Chain Estate DAO Whitepaper

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Live Real Estate Example

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Hey guys! I thought it would be fun to do one more property example before launch. This time the property is a duplex in Texas. Just like the last example, for simplicity's sake, we will be using the Zillow estimates for price and rental income expectations. Here is the listing: https://www.zillow.com/homedetails/402-Cottonwood-Dr-Kingsland-TX-78639/2066399186_zpid/

The property is listed for $250,000. Because we would be buying the property in all cash, the main expenses of owning the property would be the insurance and property taxes. The homeowner's insurance for this property is $88/mo and the taxes are $202/mo. A conservative estimated rent for this property based on others in the area is $1,250 per unit for a $2,500 total. To get the estimated cash flow for the property, we take the rent expectation minus the property taxes and insurance. Doing this, we get a total of $2,210 per month in cash flow.

Once the property is purchased, we will mint 100 NFTs in association with the property so that each NFT holder gets 1% of the cash flow. In this case, each NFT holder would receive $22.10 per month.

We will increase rents between 2-3% per year to reflect inflation. In 10 years, the $2,500 per month in rental income would then become about $3,200 per month. In 30 years, this would become about $5,250 per month. Along with the rental income going up, the average property appreciation per year is roughly 3%, so the asset that the NFT is backed by will also likely be appreciating in value over time.

The next thing to figure out is how the NFTs will be priced. The goal of each NFT is to return 25% per year to each holder. Over the course of a year, that $22.10/month of cash flow would be $265.20. At a 25% ROI, the cost of the NFT would be recuperated in 4 years. So if we multiple the first year's cash flow expectations by 4, then we would get the listing price of the NFT. In this case, $265.20 x 4 = $1,060.80 per NFT.

Once each NFT has sold out, because there are 100 of them, we would raise a total of $106,080. This money will be split in 3 ways: 40% will go towards the air drop pool that will be distributed to token holders at the end of the month. Another 40% will be burned so that the circulating supply is lower and lower over time, making the token price have a little upward momentum over time. The remaining 20% will be set aside to cover costs of unexpected major repairs.

The sustainability of the DAO is our number one focus. We believe that in order to be successful in real estate, you must have a long term focus. I would love to hear your thoughts on this property example! Thanks for reading.

Last modified 7mo ago

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