Real Estate DAO
We at Origami launch and grow DAOs, including Real estate DAOs. This article explains how these types of DAOs function, and includes a list of real estate DAOs, and organzations that are tokenizing real estate.
Before creating your real estate DAO, consult a DAO lawyer and contact our team.
What is a Real Estate DAO?
A real estate DAO is a decentralized autonomous organization that uses blockchain technology to
- Tokenize real estate assets
- enable its members to vote on key decisions
- empower its members to support its portfolio
These DAOs have a similar model to the venture DAO model we wrote about.
What is Tokenized Real Estate?
Organizations that tokenize real estate without taking the next step of forming a DAO operate more like traditional investment vehicles, but they use tokens to represent ownership.
An example of that is Homebase, which created an LLC for the property it bought in Texas, and minted NFTs for the LLC’s owners.
The difference between an organization that tokenizes real estate and one that fully embraces the DAO model is the level of involvement from the DAO members. In a DAO, members: 1. can look for investment opportunities, 2. help with due diligence, 3. have an active voice in property management, and 3. even form subcommittees that go beyond the initial vision of the DAO’s creators. Organizations that are merely tokenized, don’t have that level of member involvement, but they can offer liquidity via token sale and community via shared token ownership.
Different Types of Real Estate DAOs
Community use DAOs are composed of members who want to use property together. Members set up a DAO so they could vote on which properties to buy and how to manage them fairly.
Income-generating DAOs allow members to pool funds from multiple investors to purchase and manage income-generating properties, such as apartment buildings, office complexes, and shopping centers.
Development DAOs focus on new construction or renovations.
Debt ownership DAOs invest in real estate debt by pooling funds from multiple investors to provide mortgages or loans to real estate projects and earn interest on their investments.
The Appeal of Real Estate DAOs
The appeal of real estate DAOs lies in their ability to democratize access to real estate investing. By tokenizing real estate assets, investors can participate in fractional ownership of properties that would otherwise be out of reach. Additionally, by utilizing blockchain technology and smart contracts, real estate DAOs can streamline decision-making and reduce administrative costs. This makes real estate investing more accessible and efficient for a wider range of investors.
Like other DAOs, Real Estate DAOs can provide greater transparency to investors by allowing them to see exactly how their investments are being used and how the assets are performing in real-time. This gives investors greater visibility and control, leading to increased confidence and participation in real estate investing.
Challenge & Opportunity of Real Estate DAOs
Compared to this roundup of real estate DAOs, our venture DAO roundup found 1) more active DAOs, 2) with bigger treasuries, and 3) more investments. When I asked why that was, leaders of both active and defunct real estate DAOs had the same response: real estate participants aren’t as adventurous as members of the startup ecosystem.
One founder told me that the real estate investors he talked with were firm about what they were looking for, including stability, cash flow, and asset class.
DAOs that had success in real estate often appealed to members who didn’t consider themselves traditional real estate investors. Cabin’s members, for example, want to live and work in nature. Their membership in the DAO is more about a lifestyle choice than an investment decision.
Thriving real estate DAOs also encouraged their community members to be active leaders, instead of passive investors. At CityDAO, for example, a member known online as MemeBrains leads a podcast, runs marketing, and guides leadership.
Securities Regulation & The Origami Framework
Because of the complexity of securities laws for DAOs, we created an alternative, The Origami Framework, which has been used and tested by investment DAOs like Orange and VC3.
Real estate DAOs usually qualify as securities under state and federal laws. DAOs that issue security tokens must comply with securities laws, including registration requirements unless an exemption applies. Exemptions are complex and place various requirements on offerings, including restrictions on who can invest, limitations on the amount that can be raised, and resale restrictions on investors.
In contrast, The Origami Framework — which is released under creative commons as a public good — creates a partner entity, which sits alongside the DAO, as described by this visual, from the framework’s detailed documentation:
The 29-page description of the Origami Framework is available online for DAO builders to read, here.
The Framework creates two entities. One entity makes investment decisions and has fewer members. The second entity supports those investments and has uncapped members.
Examples of Real Estate DAOs
Cabin offers coliving neighborhoods in nature for creators & remote workers. It’s a network of neighborhoods owned and operated by its members. The network is designed as a DAO that manages itself using on-chain governance and protocols.
Of note: Origami interviewed Cabin’s founder, Jonathan Hillis.
Kift is trying to reinvent cities. It’s currently a community of van-life enthusiasts who connect online and meet in person, but it’s increasingly making room for people who prefer more traditional structures. Kift’s real estate aspirations started with leasing property and they’re working on buying land.
Of note: Origami interviewed Kift’s founder, Colin O’Donnell.
RealT wants investors around the globe to buy into the US real estate market through fully-compliant, fractional, tokenized ownership.
LinksDAO is a crypto-centric community of over 5,000 golfers. It sold NFTs that offered DAO governance votes and the right to buy individual or family memberships in golf courses it purchases.
Of note: Golf Digest’s coverage of its first purchase
RealtyDAO aims to tokenize real estate properties in fractions, making them affordable and accessible to more people. The platform wants to provide an SEC-compliant alternative that makes buying, earning passive rental income, and selling real estate affordable, instant, and fun.
While not a full DAO yet, Homebase is a TechStars-backed organization that’s tokenizing real estate to help people invest in properties for as little as $100 and earn monthly income.
Of note: Read about its first purchase, a $235,000 home in Texas
CityDAO is building the city of the future on the Ethereum blockchain by tokenizing land, rights, and governance.
Of note: Article about its first acquisition and see the CityDAO flag raised on the property.
EmpireDAO has been called web3’s WeWork. They leased space in Manhattan and subleased it to members who pay for everything using any liquid cryptocurrency they prefer.
Status: EmpireDAO no longer has a physical location. The community is looking for a way forward.
Of note: Article in Women’s Wear Daily on their fashionable location and strategy.
indaod aimed to create a collection of vacation properties in locations that rank in the 80th percentile in terms of pricing, occupancy, and amenities.
Of note: When I asked if the DAO was still investing, a community member said, “We've been keeping a low profile during the crypto winter and the FTX debacle - letting the smoke clear.”
Legends aims to build a golf membership that comes with access to world-renowned golf resorts. For its first acquisition, it’s working on raising funds to acquire The Legend Golf Course in South Africa.
Of note: Instagram video of the Legend Golf Course and the DAO’s vision.
CitaDAO is a global marketplace for tokenized real estate, secured on the blockchain. CitaDAO aims to solve the lack of liquidity, access limitation, and lack of composability in the existing real estate ecosystem by creating interoperability with other DeFi applications and primitives that operate on the Ethereum protocol.
Of note: Tech in Asia article about the DAO’s early deal.
DeRE is building a decentralized real estate group that allows real estate professionals and enthusiasts to collectively find, decide and manage real estate assets. Members who find the best deals and complete tasks for the DAO will earn rewards for their work, decentralizing the management and operations of the entire organization.
Bonfire enables investors to “buy real estate like you buy stocks.” It started by purchasing a private home, renovating it, renting it to a tenant, and tokenizing the home. It moved from small residential real estate to big commercial investments.
Of note: Twitter thread on its vision.
REI DAO is a community of real estate professionals, technologists, and investors who work together to identify, acquire, manage, and monetize commercial real estate assets.
build_ is creating startup cities. Each city chapter is structured as its own DAO for capital allocation and governance. It also invests in real estate, as it did in CougarDAO, which is listed above.
Cougar DAO tried to buy Cougar Island, but thought it was overpriced. So it pivoted and bought an income-generating farm instead.
Of note: Article about its first purchase and the team’s visit to their new tenant.
Aragon DAO talks with Origami about the recent attack on its treasury funding and what other DAOs can learn from it.
An open discussion with people building real estate DAOs
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