Bitcoin Forum

I've just discovered Manchester NH can take my home under current law. After a divorce a number of years ago that saw me lose a large amount of my wealth, I find my own house is now under duress. My mining operation is not yet big enough for me to be able to afford the taxes here and unless I can find a way to pay these the town has stated that I may lose my property.

In order to resolve this issue I propose a profitable fund called House.

This initial offering will sell the value of my house, or some portion thereof, in shares with each pinned to the current market value of the property. All the funds will be reinvested in a spread of securities on the GLBSE stock exchange and all the dividends will be payed to the shareholders. As an additional diversification part of this fund may be used to purchase mining equipment, probably ASICs from BFL to add to the dividends. Shareholders will be allowed to vote on this spread etc.

This IPO will act as a home equity loan but instead of interest being paid to the bank, dividends will be paid to the investors.

I will maintain a number of the shares and use the dividends from these to pay the outstanding usury taxes and the right to purchase back the shares at the current market value.

Since house prices are generally heading up here this is could be a very good investment going into the future.

Any constructive suggestions would be very much appreciated. If the fund becomes a reality this thread will be used as a place for shareholder discussions.


Details:

Please view this proposal as a request for comment rather than a legal document.

This fund's idea of reinvesting in other GLBSE securities is repeated numerous times with many of the funds on GLBSE whether backed by collateral or not. This is a collateral backed fund. However adding to this with actual mining hardware would increase the dividends greatly.

Pending photos ect.  This house was originally a single family home and sits on 3/4 of an acre in downtown Manchester, NH. With gingerbread architecture, 6 bedrooms, 3 bathrooms/1 half bathroom, two car powered garage, brand new shingle and copper roof, and a purchase price of 320k.

The house is fully paid for. There are no other owners, I hold a free and clear title minus back taxes which I'll have to calculate. There is no seizure order and the taxes are limited to around 10 to 15k.

This IPO is constructed as to be somewhat similar to a home equity loan, with all the proceeds being immediately reinvested in dividend bareing securities payable to the shareholders. The dividends performance will of course be based on the performance of a diversified selection of GLSBE securities while the value of the shares should reflect the value of the property or part thereof.

To make a better shot at this, I think you should create a prospect that will present the house with pictures and details, much like a real estate brooker does when he sells a house.

And then we can raise a motion to make you sell your house and you have to pay it out to the shareholders as dividends?

:o

Naturally the idea is to build a profitable venture for everyone involved. I apologize for the hastiness of this proposal but given that I lack the firepower to fight off the state for long, I felt that posting to the forum would speed the process. Pictures and other information will be posted if/when and while I build an IPO that makes sense to everyone including me.

This is likely to mean I will maintain control of a number of the shares allowing me to continue residence.

Pending photos ect.  This house was originally a single family home and sits on 3/4 of an acre in downtown Manchester, NH. With gingerbread architecture, 6 bedrooms, 3 bathrooms/1 half bathroom, two car powered garage, brand new shingle and copper roof, and a purchase price of 320k.

Given the unprecedented nature of this venture I seek the forums considered involvement.  

Or we could call it something like Bold Funding (http://buttcoin.org/has-bruce-wagner-pulled-off-the-financial-biggest-scam-on-the-bitcoin-community) and let Bruce Wagner be the boss.

Do you really want bitcoiners as your landlord ?

As a fellow home owner I wish you well in this novel idea. I think it is doable and something worth supporting on glbse.

Are you moving because of the free state project by any chance ?

Count me in!

How much do you owe on it?

Mortgage?  1st? 2nd?

Back Taxes?

Is anyone else an owner? (is the title clouded from your divorce?)

What is the exact financial situation?

Thank you.

I feel somewhat inspired by the ideas of the free staters, the NAP and libertarians in general. I suffered a great deal of loss during the housing scam back in 2007/8 and have realized that draconian governments with policies that obviously fail to meet even the basic tenants of humanity can simply walk in and take my stuff away, something that I wasn't able to learn in the UK. The idea here is that I can keep my home and buy it back over time by using the free market to fight back.

To me anyone who has even begun to realize how corrupt the societies we live in have become are better traveling companions than those who refuse to open their eyes and have gained a great deal of respect for those willing to step out of line during my time with and as a Bitcoineer.

What you're proposing is not at all clear to me. I'll point out some of my confusions.

So you're planning to sell something that is about to be seized? Isn't that illegal? Does that mean the the shares will be worthless? Why is it being seized - a part of the divorce, for taxes (both of which you've mentioned), or for something else (e.g. imminent domain)?


Well, if you sell the house and raise money, the money is yours. Taking that money and putting it into various GLBSE holdings is up to you.

On the other hand, if you raise money to invest in various GLBSE holdings, that's also a possibility.

It seems like you're trying to combine both of the above, and it's hurting my head to try to understand.

If you need to pay back taxes, why not just sell a fraction of the house to raise money, and pay the taxes?

What are you talking about with regards to "regaining your livelihood"?

Well, I hope you see based on my comments above where this could be very confusing to people.

I'm also sceptical of the legality of this. I think there is a general concensus among GLBSE users that it should stay within the legal gray-to-white area of bitcoin and try to stay out of anything illegal. (More importantly, this seems to have been Nefario's view so far.) Trying to sell property that has back taxes owed and/or is about to be seized seems like a sure way to draw attention from legal authorities. Would buying shares potentially leave purchasers with some kind of legal liability? Someone might be able to argue that in court (not that the argument would succeed--but I would rather it not come up at all).

The house is fully paid for. There are no other owners, I hold a free and clear title minus back taxes which I'll have to calculate. There is no seizure order and the taxes are limited to around 10 to 15k.

Thank you for your helpful comments mollison.

Some of your questions have been answered in the edited first post. As to the legality of this the only outstanding issue on the property is back taxes that actually don't amount to a great deal. It's likely that I will be able to negotiate a repayment schedule that would easily be accounted for by dividends long before any court involvement. In essence I am leveraging my property while sidestepping huge loan fees and interest required by the banks we are all troubled by. In the event of any unlikely failure the property can be sold and the share holders fully reimbursed.

Thank you!

Its a  nice idea in theory but why not just sell the house and setup an investment fund on glbse with the proceeds ?

I know people in the housing industry and I can tell you a story or 3 about crappy tenants :)

So essentially you want to use your house as security for a 300K glbse offering? 

I'm with you but all of a sudden I am tired of backing down! If I sell I'll have to rent again and that will reduce the investment potential of the idea.

Most importantly I can also start selling shares right away and those will immediately start producing dividends and I'll still have somewhere to stay with my own miners.

Yes somewhere around that amount, with all of that being reinvested.

I understand. So essentially whatever funds you raise will be reinvested and used to generate dividends etc ?

I like this idea if only because it's an extremely creative way to solve your problem. There are definitely some issues here, but if you've got the guts to try it out, I'll definitely throw in a little bit to help out. Good luck with this!

Exactly!
Instead of paying interest into a failing economy run by the very people that are looking to make me homeless.

Why not use a home equity line of credit or take out a mortgage on the house? Rates are incredibly low these days, and if all you owe is back taxes, it seems reasonable to me to do this. More clarification is needed about why you're pursuing this option.

-bgc

Perhaps I've been slightly lazy trying to get forum members to help with the design of the IPO that's going to save my behind but I think doing it this way will help me build a stronger fund quicker. It's actually likely that I will keep the fund going rather than immediately buy back the shares so that we can all continue to profit.

Thank you!

So, you're going to raise $300k worth of Bitcoins via GLBSE, use $10k-$15k of it to pay off the backtaxes, and then put the rest in a variety of investments?

What's to stop you from simply running away with the $300k?  Will you title the house in the name of all the investors?  Or in the name of a business that has the names of the investors?

If I, as an investor, invest $10,000 worth of Bitcoin into your house, how much of a share in your house does that buy me?  How much is the house worth?

Why not just raise a smaller amount of capital to pay off the backtaxes and sell it for a small share of the house?

What happens if the shareholders want to sell your house?  What happens if you don't want to sell, and never do sell?

If your house is worth $300k, but it is all paid off, and $300k is the amount of capital you are raising, then all shares together are immediately worth $285k + $300k = $585k?

I find myself entirely reluctant to continue supporting the groups and organizations who've already taken almost all my wealth thus far.

I refuse to pay any more interest into an economy run by the very people who are trying to make me homeless and if I was a state with the power I'd take up arms against anyone determined to pry anymore wealth out of me.

You make very good points however I believe the IPO can be balanced to allow me control of the property while also making us all profit (51/49% split?). I would pay the taxes and expenses from my share of the dividends.
It may be prudent to sell off batches or even as you say just an amount that would cover the back taxes and a little for fees etc. according to how successful this offering is while allowing us all to get our feet wet. The idea is exactly the same as a home owner looking for a home equity line of credit but it suddenly occurred to me that I could do the same with out all the ridiculous interest being paid to the banks. Instead of wasted interest a fairly large investment would now appear and support the exact people I want to support against the banks.

Trust of course is an issue, I can say for my part I will try hard to mitigate that with pictures of the house and deeds etc.  But suffice it to say I also want some of those dividends and I don't want them to stop.

So you will retain control of the property and the investments.  Assuming the house is worth $300k, then raising $300k of capital and paying off $15k of back taxes (and giving yourself a 51% equivalent of 300,000 * 51 / 49 = 312,245 shares) would make each dollar of shares immediately worth $0.9555.  The shares would, in this case, effectively devalue by 4.5% as soon as they are purchased.

Of course, if the house is worth more or less than $300k, then it changes said calculation.  That's why current house value is important to know...

Again, how much is the property worth?  What is the street address?

That ratio is not fixed in stone but represents some ratio that would be agreed on such that I have the right to keep the property and control the fund at least unless there is some sort of issue.

Now we face my risk, I may have to make quite a large part of my life visible unlike many of the investments on GLBSE where there's not even an email address. In order to do this properly I will have have the property valued and make the valuation public in such a way that proves this is my house however I'm not sure I like the idea of imperial involvement and so this aspect of the IPO will have to be up for discussion.

The rough price quote is in dollars so it's 300,000/Current BTC price to get to BTCs. Also that price was when it was purchased at the height of the market 250k is probably a closer estimate.

I want to structure the IPO so there are really healthy dividends and with such a large amount this should be possible?

What do you intend to invest the capital in ? A huge ass mining farm ?

 :D

You may have answered some of my questions. I'm not even sure I would say that, though.

To me, the biggest red flag is that you seem to be conflating (a) selling shares of your house and (b) selling shares in a GLBSE fund that pays dividends. I could understand doing one or the other to try to pay your back taxes (although not necessarily condone it), but not both.

You're basically selling shares in your house and then giving away dividends. Doesn't make sense.

Alternate perspective: You're basically starting a GLBSE fund, where you keep some of the initial shares (and thus get some of the dividends) without putting any initial investment in, unlike the other shareholders. The whole house thing makes it look like you're putting in an investment.

Also, I don't have sympathy for the "screw the banks" rhetoric. It's just distracting from addressing the actual flaws.

Best of luck to you but unless all the issues people are raising are addressed, this does not look like something people would want to put money into.

He said he was going to buy GLBSE assets that pay dividends.

What's the difference between taking out a home equity loan from a bank and doing a similar thing with Bitcoin? For one thing I won't have huge interest payments and this will benefit all the shareholders? The shares represent ownership in the house and the house is collateral against the shares, if something goes wrong the share holders may reposes my house or some small part of it by calling in the shares value.

But where do the funds that I receive go? Instead of a new car or renovation they go directly to an investment fund that then pays dividends to the share holders.

The shares themselves being pinned against the value of the house represent an investment opportunity however the shares value plus dividends represent a better investment and return for the money.

Why is this conflation or illegal in any way, I should have the right to invest any funds I receive in any way the shareholders see fit and I along with all the other share holders are probably going to want to see dividends. What law would you site to prevent me from paying my shareholders this way?

Please elobarare on this ideas flaws.

It's your prerogative to not invest however thank you for the good wishes.

Effectively yes, however that's also a good idea!

If that is what you actually want to do (imitate a home equity loan), I think it's an interesting idea (and possibly even a really good idea). That's not really how you represented the investment, though. I did not realize the house was supposed to be collateral. (After all, you said you were "selling" the house.) Your proposal was confusing.

I would be more comfortable as an investor if this were structured as follows. Each share represents a proportion of the house, with a guaranteed date for buyback (by you) and a certain fixed dividend payed out on some schedule (i.e., interest).

For one thing, this is simpler to understand and straightforward, and for another thing, it sheilds the investor from the whole "re-investing money in GLBSE" business. Yes, you can do that if you want as a means to try to generate the money to pay the dividend to your creditors (I say "try" because I'm rather bearish on much of the GLBSE).

Of course, doing it the other way exposes the investor to more GLBSE risk and sheilds you from it. That's also an option.

The shares being pinned to the value of the house only matters if you are unable to make good on the debt you are issuing, if I understand your proposal. Shouldn't you not plan on that happening and not use that as a selling point? I am sure nobody is going to be comforted by that train of thought.

My legality concerns were not from the "conflation" issue, but from your statement at the beginning of the original post (which is still there as of now) that a town in NH plans to take the house. You later state that there are no plans to seize the property, which is a contraditcion. Assuming there are indeed no plans to seize the property, I'm not sure I see anything legally questionable here.

Also, talking about losing assets to a divorce just made things more confusing. That does help explain the backstory, so it's good to know (and you have my condolences), but it just wasn't clear at first to me whether the house could be seized as part of those proceedings.

tl;dr: you may be onto something but you need to hire a PR firm or something.  ;D


Tip o' the hat for not being aggressive in response to the criticism.

A relevant question is also, what steps will you take to give your investors legal recourse in the event of a default? You would essentially be blazing a new trail legally-speaking, so laying a solid legal groundwork is important. If it's an issuance of debt, who holds the note? Who will hold the deed to the house if you get your investors?

-bgc

nonsense; BTC exchange rate movement will make this a bad investment for both investors and issuer; and I pretty much doubt that there's enough high quality assets on GLBSE to invest such high sums into for long term

Care to explain?

+1 to that.

I think I read a similar thread quite some time ago (like ~1 year ago) with the same characteristics - someone wanted to offer a house or so as security for huge loans, "everyone" starting from the government, the wife, big corporations and whatnot were out to get him and there was a strong emotional appeal to raise money from libertarians.

Also again, with so many other investments on GLBSE:
This investment is denominated in fiat currency and sold in BTC - a bad investment for anyone believing BTC <--> fiat exchange rates will grow faster than the return rates of your investment fund (which is backed by a house).

I agree with mollison: If you want to have a loan on your house, present it like this and also pay dividends/interest accordingly. How you make back this money is completely irrelevant to me as your lender in most cases, if you want to earn it on GLBSE that's fine for me (and probably a lot of others too).

Goat for example suggested a scheme where he pays 1% of interest + 1% of capital back each week, which amounts to a fully paid back loan + 100% interest after 100 weeks. Yes, it sounds like a lot, but with current earning potential on GLBSE you might still have quite a few gains (if you invest smartly that is). The biggest problem is that your collateral is denominated in USD, so either you price everything in USD (and BTC bullish investors risk gaining fewer BTC back than they initially bought in for) or you price it in BTC (paying back 2 BTC for 1 BTC over 100 weeks), risking that your house drops from 60000 BTC @ 5 USD to something far lower, not covering your debt any more.

My advice would be (from an investor's perspective):
Don't raise more than you need, your emotional appeal etc. already caused me to not trust you at all for 300k USD but put up the whole house as collateral. If you need 20k USD, raise 20k USD in BTC at current value, offer some nice returns and earn them back in whatever way you want. This would also make sure even if BTC rises to 10 USD or more, that you still could fully cover the debt in BTC if you sold the house.

Alternatively:
Make sure to make clear your debt is USD denominated and for example issue 20k shares for 20k USD debt. Then integrate a bot that always keeps the ask price up-to-date with MtGox and make clear rules for dividends and which USD <--> BTC rate will be used there. This means BTC bullish people might be driven away, but they still might at least appreciate the straightforwardness and still invest a bit, unlike the recent mining bond crash that cought quite a few people by surprise.

So now it is GLBSE Loan & Pawn? What's next, someone going to IPO their car or their gun collection? If I buy enough shares can I move into a room? How many shares for the garage? There are other mechanisms in place for situations like this (i.e. private lenders and Bitcoin banks). Crowdfunding the mortgaging of your home via GLBSE is just silly and takes away from the credibility of the exchange. Any real world investors looking at Bitcoin for the 1st time and seeing a 'security' like this listed on one of the main exchanges will probably take their money elsewhere, and for good reason.

Sorry but this is true.

I think this project should go elsewhere. What about Patrick's new baking services?

But I guess it's up to nefario to accept or not this listing on his exchange.

Anyway whish you best of luck  Punningchan

Thanks again for the advice. I have to say I was a somewhat upset when I was typing the original idea in, but one of the good things about this forum software is I can edit it!

There's a first time for everything. I've chosen GLBSE since I have come to trust the company. They are developing secure software for compromised environments. Also the original idea was to sell shares to the whole value of the house however that could easily be pared down until the market improves. 300k may sound like a lot but looking at the volume on some of the securities there this is not that huge?

So all home equity loans have no credibility?
People on the forum have already asked me why I'm doing this I thought it prudent to tell the truth.

Thank you.
Please understand that I really don't see it as silly risking my livelihood on a venture like this. It's interesting how banks have the ability to make Home Equity loans look so credibile but I'm having a less easy time of it here, perhaps that's a good thing. Another poster commented that I may need a PR firm, this could be true but the fundamentals of this idea are solid. A home equity loan reinvested to the benefit of the shareholders. If I had the money right now I'd invest far more on GLBSE and with the collateral I can. I'm starting to think of this idea as selling real estate in small pieces.

From an investors stand point, since they are investing in a property, shouldn't they share the risk/benefit of the value of the property if that increases then the sell price should be higher, if the property falls in price the price should be lower. None of us can control that except the market and anyone can buy or sell the security at whatever price they want. The initial offering will be pinned to the market price of the property at the time of the IPO.

The question of the value of BTC over time would also seem to effect all GLBSE securities not just this proposal but since all funds are to be reinvested in those funds this would seem to be a mute point.

Also all investments can immediately be reinvested without sojourn into Fiat land since the securities are being sold in BTC.

Since I will pay the taxes etc. from my share of the dividends this is the only place in the IPOs functionality where Fiat will be involved and in reality is of little interest to the investors as pointed out by another poster.

That's an interesting question since there can't really be a default with no outstanding mortgage. The only risks are if the house blows up, I decide to spend the dividends on something else other than the taxes and the town then takes the house, or the bottom falls out of the Bitcoin market. My goal in all of this is to keep the house and to do so means paying the taxes and therefore I'd be shooting myself in the foot if I didn't pay them.

From an investors perspective I probably need some way to publicly display that the taxes are being paid or at least that town has decided I'm paying enough.

If it's a home equity loan (or even a "fancy/complicated" home equity loan), the investors are not investing in the property. It's just collateral.


You are failing to mention the #1 source of risk, which is that you don't pay out the dividends you own to investors, and/or don't pay back the principle (i.e. buy back the shares). For example, because you invest that principle in GLBSE assets which could underperform.

Seriously, red flags, man.

See the previous post.
[snip]
That's an interesting question since there can't really be a default with no outstanding mortgage. The only risks are if the house blows up or I decide to spend the dividends on something else other than the taxes and the town then takes the house. My goal in all of this is to keep the house and to do so means paying the taxes and therefore I'd be shooting myself in the foot if I didn't pay them.
[/snip?]


Isn't that a red flag against all GLBSE dividend baring stocks any one of them could stop paying the dividends but then the value of the stock would plummet to everyones misfortune, including mine. The dividends will be based on the returns from the reinvested funds based on their performance.

I'm beginning to see the difficulty in my approach, instead of just one banker I have to appeal to hundreds, but I beleive it's worth it to avoid paying interest for loaned money that does not exist.

The idea is that if the house goes up in value then the shares should be more valuable, is that a problem?

What about setting up a company that does house mortgages or partial mortgages on glbse ?

Dont list the house but instead use it as collateral to set up a mortgage broker :)

Eventually people will want to pay their house repayments using btc.

As already pointed out, you are confusing things by mixing investment types. Forget the GLBSE dividend paying investments for a moment. For me to invest I would need to see the following occur.

Get an independent market valuation from a licensed valuer. Provide statements of exact amounts of tax owing. Work out your equity by subtracting tax owing from valuation. Sign a legally binding mortgage to a trusted third party escrow. (If the third party escrow has sufficient reputation in the bitcoin securities world, you would not need to publicly reveal your address. A statement from the escrow that they hold a mortgage would be enough.) Get an independent valuation of the rent that would be payable on an arm's length basis (http://en.wikipedia.org/wiki/Arm's_length_principle). Either you, or preferably the third party, issues GLBSE assets for no more than 80 % of the equity. You sell at least enough to cover the tax, but more if you like. Proceeds are used first pay off your tax. Each month, you pay to the third party escrow 80 % (or whatever percentage of assets issued) of the market rent for the house, and this rent is distributed as dividends. You may deduct any genuine expenses for the house from the rental income by providing the thrid party escrow with receipts. If you own some of the GLBSE assets yourself, you get some of the rent back. If you issue more assets than is needed to pay the tax, you can invest some of this in dividend paying GLBSE investments. If these go well, you keep all the income yourself and use it to help pay your rent. If your investments bomb, you are still up for rental payments, and if you stop paying rent, the investors can choose to evict you and put someone else in or foreclose on the house.

I would be interested in seeing something like this happen. It would be a novel concept to the bitcoin world (although not the first mortgage). I would need to see the valuations and rent appraisal before deciding whether I would invest in such a venture.

brendio is the first one to propose realistic terms. That would be a really interesting first for bitcoin. I don't agree with the "a trusted forum member's word would prevent needing to reveal the address". Holding as illiquid an asset as a house requires extra burden in terms of proof. I would require an appraiser and a fully notarized transferal of title.

I also think you'd need to be pretty bearish on bitcoins to think that a house would outpace them at the moment. A house is certainly at less risk for total loss however, so if the right boxes are checked you could possibly find some investors. Not me, but it's not a totally unviable idea.

-bgc

As a home owner this is relevent to my interests  :)

Brendio is one smart cookie.

Would the bank want to move in to a room if I got a home equity loan? They certainly considered it a security for the years of mortgage and made phenomenal amounts of interest off my back, perhaps you are right that does seem entirely silly.

This method as I have come to realize allows very small risk from the shareholders perspective, since they can buy a small piece of a fund that is backed by collateral which is like the basis of any standard security, isn't it?

Can you elaborate on what you find silly?

Please also understand this document is a request for comment not the actual fund.

Thank you for your excellent suggestions.

I would also happily have a representative vist me here.

Who is paying rent to whom? I currently pay no rent and wish to continue doing so. Reinvesting the value of the shares in funds that pay dividends is simply adding more functionality to a simple investment instrument, it is not illegal, it promises guaranteed regular payments and anyone suggesting that investing on GLBSE is excessively risky shouldn't be investing in the first place? (To answer a poster elsewhere.)

There are ETFs on GLBSE that have no such stringent requirements and they are only backed by the funds themselves, you want me to put the collateral up and pay rent?

A home equity loan requires no rental, why should one based on Bitcoin? Banks use collateral to make money all the time?

This is an awesome idea!

I would certainly consider doing this with trusted forum members. I'm not a lawyer but if there are some on the forum we should appeal to them, as much as I detest the paperwork some of this might need a degree of that.

I think you should ask for a USD home equity loan and invest in glbse so you get returns in bitcoins.
If you are paying 5% per annum for this loan and earning a 4% or more weekly yield on glbse it should cover the repayments.

This is where it would be nice if there was a service that let you deposit fiat to get bitcoin returns.

https://bitcointalk.org/index.php?topic=89558.0  this is possibly related.

I would really like to start such a  venture as I see a demand for it.


Also you could cover the tax with those returns. You just need people to loan the fiat not bitcoins :)

I'm not sure how usagi has taken it upon himself to say that I have "spurned his every advance" since I only see one advance telling me how unlikely I'll be to succeed without his help. I'm sure his help would be appreciated, but I can't help wondering what this sentence means "I can pretty much guarantee you that if you don't hire me or someone else, you will simply not be able to list. "?

Are you really saying that all the Bitcoineers you profess to stand for have completely decried collateral based loans even given they are the foremost loan instrument in the world? And if so why do you think you can manage it?

The poster also needs to keep abreast of the current facts in this proposal.

Thank you again.

You don't currently pay rent because you currently own the house. If you sell the house, as your title suggests, either you need to move out, or else pay rent to the new owners of the house, which in this case would be the GLBSE investors.

A home equity loan requires no rental, but they do require interest payments. That could be an alternative set up for this. It would still require a legally binding mortgage and either a fixed interest rate or a rate that floats relative to some external reference rate.

I'm not sure I've ever seen a home equity loan that requires the home owners to move out and pay rent?

Instead of interest the shareholders will receive weekly dividends.

You did not post asking for a GLBSE home equity loan. You posted your house for sale. There is a difference that you seem to be confusing.

How about simply starting a mining operation, or issuing shares for what you have on GLBSE? That way the BTC price will never get out of control and you can "cash out" whatever you need... 15-20k usd and pay it back with dividends. That 300k amount bothers me.

++

punningclan: If you're doing a home equity loan you would be asking for something similar to your liabilities, e.g. around $15000 or your current tax liability. Optionally, you could ask for more and intend to invest it in GLBSE. However, if you're asking for a home equity loan, it's still necessary for the holder of the loan to have title on your house. Without it, there's really no collateral you're offering. In a normal/fiat home equity loan, you already have a primary mortgage on the home and the home equity lender places an additional lien on the title, preventing sale without them being paid off.

If instead of a home equity loan you are essentially selling it, then that justifies something more like the $300,000 of market value. Either way, you need to lose title to whatever entity holds your loan/title.

I really recommend using a traditional home equity line, and if you're very convinced in the viability of GLBSE assets, take out twice what you need to pay your taxes and invest in GLBSE equities yourself. There is no reason to issue a security for this: my analysis is that neither you nor your shareholders would benefit in the optimal arrangement, and in many suboptimal arrangements one or both of you would end up royally screwed.

-bgc

The title has been some what misleading and I probably should change that though looking at the content of the proposal it becomes evident. Thanks for that.

Apart from declaring whatever to the whole forum.

In a way you reminded me of the way real estate brokers treat their customers.
 
I apologize but your private message should have remained private, it's just so easy to copy and paste, however given your stance in the follow up it became evident what was happening. I actually went back and edited the comment realizing it was a little harsh.

Thanks again anyhow and I hope I am able to put together something that works and that you can invest in in the future.

So the questions are:

1) How do banks manage home equity loans? They are unlikely to repossess for say a 20k loan on a 300k house right?
2) If in Bitcoin each user is a tiny bank, as many have realized, why can't those tiny banks do what they want?

Not only do banks reinvest their customers interest payments they tried to do the same with the debt also? I'm not asking for that, I'm asking you to be the bank. The bank doesn't take the title on a small loan they expect payment based on an income report you have to supply. I have a Bitcoin income and without much ado can build a huge fund with unending dividends certainly within the terms of this loan. If you default on such a loan then usually the bank will put a lien against your title but they don't abscond with it, which means I'd have to find a way to do something like that in this case.

Perhaps unfortunately no "real" bank is going to loan based on a Bitcoin income, additionally as you might understand I really don't want too declare that as I imagine many of the funds on GLBSE don't for the same reason quite apart from the extreme compounding interest they charge.

You could be right and it might be better to start smaller. I actually have some mining rigs but would certainly entertain the idea of taking a collateral based loan to purchase some of the new ASIC miners slated to be released in October. I do like the idea of spreading the risk across multiple funds and my own mining also.

Although another poster suggests an even larger scale plan that would essentially see the creation of Bitcoin Housing and Loan that I certainly see as being part of a healthy Bitcoin future.

It's true that banks are normally not going to repossess a $20k loan on a $300k house. Often with home equity credit, they just roll unpaid interest into the principal on the loan. Typically the credit line has a limit, in your case probably ~$100k, after which they would possibly require you to pay up or repossess.


They obviously can. I'm just trying to scope out what protections any potential investor should require.


Have you talked to the banks? You can probably get a loan based just on the asset value of your house. It probably won't be on as good terms as it would be if you had income to declare though.

Also, from a strict tax-understanding perspective, to comply with US law you need to report capital gains income realized when you sell your BTC for $ or real-world goods. Until that point, you can accrue without tax liability (at least this is my current understanding).

-bgc

Have you ever actually read a mortgage contract (rather than just blindly sign one)?  

1) A bank is well within its rights to repossess for 20 k on a 300 k house. If they then sell for 200 k, they will take their 20 k from that plus costs and give you whatever is left over.

2) Yes, tiny banks can operate according to their own terms and I have already stated my requirements. You appear to be unwilling to actually offer you house as security as stated.

It needs to be legally binding contract otherwise its not really collateral :)

I have to admit to being somewhat puzzled at the sentiment that rejects collateral. Many of the stock on GLBSE don't even come with an email, a web site or anything and they have thousands of Bitcoins in investment essentially into thin air. I'm backing this idea with a solid investment, one the bank was willing to uphold through all the years of mortgage. Personally I think Bitcoin is going to increase in value, but the shares need to be pinned to the market value of the house and that's why dividends are important here. Another poster mentioned it may be better to take initial payments in Fiat to avoid the issue with increasing BTC value, but to my mind any stock that's valued against Bitcoin has this so called problem. The stock gets more expensive as Bitcoin increases in value, won't that happen to Gigamining or any of them?

I understand, I am very appreciative of this conversation and admit to blindly signing giant piles of paper. What I'm trying to do here is to help discover a new way of managing this and other similar loan types essentially following suit with Bitcoin's idea of simply ignoring the current standards and replacing them with my own/the forums. Why is interest so expensive and how can Bitcoin be used to minimize the expense? It seems like it really should be an option given that the banks and insanely expensive agents process can be side stepped to some degree making for easier entry in to a currently monopolized industry.

What I've realized is I could take the house out of the equation completely and simply start a mining fund to buy ASICs it seems to me though that I should put up some sort of collateral to do this although maybe I'm wrong? I mean with collateral I should be able to do it sooner as opposed to without?

I didn't mean to outright deny your offer, I'm just not in the position to do anything quite yet. The issue of accountability is an important one and what loaning from the bank etc does is provide that accountability but the real idea I had, the one that I've been bitching about the whole time, is to shake the banks and their crony agents loose. To find a suitable method of building a loan like this that everyone can be satisfied with. I'm personally satisfied with my risk on GLBSE so investing there seems like a good deal, in the same way any purchaser of this stock can rely on that stability.

With that said what I could do is have a notorized document proving the property is mine and a contract written up for the shareholders that makes it legally binding that I must pay the holders in the event of some default? I guess something like that would be a minimal requirement.

You would be better off forming an investment group with under 100 shareholders  to make it easier to manage. This group might then investigate other opportunities to tie real estate investment to bitcoin and appoint a treasurer,accountant and secretary etc.

This group could be managed over gpg email.