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Andy Crebar is the CEO of HoneyBricks, a revolutionary platform that breaks barriers to commercial real estate investing.
HoneyBricks provides an SEC-compliant, fractional, and tokenized ownership path that makes buying, earning passive rental income, and selling real estate instant, low cost, and enjoyable.
Could you share the genesis story behind HoneyBricks?
Hi, I am Andy Crebar, the CEO and Co-founder of HoneyBricks. With a father who was an architect, I become involved in real estate at a young age. He taught me how real estate is wonderful and important. Wonderful in that it’s the spaces where people live, work, and play. Important as we’re surrounded by it every day and it’s the main driver of our quality of life.
Over the last 10 years, I’ve been building my wealth through real estate and see how powerful it is as a platform for wealth creation. With the advent of blockchain technology and tokenization, I want to enable more efficiency, transparency, and access for people to grow their wealth as well, which is why I started HoneyBricks.
For readers who are unfamiliar with security tokens, could you describe what these are?
Tokens can come in all shapes and sizes, but when we’re talking about tokens backed by real estate – they are called security tokens.
To understand security tokens – it’s important to understand what are securities, and what are tokens.
Securities are investment contracts that enable people to passively invest and grow their wealth. Tokens are representations of ownership that are maintained on the blockchain – enabling better access, speed, and efficiency.
By combining the two – you have security tokens. These are financial products that run on the blockchain.
Just like regular US securities, security tokens need to comply with security laws. This means abiding and operating by the rules set out by the Securities and Exchange Commission (SEC).
How does tokenization of real estate remove the illiquidity that is traditionally associated with this asset class?
Tokenization is the process of creating digital securities, or tokens, to represent fractional ownership of an asset.
This is done through blockchain technology, a shared and immutable ledger for recording transactions and assets. This is the same technology that powers cryptocurrencies like Bitcoin and Ethereum.
Similar to crowdfunding, tokenization improves capital formation by allowing smaller investors to pool capital to invest in larger projects.
Tokenization removes the illiquidity discount inherent to real estate. For example, tokens can be traded on a growing number of secondary markets.
Once tokens pass minimum lock-up periods (Typically 12 months), they can be listed on an exchange so investors can trade their tokens. Additionally, tokens can be listed on multiple exchanges, which further expands their value in the global marketplace.
What are some other benefits of tokenizing real estate?
Tokenized ownership provides many valuable benefits for investors, including improved:
- Liquidity: Unlike many traditional crowdfunding models, tokenized real estate investors can sell their tokens on secondary markets after meeting minimum hold periods
- Transparency: An investor’s tokens are accessible at any time via a crypto wallet.
- Direct ownership: Investors benefit from the advantages of direct ownership through tokenization, such as a more tax-advantaged ownership structure compared to traditional crowdfunding.
Can you discuss the process of selling tokens for investors who are ready to liquidate a position?
The HoneyBricks secondary market enables investors to sell tokens with each other.
This is available post the required ‘holding period’ of financial securities, which is typically 12 months. Token transfers are completed through a smart contract that clears and settles the transaction on a wallet-to-wallet basis, directly on the blockchain, and does not require a third-party custodian.
Tokens can also be listed on Alternative Trading Systems that allow token holders to sell their tokens outside the HoneyBricks ecosystem.
Could you provide some details on the back end, how the due diligence on property is performed, and the legal special purpose vehicle that is used to acquire the property?
Our team partners with local and experienced sponsors to bring tokenized investment opportunities to the HoneyBricks platform.
After a strict diligence and vetting process, less than 1% of opportunities reviewed are accepted. In total, over 100 data points are factored into the evaluation process of each investment opportunity
What are the current cities that real estate is sourced from, why were these cities chosen, and how are specific properties selected?
While market strength is an important factor to consider, we do not limit our deal review to specific markets. We feel it is important to assess each opportunity on an individual basis and include market strength as one of many factors.
We track supply/demand balance, population and job growth, affordability, desirability, and business friendliness as our major indicators of market strength. This enables us to discover standout opportunities in any market.
HoneyBricks offers a vetted management team that runs the asset to its highest potential, what are the management fees and what type of income can be expected?
HoneyBricks charges an annual 1% management fee on invested capital. This fee allows us to execute legal compliance and other administrative tasks, maintain property profiles in support of secondary exchanges, and provide investor support for questions and other communications.
In regards to income, each opportunity will have a unique cash flow profile, but in general, they will fall into one of four categories: core, core plus, value add, or opportunistic.
Core is intended to have the lowest risk, most consistent, hold period cash flow. Opportunistic will see the majority of cash flow at the sale of the investment. Core plus and value add will have varying degrees between these two extremes, with value add being riskier than core plus.
Is there anything else that you would like to share about HoneyBricks?
People can learn more from us at HoneyBricks.com with a lot of exciting news coming up.
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