A new real estate model using blockchain and fractional ownership is creating a housing nightmare in Detroit, leaving tenants with unresponsive landlords and squalid living conditions.
The concept of a tenant facing dilapidated living conditions due to an unresponsive landlord is a common one. But imagine this scenario: instead of one landlord, you have hundreds, and even getting them to fix a simple hot water issue requires navigating a complex blockchain system. This is the reality for hundreds of renters in the Detroit metropolitan area, a region grappling with its share of housing woes.
This situation arises from a scheme where a real estate firm acquires homes in affordable neighborhoods. They then sell 'fractional ownership' shares of these properties on the RealT platform in the form of 'RealTokens,' tradable using Ethereum cryptocurrency. Property management is outsourced to local firms that handle tenants and rent collection. RealT distributes weekly payments to investors based on their RealToken holdings and the property's rental income, using stablecoins.This system raises serious concerns, as experts point out the potential for dystopian scenarios in real estate driven by crypto. Professor Andrew Baum from the University of Oxford questions how tenants would address issues like leaking roofs, given the complex structure of token-based ownership. He also wonders if the platform has adequate reserves to handle such situations. Critics argue that RealT prioritizes profit maximization for tokenholders over providing decent housing for communities in need. Reports highlight RealT-owned properties in Detroit plagued by issues like black mold, water damage, and faulty air conditioning, despite the platform's claims of outsourcing management. The situation has escalated to the point where over 200 properties face imminent foreclosure due to unpaid taxes, with RealT-linked companies controlling an estimated 1,000 properties in the city. Tenants face a Kafkaesque nightmare, dealing with absentee management, unclear lease agreements, and confusion regarding rent payments. The decentralized nature of RealT's ownership makes it challenging for tenants to pursue legal recourse against unresponsive landlords
Technology Social Issues REAL ESTATE BLOCKCHAIN DETROIT HOUSING FRACTIONAL OWNERSHIP Slumlords TENANTS RIGHTS
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