Should I Sell My Crypto to Buy Real Estate in 2024?

In today’s competitive real estate market, making a compelling offer can be stressful, especially with rising property values and evolving market dynamics. For many buyers, assembling funds for a down payment is the most significant barrier to homeownership. This challenge often leads prospective buyers to assess all their assets—including those earmarked for long-term growth, such as cryptocurrency.

With the cryptocurrency market experiencing a surge in 2024, including Bitcoin surpassing $96,000 in November, liquidating crypto assets to fund real estate purchases is an even more critical decision. While converting crypto into cash is the most straightforward approach, doing so means potentially missing out on significant future gains and triggering taxable events. Fortunately, investors today have innovative options that allow them to use crypto to buy real estate without selling.

Let’s explore the most effective strategies for leveraging crypto to buy real estate in today’s market.

How Can I Use Crypto Assets to Buy Real Estate in 2024?

There are three primary ways to use crypto to fund a property purchase, each with its benefits and drawbacks:

1. Convert Crypto to Cash The most straightforward way to buy real estate with crypto is to convert it into fiat currency. This approach remains the most common, particularly for buyers unfamiliar with alternative options. According to recent studies, 12% of first-time homebuyers in 2022 sold crypto to fund their down payment, reflecting a 4% increase from 2021.

This method allows buyers to leverage the liquidity of crypto assets, making it easy to meet traditional down payment requirements. However, with Bitcoin and Ethereum achieving historic highs in 2024, this approach has notable downsides:

• Missed Upside: By liquidating crypto, you forgo potential future gains. For instance, Bitcoin’s recent rally past $96,000 reflects increasing optimism in the market, particularly fueled by regulatory clarity and the President-elect’s pro-crypto policies.
• Tax Implications: Selling crypto is typically a taxable event, subjecting the seller to capital gains tax if the asset appreciated in value. With the 2024 surge, many investors could face substantial tax liabilities.

This method remains viable for those seeking simplicity, but the current market dynamics make it less appealing for long-term investors.

2. Transfer Crypto Directly to the Seller Another option is negotiating directly with the seller to accept crypto as part of the transaction. With the growing adoption of blockchain technology, sellers are more open to partial or full payment in cryptocurrencies like Bitcoin, Ethereum, or stablecoins.

This method allows buyers to avoid converting their crypto into fiat and thus sidesteps the taxable event triggered by liquidation. However, there are several caveats:

• Limited Seller Acceptance: Despite increasing adoption, many sellers remain cautious about accepting crypto due to its volatility. With Bitcoin’s price fluctuations still common, some sellers may prefer fiat currency for security.
• Still Losing Crypto: While you avoid capital gains taxes, you still part with your crypto assets, missing out on future gains—especially significant given the 2024 rally.
• Administrative Challenges: Closing costs and administrative fees still need to be paid in fiat currency, requiring you to convert at least part of your crypto.

3. Borrow Against Crypto Assets The third—and increasingly popular—method involves borrowing against your crypto to secure a real estate loan. With Milo now offering crypto-backed mortgages, you can use digital assets as collateral while maintaining ownership and exposure to potential future gains.

What Is Crypto Collateral? When using crypto as collateral, you pledge a portion of your digital assets to secure a loan. These assets are held in a secure custodial account for the duration of the loan, ensuring that they remain intact. Once the loan is paid off, your crypto is returned to you.

Benefits of Crypto-Backed Mortgages:

• Retain ownership of your crypto and benefit from potential price appreciation.
• Avoid triggering a taxable event by selling your crypto.
• Use the borrowed funds to make a competitive cash offer on real estate.

Market Update for 2024: Crypto-backed mortgages have gained traction, with lenders expanding their offerings to include more flexible terms and additional digital assets. The use of stablecoins as collateral has also grown, reducing concerns about crypto price volatility. Lenders like Milo now allow borrowers to finance up to 100% of their property purchase while holding onto their crypto assets.

The Rise of Crypto-Backed Mortgages

Milo has pioneered crypto-backed mortgage solutions, providing digital asset investors with the opportunity to enter the real estate market without liquidating their holdings. These products bridge the gap between traditional lending and modern crypto financing, offering tailored solutions for investors looking to diversify their portfolios.

Features of Milo’s Crypto Mortgage:

• Finance up to 100% of your property purchase.
• Borrow up to $5 million while holding Bitcoin, Ethereum, or stablecoins as collateral.
• Competitive interest rates tailored for digital asset investors.
• Add or withdraw crypto throughout the loan term to manage your portfolio dynamically.

For crypto investors committed to the HODL (hold on for dear life) strategy, crypto-backed mortgages provide the flexibility to invest in real estate without compromising long-term crypto gains.

Real Estate and Crypto in 2024 With the cryptocurrency market gaining strength and Bitcoin reaching historic highs, investors have more options than ever to leverage their digital assets for real estate. Borrowing against your crypto offers a compelling alternative, allowing you to preserve the potential upside of your assets while diversifying into real estate. Whether you choose to sell, transfer, or leverage your crypto, it’s essential to weigh the tax implications, market trends, and your long-term investment strategy. For those looking to maximize their wealth-building potential, crypto-backed mortgages offer a unique opportunity to merge two high-growth asset classes.

Buy real estate and keep your crypto—apply for a crypto mortgage today and explore the financial tools of the future.

The opinions expressed in the Blog are for general informational purposes only and are not intended to provide specific advice or recommendations for any individual or on any specific security or investment product.