

If the purpose of purchase is to shift from being a tenant to live in our own property, then instead of paying a rent of Dh6,600 per month, we are now spending Dh5,840 per month on bank repayments and maintenance fee.

It’s a winning situation – whatever the purpose may be.

WATCH THE VIDEO VERSION OF THIS ARTICLE:

 

Source: Gulf News – Written By Aakarshan Kathuria

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