Chem Purchasing Real Estate
Chem Buying Real Estate Using AssetSlices
In this scenario, Chem uses the AssetSlices platform as an alternative to a traditional bank loan to purchase real estate. The platform tokenizes the property, allowing investors to fund the majority of the purchase price in exchange for monthly principal and interest payments from Chem. Here's how the process works:
Step 1: Chem Partners with AssetSlices
Property Details:
Chem wants to purchase a property worth $500,000.
He can pay 10% down payment upfront: 10%×500,000=$50,00010\% \times 500,000 = \$50,00010%×500,000=$50,000.
Funds from AssetSlices:
Chem requires the remaining 90% of the property value: 90%×500,000=$450,00090\% \times 500,000 = \$450,00090%×500,000=$450,000.
AssetSlices agrees to fund this amount by partnering with investors.
Agreement Terms:
Loan Amount: $450,000
Interest Rate: 8% annually
Loan Duration: 15 years (180 months)
Chem will make monthly payments to repay the principal and interest.
Each payment increases Chem's equity in the property.
Step 2: AssetSlices Tokenizes the Property
Tokenization:
The 90% equity (representing $450,000) is tokenized into 450,000 RWA tokens, each worth $1.
Investors can purchase tokens to collectively fund Chem’s property.
Marketplace Listing:
The property is listed on the AssetSlices marketplace with details:
Property Value: $500,000
Tokens for Sale: 450,000
Token Price: $1
Loan Term: 15 years
Expected Annual Return: 8% (from Chem’s interest payments).
Step 3: Investors Fund Chem’s Property
Investment by Bob:
Bob, an investor on AssetSlices, decides to fund part of Chem’s loan by purchasing 10,000 tokens for $10,000 (representing 2.2% of the $450,000 loan).
Ownership and Returns:
Bob owns 10,000 tokens, representing 2.2% of the 90% equity in the property.
Bob’s share of returns is proportional to his investment.
Step 4: Chem Makes Monthly Payments
Monthly Payment Calculation:
Loan Formula:
M=P×r×(1+r)n(1+r)n−1M = \frac{P \times r \times (1 + r)^n}{(1 + r)^n - 1}M=(1+r)n−1P×r×(1+r)n
Where:
P=450,000P = 450,000P=450,000 (Loan Amount)
r=8%12r = \frac{8\%}{12}r=128% (Monthly Interest Rate = 0.00667)
n=180n = 180n=180 (Total Months)
Monthly Payment: Approximately $4,301.88.
Payment Breakdown:
Each monthly payment consists of principal and interest.
Example (First Month):
Interest: 0.00667×450,000=$3,001.500.00667 \times 450,000 = \$3,001.500.00667×450,000=$3,001.50
Principal: 4,301.88−3,001.50=$1,300.384,301.88 - 3,001.50 = \$1,300.384,301.88−3,001.50=$1,300.38
Chem’s equity increases by $1,300.38.
Equity Growth:
Over time, as Chem pays down the loan, the interest portion decreases, and the principal portion increases.
By the end of the loan term, Chem owns 100% of the property.
Step 5: Investor Returns
Interest Distribution:
The interest portion of Chem’s payments is distributed to token holders proportionally.
Example (First Month):
Total Interest: $3,001.50
Bob’s Share: 2.2%×3,001.50=$66.032.2\% \times 3,001.50 = \$66.032.2%×3,001.50=$66.03.
Principal Repayment:
The principal portion of Chem’s payments reduces the outstanding loan balance.
Token holders indirectly regain their capital as the loan is repaid.
Total Returns for Investors:
Over the 15-year term, investors earn a total of $450,000 principal + $324,338 interest = $774,338.
Bob’s Total Return: 2.2%×774,338=$17,035.442.2\% \times 774,338 = \$17,035.442.2%×774,338=$17,035.44.
Step 6: End of the Loan Term
Loan Fully Repaid:
After 15 years, Chem completes all payments, fully repaying the $450,000 loan plus $324,338 in interest.
Investor Payouts:
Token holders have received their full principal and interest over the loan term.
Bob earns back his $10,000 investment plus $7,035.44 in interest, totaling $17,035.44.
Ownership Transfer:
Chem now owns 100% of the property, as he has fully repaid the loan.
Platform’s Role and Fees
Fee During Token Purchase:
AssetSlices charges a 1–3% transaction fee when investors purchase tokens.
Example: Bob’s $10,000 investment incurs a 2% fee ($200).
Management Fee:
AssetSlices deducts a 5–10% management fee from Chem’s monthly payments before distributing the remaining amount to investors.
Example: If Chem pays $4,301.88 monthly:
Interest Portion: $3,001.50
Management Fee: 10%×3,001.50=$300.1510\% \times 3,001.50 = \$300.1510%×3,001.50=$300.15
Remaining Interest for Investors: 3,001.50−300.15=2,701.353,001.50 - 300.15 = 2,701.353,001.50−300.15=2,701.35.
Listing Fee:
AssetSlices charges Chem a one-time fee for listing his property on the marketplace.
Key Benefits
For Chem:
Avoids traditional banks and their stringent requirements.
Gains access to a decentralized pool of investors.
Gradually increases ownership equity in the property.
For Bob (Investor):
Earns passive income from Chem’s interest payments.
Capital is returned over time, reducing risk.
Backed by tangible real estate collateral.
For AssetSlices:
Earns revenue through fees at multiple stages.
Facilitates a unique alternative to traditional real estate financing.
Conclusion
This model enables Chem to purchase real estate without relying on banks, leveraging the power of decentralized investments. Investors like Bob benefit from regular interest income, while AssetSlices sustains operations through transparent fees. The system democratizes real estate financing, offering a win-win for buyers, investors, and the platform.
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