Blockchain-Based Real Estate & Mortgage Investment Platform

Transcription

1 Blockchain-Based Real Estate & Mortgage Investment Platform Whitepaper February, 2018 Version 1.10 COPYRIGHT 2018 NEST PLATFORM LLC ALL RIGHTS RESERVED

2 I. INTRODUCTION PG. 03/ Abstract PG. 04/ Background of Residential Rental Market PG. 07/ Our Vision PG. 08/ Blockchain Technology II. NEST ECOSYSTEM PG. 09/ PG. 10/ PG. 13/ NEST Ecosystem NEST Platform and Interface NEST Token III. BUSINESS PLAN PG. 14/ PG. 15/ PG. 18/ PG. 19/ PG. 20/ NEST Advisors NEST Partners NEST Token Sale NEST Roadmap Future Developments IV. CONCLUSION PG. 21 V. LEGAL DISCLAIMER

3 The traditional centralized real estate system has remained mostly unchanged in the past couple of decades. NEST plans to disrupt the current ecosystem by streamlining processes, automa- Currently, the residential real estate market is not as accessible as it should be to investors who are unable to afford the high upfront costs that are associated with purchasing rental properties. A large percentage of investors are looking for ways to safely, secuestate assets in the US. The domestic real estate sector has yet to confront this reality despite signs of change in investors expectations. There is an urgent need for a decentralized network that will As capital markets are becoming global markets, residential real es- This has created the opportunity for a new decentralized solution to capitalize on this potential. NEST s objective is to disrupt the traditional model associated with peer-to-peer (P2P) mortgage funding platform on the blockchain. Integrating cryptocurrency into this overly regulated and stagnant market, NEST allows direct access to highly desirable rental opportunities in the US market and abroad, as well as the opportunity to participate in P2P mortgages as a way to add diversity & stability to their cryptocurrency portfolios. Token holders will be able to use their cryptocurrencies in a secure, ves (i.e. ~20% down payment, high credit scores, costly fees, etc.) - Operating in our token holders best interests, NEST will be helping accelerate the adoption of the sharing economy. Our P2P platform previously untapped capital and tokenization of property to enable long-term investment opportunities for additional income at a lower time needed to close. 03

4 The U.S. Mortgage Market Today The traditional mortgage industry has unfortunately remained largely unaffected by the ever evolving technological advances we witness in other industries. This has led our team of real The following market statistics exhibit the current state of the mortgage industry, and simultaneously represent a massive opportunity for disruption through blockchain technology: Mortgages Originated in 2016 Average Mortgage Balance Average New Mortgage Balance $137,000 $244,000 Homeowners (Owner- Occupied Homes) 63.4% 65% Total Mortgage Debt: $2.065 Trillion $9.9 Trillion Homeowners with a Mortgage Median Credit Score for a New Mortgage Average Down Payment Required 754 $12,829 The Rental Market Today Real estate has long been considered one of the most stable stores of value. Its rise in popularity amidst economic and political turmoil derives from the fact that not only is land typically an asset which nearly always appreciates in value over time, but also is often income-producing, generating further capital wealth for its owners. For this reason, the rental market is sizable and growing and real estate remains one of the best ways to build wealth. Additionally, in the event of a bear market, income-producing rental properties can provide downside protection. 04

5 The vacancy rate for U.S. rental properties, as of Q4 2017, is 6.9% - one of the lowest rates the market has experienced since the year This statistic, sourced from the U.S. Census Bureau, represents a strong demand for rentals. In fact, more U.S. households are renting than at any point in the last 50 years. Absent the market entry barriers outlined below, this presents a very lucrative opportunity for investors everywhere to enter the residential rental market at the moment. As rents continue to rise, and vacancies continue to go down, the U.S. housing market is expected to remain strong. Rental rates for residential properties have consistently increased for the past 50 years. For over 30 years, rental rates have continued to accelerate in most major cities in the U.S. making rentals a great, stable, and secure investment. 15% 13% 11% Percent 9% 7% 5% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q Data Extracted on: February 11, 2018 (12:46 am) EST access to funds continues to restrict investor entry into the market. There are limited alternatives for those interested in investing their cryptocurrency into an appreciating asset in a secure environment, all while having direct control and use of it as they wish. As a result, many are 05

6 Challenges to Participating in the Rental Market the average and even seasoned investors. For those investors who are able to participate in the rental market, the illiquidity of real esinvestors cannot readily diversify or adjust their investments. Example: A $350,000 rental property would require a minimum of 20% down payment (US$ 70,000). The average investor starting out and wanting to build their investment portfolio of 3 homes would need $225,000 in liquid cash just to get started. Other challenges to participating in the rental market include a host of expenses and fees for acquiring and managing properties, such as: Property Management Administration Eviction HOA Fees Maintenance/Repairs Taxes/Insurance Utilities Challenges to Participating in the Mortgage Market Previously, your best chance to invest in a mortgage note was through what s called a Mortgage Backed Security (MBS) which carries the risk of being inaccurately rated or dishonestly represented - a great downfall for centralized systems. With MBS s, you have no voice to choose the borrowers and/or properties that you are investing in, leaving you with little to no control over these potential risks. 06

7 At NEST, we believe blockchain and cryptocurrency are on a one way street to mass adoption. While other cryptocurrencies are providing invaluable contributions to the industry, the majority of the world s population has yet to be introduced to it. Our vision is simple: eliminate barriers of entry to participate in passive rental income, and introduce an industry-disrupting investment vehicle allowing anyone to participate in P2P mortgages via our plaleast half or more. This ultimately will save the borrower thousands in unnecessary fees. By leveraging decades of industry expertise, understanding of consumer needs, and the power of blockchain; NEST has the unique ability to offer seamless integration of real estate and cryptocurrency for mass adoption. NEST s smart contracts provide a safe, transparent, and secure avenue for individuals to diversify their investment opportunities and capitalize on their wealth. NEST disrupts two major markets: 1) the traditional rental market, by allowing token holders to become like-landlords by selecting and staking their tokens on rental agreements for various properties owned by the NEST Platform, and 2) the mortgage market, by altering the creation process, cutting costly closing costs by half, and streamlining the system to reduce closing from 45 days to as little as 7 days. At NEST, we are convinced that blockchain technology and smart contracts are the driving force for people who are willing to invest in real estate rentals and mortgage notes with a high potential ROI. 07

8 Overview At its core, blockchain technology is a decentralized database that can store and execute data in novel ways. In particular, decentralized ledgers have a number of properties that distinguish them from the centralized private or government databases historically used to record information. Low-cost: parties can transfer information and value with only small transaction fees without middlemen. Immutability: the decentralized ledger and its integrity is policed by every member of the network, and attempts to alter previously recorded data are rejected by the network participants. Transparency: anyone can see what takes place on the blockchain as it records all transactions that have ever occurred. Both transactions and investments are visible on the blockchain. Irreversibility: transactions are immediate and non-refundable, protecting all parties involved. Pseudonymity: blockchain addresses are strings of random characters that do not automatically reveal individual owners and thus ensure a high degree of privacy unless the owner chooses to reveal their information or engages in systematic behavior from which their identity may be inferred. Security: open blockchains are maintained by a large network of participants that prevents any one person from submitting inaccurate data, recording a fraudulent transaction, or improperly altering recorded information. 08

9 Smart Contracts In this new-age of blockchain technology, there has arisen an extension of the technology to execute computer code - smart contracts. These contracts are code that are trustlessly executed on the blockchain, immutably, when the required conditions are met. Smart contracts are revolutionizing how people, businesses, and smart devices interact and transact. We ve chosen the Ethereum platform to create, issue, and manage the NEST platform and token through decentralized smart contract applications. - tions that are low in fees, much more secure, and lightning fast. Smart contracts will manage Overview Using blockchain technology, NEST will bring a revolutionary way for real estate investors to enter the rental market and mortgage notes without facing many of the barriers normally associated with the procurement of large sums of money for entry. We will achieve this through creating our own NEST tokens, which will serve as the platform s cryptocurrency, and establishing smart contracts. NEST will issue these tokens, which will provide NEST token holders the following management opportunities: The NEST platform will provide NEST token holders with the opportunity to: Vote on properties for NEST to acquire Vote on potential rental habitants Search for, select, and stake NEST tokens using smart contracts and receive payments on fractional parts of rental contracts (quarterly terms) Rent NEST properties using NEST tokens as payment for rent Provide feedback on the website interface and mobile app Use NEST tokens as a membership fee for access to NEST s P2P platform At the most basic level, NEST is a platform for procuring real estate assets, mortgage notes, and assisting with access to highly lucrative investment opportunities. 09

10 The decentralized brokerage system that constitutes the NEST ecosystem will be comprised primarily of an open marketplace that connects token holders with NEST real estate rental contracts and P2P mortgages. NEST plans to open access to its blockchain marketplace to all owners of real estate property rental contracts who satisfy the requirements established by - form that is fully secure. The NEST P2P mortgage platform will allow NEST token holders the ability to invest into mortgages that have been pre-screened and approved to be listed on the NEST platform after meeting the following criteria: Reviewed by a 3rd party underwriter Acceptable credit scores & credit history asset, and is as in depth NEST s P2P mortgage platform will charge the borrower a 1.5% fee of funds raised (half Platform use (i.e. listing asset on platform) Tokenization of asset Advertising Legal Any other costs associated with procuring funds through NEST s platform The NEST platform will list each residential property acquired by NEST and include key information on the following parameters: Price of property Cap rate Projected rents Projected repairs if any Other information requested and voted upon by token holders 10

11 contract associated with each NEST property using the following parameters: Renter Credit Score Renter Job History Income Rental History Other information requested and voted upon by NEST token holders: NEST also proposes to begin by acquiring properties in the following high-demand single family and multi-family markets afterward expanding to other markets including international markets: Atlanta Orlando Seattle Las Vegas Chicago San Diego Salt Lake City Detroit Dallas-Fort Worth Nashville NEST proposes a strategy of diversifying real estate as follows: 10% vacation rental properties, including Airbnb properties 60% multifamily units 30% single family residences operties 11

12 NEST Interface User experience is an integral aspect of the vision for the NEST platform. NEST will provide a feature-rich platform that relies on a secure backend infrastructure and a highly intuitive front-end interface. Simple registration, instant access, direct payment processing, transaction mobility, and a selection of lucrative rental properties of the platform. NEST tokens and implements smart contract technology via our platform. Enabling token from NEST s exclusive rental properties as well tokenizing P2P mortgages for investors to diversify and add stability to their portfolio. Every quarter, a distribution in the form of DASH (or similar cryptocurrency) will be made via a smart contract to all NEST token holders with staked tokens, representing 70% - tate rental contract after management fees, operating expenses, and development costs. additional properties each year. Because the number of properties in the rental pool will continue to increase while the number of NEST tokens remains the same, over time NEST token holders will gain more opportunities to stake their tokens on rental contracts as the rental pool grows. 12

13 Here is an example of NEST s P2P mortgamortgage market originated $2.065 trillion in new loans. By disrupting just 1% of the market, NEST platform will have procured $2.065 billion in funds for borrowers. With NEST charging a 1.5% fee on all funds raised for the listing on the platform and tokenization of the asset, this would gross approximately $309,750,000 in revenue for NEST in a period of one year, while saving borrowers over $300 million in closing costs vs. a traditional mortgage. - ments reserving the right to place a lien on the property securing the mortgage, and to foreclose on the asset in the event the borrower doesn t uphold to the terms of the loan. In the event of a foreclosure, the token holders will take a vote on whether to sell the asset, offer it with new loan terms to NEST for purchase (contingent on NEST agreeing to terms), or add it to the NEST platform to be included in the rental pool. NEST tokens are issued on a smart contract, using the ERC20 protocol on the fully decentralized and auditable Ethereum blockchain. fully auditable smart contract with a low entry with no minimum investment during the token sale. Capital will be set aside on a quarterly basis to buy back and burn tokens to provide liquidity. 13

14 Each holder of at least one NEST token receives access to the NEST blockchain-based ecosystem, and platform. The NEST token is a core component of and required for access to the NEST platform. On the NEST platform, token holders will use NEST tokens for the following four purposes. Voting on properties for NEST to acquire. target market on the NEST platform together within NEST s successful investment formula. NEST token holders can then vote on preferred properties in that target market up to the number of tokens of each token holder. Staking on rental contracts for NEST properties. Example: Every quarter, NEST token holders - ks provided from rental agreements concluded by NEST for NEST residential properties. Each token counts as one vote. The staked tokens will be locked staked for that quarter, and the NEST token holder will receive their - Renting one of NEST s properties using NEST tokens as payment. Example: Instead of staking tokens on a real estate rental contract, NEST token holders can use tokens to rent vacant NEST properties. Payment will be sent to contract holders via airdrop in the form of DASH at the conclusion of the 3-month block. Regardless of whether the property was rented or not all NEST tokens will be returned to the token holder at the end of each quarter. Voting on potential renters for NEST properties. NEST token holders will also be able to use the tokens for the private membership to NEST s P2P mortgage platform. NEST will enter into listing agreements with cryptocurrency exchanges to provide for liquidity and settlement of NEST tokens in other currencies. 14

15 Rosson Shumway Marketing & Web Development Rosson Shumway is an avid entrepreneur, having co-founded a web development agency called Develop Bright as well as a Real Estate Marketing Agency called Terra. Rosson manages dozens of developers on both front-end and back-end development. On top of his developing abilities, Rosson also manages a multi-million dollar demolition company and is a commercial real estate agent. Marcus Green Strategy Advisor Marcus Green is passionate about connecting people with their ideal future self, building and running successful companies, and chasing adventure. Marcus is a Utah native with an extensive background in real estate, investing, asset/property management, and degree and has been a licensed Realtor for over 15 years. Marcus has been involved in 1000s of transactions and has consulted investors, entrepreneurs, and developers for years. Marcus currently owns and runs several companies in Utah and Arizona. Some of those companies include: Owner in Multiple Keller Williams Franchises, UT Owner of Green Management Group, AZ Owner of Green Group Real Estate, AZ Owner of Green Holdings Investment Companies Founder of Green Group Gives-Charity 15

16 Justin Robins CEO Justin has been actively engaged in the real estate community for over 11 years. He is licensed in both Utah and Tennessee where he successfully runs teams. Justin is the recipient of the Top Producing Agent award by number of transactions for 2015, 2016, and Justin has made his mark in social media by building the #1 Utah real estate fb page, #3 Utah real estate IG page, and the #4 Tennessee real estate fb page. He is an avid farmer, outdoorsmen, and equestrian. His most important role is father to his two sons and husband to his wife Keely. Chase Saxton Marketing & Web Development Chase lives and breathes tech. He has more than 8 years of digital marketing experience, having consulted numerous Fortune 500 and even Fortune 100 companies on digital marketing strategy. He currently works as an Enterprise Account Executive for Adobe Systems Inc. He s a Co-Founder of a web development agency, Develop Bright, as well as a Co-Founder of a Real Estate Marketing agency called Terra. 16

17 Jason Frazier VP of Tech Frazier has more than 18 years of expertise in technology startups and venture capital, having previously held senior-level technology positions at various companies. He has been blessed to work for and alongside the most talented innovators, disruptors, and visionaries of Silicon Valley, affectionately LinkedIn, Safeco Insurance, Peregrine Systems, Dresdner RCM, and Bandwidth Capital. He served as Senior Vice President of IT & Security for Clarium Capital Management; a San Francisco based Global Macro Hedge Fund founded by Peter Thiel, for four years prior to mo- - perience from the ground up. He was promoted to CIO in 2015 and was named as the com- Peter Thiel, Keith Rabois, and Joe Lonsdale, Frazier created and leads the digital evolution is mostly due to Frazier s focus on building his company s core platform on a foundation of consumer experience, social engagement, and dedication to the Kaizen philosophy of continuous improvement. Frazier was chosen as Housing Wire s Young Rising Star in 2016 and their Vanguard Award Winner in He was also honored as one of the Top 50 Connected Mortgage Professionals in 2016 & 2017, by National Mortgage Professionals Magazine. He is an advisor to Blend and he also co-founded one of the Top Social Media & Marketing Focused Real Estate Facebook Groups called The Snappack. 17

18 Dustin Brohm Business Development podcast host, and entrepreneur in Salt Lake City, Utah. He is actively involved in cryptocurrency investments and is a huge believer in how blockchain can, and will, transform the real estate industry. He is a real estate agent, Founder of SearchSaltLake.com, Founder of SaltLakeInsider.com, and co-founder of the Snappack Real Estate Marketing Group on Facebook, where he leads a community of 3,000+ real estate professionals from all around the country. Dustin is the host of both the Massive Agent Podcast and Salt Lake Insider show. Dustin is prominent in the real estate marketing world as a speaker at Inman Connect San Francisco 2017 and a regular contributor to Inman, RISMedia, Zillow Blog, Homelight, and more. 18

19 Token Generation Event NEST is running a Token Generation Event in multiple phases to accelerate the establishment of the NEST ecosystem as the premier platform for real property rentals and to help NEST deliver the best service and product offerings possible. NEST plans to create 100,000,000 tokens. NEST will issue 12,000,000 NEST tokens for founders, advisors, marketing consultants, and bounties. Founders vesting period to be 1 year. Start date APRIL :00 AM (PST) Completion date JUNE :00 AM (PST) Payment methods: BTC ETH LTC USD (bank transfer) During the main sale phase, tokens will be priced as follows: Phase 1: Tokens will be priced at.65 cents plus a 5% bonus. Phase 2: Tokens will be priced at.70 cents plus a 3% bonus. Phase 3: Tokens will be priced at.75 cents plus a 1% bonus. Phase 4: Remaining tokens will be priced at.80 cents with no bonus. 19

20 Q2 Apr Q1 Q2 Q3 Q4 Jan Apr Jul Oct Q1 Jan Q2: Our Vision 1 2 NEST s real estate professionals conceive the vision for NEST in November NEST commences development of the NEST platform Q1: Token Generation Event 1 2 NEST s whitepaper design. NEST conducts Token Generation Event pre-sale in March Q2: Platform Integration, Application Development, Property Acquisition NEST conducts Token Generation Event main sale in April NEST will work to make tokens available on all popular, high-volume exchanges. Contributors receive ERC20 compatible NEST tokens on the Ethereum network. NEST platform launched. Acquisition of NEST real estate commences as determined by NEST token holders. NEST website, interface and applications are launched and customized as determined by NEST token holders. 20

21 2018 Q3/Q4: Platform Establishment NEST P2P platform launched. NEST establishes and expands partner relationships, as determined by NEST token holders, to establish NEST as the premier platform for application development. NEST promotes application development on the NEST blockchain to NEST partners. Continued acquisition of real estate continues as determined by NEST token holders and beyond: Global Expansion 1 2 NEST continues acquiring and populating NEST platform with NEST real estate, esta blishing and expanding partner relationships globally, and promoting application de cation development. Community open source projects are sponsored to accelerate real estate rental appli cation development on the NEST blockchain. 21

22 decentralized real estate rental and P2P mortgage investment platform. NEST will revolutionize short and long term rental markets by facilitating the use of cryptocurrency by participants as a medium of exchange to invest in secure, tangible, and lucrative real estate. We will achieve this by fusing the current low-tech purchase and rental process with the new high tech methods of transferring wealth globally via blockchain and smart contracts. Our aim is to allow direct access to highly desirable rental opportunities, beginning in the US - This will allow NEST to operate in the best interests of NEST token holders, essentially guaranteeing them an entry into a market that may be traditionally restricted while also helping them a lower risk. Questions or comments? us at: team@mynest.io 22

23 General. This document describes NEST s current vision for providing opportunities to participate in the residential real estate rental maker, which NEST plans to diligently pursue and seeks to realize. As NEST s vision depends upon many factors and is subject to many risks, including, without limitation, advances in technology and changes in applicable law, this Whitepaper is subject to the disclaimers contained herein, and NEST reserves the right to change, modify, add, or remove portions of this document at any time before, during, and after the sale of NEST tokens. Disclaimer of Liability. NEST does not make or purport to make, and hereby disclaims, any representation, warranty, or guarantee of any type or nature whatsoever (including those that are implied) to any person or entity, including, without limitation, any representation, warranty, or guarantee arising out of or relating to the truth, accuracy, and precision of any information in this document and the NEST ecosystem, or NEST Platform, or NEST token. To the maximum extent permitted by applicable law, regulations, and rules, NEST will not be liable for any indirect, special, incidental, consequential, or other losses of any kind, in tort, contract, or otherwise (including, without limitation, loss of revenue, income, or profits, and loss of use or data) arising out of or relating to any acceptance of or reliance on this document or any part thereof by you. This document does not obligate any party to enter into any contract or binding legal commitment or to accept any form of payment for any purpose. Any agreement with NEST for the sale and purchase of NEST tokens will be governed by the terms of conditions of that agreement, which will prevail over this document. Not A Securities Offering. The NEST tokens are designed as functional utility tokens and are not intended to constitute securities in any jurisdiction. This document or any part of it does not constitute a prospectus or offer document of any type or nature and is not intended to constitute an offer of securities or a solicitation for investment in securities in any jurisdiction. NEST intends for NEST token holders to use those tokens to participate in the developing of the NEST ecosystem and platform and receive the benefits of landlords in the residential real estate rental market without incurring the substantial investment costs of acquiring residential property. 23

24 If the NEST ecosystem, NEST platform, and NEST token are successfully developed, whether a NEST token holder successfully receives any returns as a landlord and the amount of those returns depends upon the decisions of the NEST token holder, including, without limitation, in proposing, obtaining information on, and voting on properties that NEST acquires, in proposing, obtaining information on, and voting on potential renters, in proposing, obtaining information on, and voting on rental contract terms and conditions, individually deciding whether and how to select, bid on, and stake tokens to obtain rents received from rental contracts for NEST residential real properties, providing feedback on the NEST ecosystem, NEST platform, rental properties, and deciding whether to participate in any of these activities at all. NEST token holders do not have any ownership or equity interest in NEST, are not entitled to the profits or losses or assets or liabilities of NEST, are not creditors or lenders of NEST, cannot claim in bankruptcy as equity interest holders or creditors of NEST, and are not entitled to any repayment from NEST. NEST token holders are provided with the opportunity to use their knowledge, time, and financial resources and improve the NEST ecosystem and NEST platform and pursue returns with NEST Tokens as desired pursuant to their investment strategies. Risks and Uncertainties. Prospective purchasers of NEST tokens should carefully consider and evaluate all risks and uncertainties associated with NEST, the NEST ecosystem, NEST platform, the NEST token, the NEST token generation event, and the terms and conditions of any agreement with NEST for the sale and purchase of NEST tokens before purchasing and NEST tokens. These risks and uncertainties may include, without limitation, the following: risks relating to the value of the NEST tokens because a market for NEST tokens does not currently exist and because NEST tokens do not provide any rights NEST for profits, assets, bankruptcy claims, or repayment; risk relating to residential real estate rental markets and competitive conditions; risks relating to blockchain technology and software, including delays, interruptions, errors, losses, advances, and changes; security risks to your access and use of a digital wallet and blockchain applications; risk relating to platform development and implementation of business strategies, including, reliance on its personnel and third-party service providers; political or government risk, including changes to applicable laws, regulations, and rules, and enforcement actions. If any such risks and uncertainties arises, such events may materially and adversely affect NEST, and you may lose all or part of the value of the NEST Tokens. Non-advisory. This document does not constitute any legal, tax, regulatory, financial, accounting, or other advice, and is not intended to provide the sole basis for any evaluation of NEST, NEST tokens, the NEST ecosystem, or the NEST platform. Before acquiring NEST tokens, a prospective purchaser should consult legal, investment, tax, accounting, and other advisors to determine the potential benefits, burdens, and other consequences of such transaction, NEST, NEST tokens, the NEST ecosystem, and the NEST platform. 24