Why Real Estate Investors Understand Liquid Loans (almost instantly)

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By Connor
Estimated reading: 3mins
Investors understand Liquid Loans

Liquid Loans and Real Estate have a lot in common.

Oftentimes in Twitter spaces, community members will say something along the loans of: 

“Liquid Loans clicked with me quickly because I am a real estate investor”

So what are the commonalities?

1. Collateralized Lending

In the context of real estate, collateralized lending takes the form of a HELOC.

A HELOC, which stands for Home Equity Line of Credit, is a type of financial arrangement that allows homeowners to access funds using the equity they have built up in their homes as collateral. 

It gives them liquidity backed by a highly illiquid asset (oftentimes homes are difficult to sell and requires high fees).

Real estate investors know that if they do not repay their loan that they could lose their collateral which in this case is their home. 

So when they come across Liquid Loans, a protocol which collateralizes cryptocurrency for liquidity, it makes sense to them.

But they are pleasantly surprised to hear that with Liquid Loans there is no repayment schedule and no interest on their loan. 

And that there are no credit checks or lengthy process to get their loan. 

They simply have to interact with the Liquid Loans code and lock up PLS.

2. Tax Implications

Real estate investors also know that when you sell your house, and it has appreciated in value, you will pay capital gains tax in most jurisdictions.

For large sums of money, this can be upwards of 5 to 6 figures. 

For this exact reason, they'll often opt to take a loan on their house rather than sell it if they need money.

Many business owners will do the exact same with their shares in a company. 

Liquid Loans allows holders of PLS to execute this process with their crypto, and therefore avoiding a possible taxable event.

3. Not Selling the Golden Goose

A HELOC allows the real estate investor to extract value from their home without having to sell. 

By not selling, they maintain price exposure to the home and do not lose any potential appreciation. 

This is important for real estate investors because historically, home prices have been up and to the right forever with only a few hiccups.

Historical US Housing Index

Who would want to lose exposure to a chart like this?

In addition, if set up properly, real estate is a cash flowing asset primarily due to rental income

Liquid Loans enables this exact style of lending using a cryptocurrency.

Users can extract value from their PLS in the form of USDL without needing to sell. 

This way they can keep exposure to future price performance and can continue earning yield on their asset.

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Disclaimer:Please note that nothing on this website constitutes financial advice. Whilst every effort has been made to ensure that the information provided on this website is accurate, individuals must not rely on this information to make a financial or investment decision. Before making any decision, we strongly recommend you consult a qualified professional who should take into account your specific investment objectives, financial situation and individual needs.

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Connor is a US-based digital marketer and writer. He has a diverse military and academic background, but developed a passion over the years for blockchain and DeFi because of their potential to provide censorship resistance and financial freedom. Connor is dedicated to educating and inspiring others in the space, and is an active member and investor in the Ethereum, Hex, and PulseChain communities.

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