Yes, it's possible that the price could go above ICO values, but it relies 100% on finding buyers who don't know what they are doing and are just excited because something was released. There are plenty of people like that buying coins, but hoping to find uneducated buyers isn't a great investment strategy. Fundamentally, the price should never go back to ICO prices.

Regarding the decision to hold ETH longer, it's pretty ironic. Investors could have held ETH for themselves if they wanted appreciation without having to pay salaries for the team. So if they thought ETH was going to go up more than 12%-20%, they shouldn't be investing in the token.

As I mentioned in a previous post, at some point the team will have to convert to fiat in order to invest in real estate. So, by buying tokens, you're really buying into a fiat based investment and will lose out on any ETH appreciation (once they convert).

So either you want the ETH exposure and shouldn't invest, or you want the real estate exposure (based in fiat) because you think it'll outperform ETH. In that case, you should theoretically want them to convert to fiat because you wouldn't have bought tokens if you thought ETH was going to go up.

Wow...they really didn't say very much

I'm saying this how the market should value the coins, which has nothing to do with what the ICO price was.

By definition, if REAL tokens give you claim to (estimated)  19,200 ETH they are holding for investment, that's what the aggregate value of the tokens should be. Across 15 million tokens, that's 0.00128 each. This is a huge discount from the ICO price because there's a big loss of funds associated with team compensation and other costs.

I wasn't clear enough in my previous post. The sentence you highlighted should have said:

"the value of all REAL tokens combined should be equal to the value all the *INVESTABLE* cash/ETH they hold".

You could apply some other discounts, but I'm just trying to figure out the absolute max price this token could be worth right now. My point is it would be irrational for anyone to value it for more than the amount of investable cash they hold. Anyone waiting for the price to recover to the ICO value is out of their mind because that would be assuming the 37,000 ETH raised is still available for investment. In reality a much smaller amount is available.

I'm surprised more people aren't flipping out over this.

Actually, that should have no impact on REAL token prices. They are only a store of value that gives you the right to buy RPP tokens.

Until they start making investments, there's just cash (or ETH) sitting in the accounts. Why would anyone pay more than $1.00 for $1.00? Even if the prospect of them making investments is great, you don't know that you'll actually get a piece of it. REAL token holders will be competing to buy RPP tokens, so you're not guaranteed to get a piece of a great deal just because you hold REAL. For that reason, I think the RPP tokens will be more representative of the real estate prices / opportunities.

There will likely be an inverse relationship between REAL and RPP once they start making investments. In aggregate, the value of RPPs should approximately equal the value all the real estate they own. If the RPPs are undervalued, people will pay more for REALs for an opportunity to buy in. If RPPs are overvalued, the price of REALs should go down.

Remember, right now the value of all REAL tokens combined should be equal to the value all the cash/ETH they hold. As they invest everything into real estate, the value of all the REAL should be somewhat equal to the value of all the real estate. Same with the RPPs. Short term deviations in price can happen, but you'd expect them to self-correct as people notice they can buy $1.00 of real estate for $0.75.

I'm adjusting my price estimate. The team has confirmed there's 15 million tokens that will be in circulation, not counting the ones being reserved for a future sale (or possibly burned). They raised around 37,000 ETH.

Putting the budget issue aside for a moment, the MAX price is 0.0025 ETH/REAL. That's just simple math. 37,000 ETH divided by 15 million tokens.

Of course not all of the 37,000 ETH will be used for investment since they need to set funds aside for the Operating Budget. We know they were originally budgeting $8 million, but that's way too much considering the value of the ETH they are holding is around $11.1 million. I'm assuming an ETH price of $300, even though it's trading lower today.

They haven't released the new budget yet, so that's the big question. The last trade on EtherDelta was at 0.00128. This implies that the company will invest 19,200 ETH and 17,800 is being set aside for the budget. That's $5.3 million, or a little more than $1 million per year.

I can't say if this is a reasonable budget or not, but that's what's being priced if you just look at the amount of ETH they are holding. Of course, there are other considerations, many of which I've outlined in previous posts.

I'm still keeping an eye on this, but I've decided that it's still too expensive for me right now. Until the new budget is released, my buy price is probably around 0.0005.

I've been thinking about the risk/return side a little more. By investing in REAL, you're buying into EU real estate (although we don't really know what country for sure). It also sounds like it'll likely be hotel investments. Let's put aside the possibility that they are actually just going to sell you a property they already own.

Holding on to tokens is therefore a hedge against crypto investments. Essentially you're saying you'd rather sell some of your cryptos, convert it to fiat (Euros) and buy real estate. You're betting that the 12% - 20% returns they are targeting is better than you can earn in cryptos on a risk-adjusted basis.

Assuming they will be buying hotel assets, it's likely a bet on the economy (although we don't know which one). Most hotels either target business travelers or tourists, but both depend on a strong economy. So, in order for your investment to do well, the dependant economy has to do well.

It sounds like you won't have to buy into each investment they propose, but since they didn't raise that much money, I don't know how many choices you'll have. If you don't like their first investment, you can hold onto your REAL tokens instead of buying RPPs, but then you're not earning a return on your money, so it's just tied up.

Of course, if the Euro isn't your local currency, then you're you're taking that currency risk as well.

I know nobody asked the question, but I find this ICO fascinating and it's helping me become a better ICO investor as I think about what I'd REALLY be buying into.

They are like evil geniuses if that's true. Hopefully there's an independent valuation or some other oversight to determine the price if it's not an arm's length transaction.

It sounds like you were right how you interpreted the conversation. The reserves can be sold to new investors in the future, which would raise additional ETH.

Regarding the valuation, it's impossible to know what's a fair price until we get the following info:

* An updated budget
* More info on how the reserves work and how much is actually set aside for future investment (vs any non-investment expenses)
* Estimated timing on their first property purchase
* Much more detail on their real estate strategy and their previous experience implementing that strategy.
* it would be helpful if they could also confirm how much ETH and fiat they currently hold. I have a pretty good idea based on the ICO results they posted, but confirmation would be helpful.

Without having any of this info, I'd say the max price right now is about $0.20 if the budget is still $8 million and assuming they will acquire their first property very soon.

My guess is that they are working on reducing their budget. That would raise my estimate IF I thought they could still pull off their business plan based on the new budget, so there's a balancing act there.

It doesn't really take many people on the real estate side to acquire and manage just a few properties (in my opinion), but the tech side adds a lot of bloat that most real estate firms don't have to carry.

Of course, if they were to reduce the number of people they hire, you'd expect a commensurate reduction in the amount of REAL set aside for the team. Otherwise all the remaining people end up getting more.

You're right in the sense that they have to adjust their budget. Otherwise the business falls apart since they won't have much money to actually buy real estate. However, it's not clear if they'll be able to actually execute their strategy with too small of a budget.

Regarding your last comment about needing the price of REALs to appreciate so they have more money to invest, you're looking at it the wrong way. It has zero impact on how much they can invest since they raised a fixed amount of ETH and that's what will be used. A higher price would help the team members personally (not investors) since that's how they received their 20%

That being said, they could sell the reserve tokens, so a higher price could help in that respect.

The budget is really the big question since the REAL token value is highly dependent on this. The higher the budget, the lower the value of REAL tokens. It's a balancing act since they didn't raise as much money as expected, but they still need money to run their business.

It was really a poorly structured ICO because they set it up to disadvantage early investors. That's the opposite of how it should have been run. This is aside from the fact that they didn't provide enough info on the real estate side of the business, which is really what token holders bought in to.

The ONLY things that should matter to token holders is the real estate investment strategy and how any non-investment money is being spent/allocated. They screwed up both, which I suspect is why they didn't raise enough money. There should have also been a minimum amount they need to raise or have everyone refunded. Because they didn't do that, they now have the issue of having to drastically reduce their budget, which is a HUGE problem.

At some point, a real estate company will put together an ICO  the right way, so that's what you want to keep an eye out for if you're interested in the space.

I went through the whitepaper again and this is my understanding:

* 20% of tokens are for the team
* 51% of the tokens were sold to contributors during the ICO.
* 29% is being reserved for a future sale, although it looks like a small portion may be offered to "partners" (see page 32). So, together with the 51% above, around 80% should be available for investment LESS $8 million reserved for 5 years of operating expenses (this is the Core Budget that was referenced).

Typically, with institutional investments, you'd expect the following, but it shouldn't be surprising that REAL fees are higher since they are a smaller platform. That said, the essence of how it works should still be fair to investors.

Management fees: 1.5% - 2.0% of invested equity annually. Let's work backwards to see how much they can support. If $8 million is supposed to last 5 years, that's $1.6 million per year. Using the 2% of equity rule, that should support $80 million of investable capital (including the 29% that's being held in reserve). They have raised $11 million so far.

Incentive fees: Typically 20% over a return hurdle. Since they are targeting returns of 12% - 20%, you'd probably expect a 7% - 8% return hurdle (let's say 7%). This means that the team shouldn't take a portion of the profits until investors have earned 7%. After that point, investors should receive 80% and the team should receive 20%. Again, this is from an institutional perspective.

I've seen there be no hurdles, where the team starts earning a percentage of any profit. So once investors get their money back, there's an 80/20 split. However, the REAL team is taking 20% right off the bat, from day 1. Yes, there's a lockup period and they are being paid in REAL tokens, but they are still guaranteed this payment. This is extremely egregious in my opinion.

Hmm...I'll have to go back and run through the numbers. Either way, it doesn't change the fact that ICO participants end up getting screwed.

I also heard that very little of the money set aside for acquisitions has been converted to fiat. They are using investor funds to speculate on the price of ETH.

While this could end up benefiting token holders, they are taking on additional risk that investors did not specifically sign up for.  It should be concerning that they are making non-real estate bets, even if it ends up being profitable. I imagine anyone here is capable of making their own crypto bets however they see fit and they don't need real estate "experts" to be doing this for them.

You're right, but wouldn't it be ~80% of 51% (or ~40%)?
I'm referencing the whitepaper from my phone, so it's not easy to double check.  

Either way, anyone who invested in this ICO signed up for a guaranteed loss. It's like saying "Here's $1.00. Please invest $0.40 in real estate for me and keep the change."

This isn't FUD...it's simple math. Even if they hit their target investment returns, it'll take token holders years just to break even.

He's referring to the info that starts on page 31 of the whitepaper. Only about half of what token holders funded is actually used for acquiring properties.

In the institutional world, fund sponsors only earn a promoted interest after certain return hurdles are reached. This helps keep interests aligned.

The REAL team is getting 20% of your money before they even buy a property.

Also, the CEO is getting a very nice salary with guaranteed raises over the next few years.

I wouldn't be surprised if no one has called them out on this yet. Anyone who read through the whitepaper and really thought about it would have seen that this was a terrible ICO to invest in.

Aside from being a windfall for the team, there were plenty of other reasons to stay away. I posted a couple of days ago how there is no fundamental reason for this token to EVER trade above the ICO price. This isn't FUD...what I'm saying is pretty clear and simple to understand if you really look at it. The ICO price is basically the maximum amount that the token should ever trade for, so there's no reason to have participated when there's no benefit to tying up your funds so far in advance while also giving away such a large percentage.

The tokens only starts to make sense at 50% of original value, or less.

They said that MyEtherWallet should be fine

I know this is a PPP thread, but I thought I'd comment on REAL since you brought it up and I was reviewing it earlier today. REAL tokens have no fundamental reason to trade above ICO value for a LONG time, so keep that in mind as the max price.

The value should creep back up to the ICO price once the first property is available to invest in. REAL tokens have no use other than providing the right to invest so they are just being held in anticipation and should trade below ICO until that time.

* this analysis assumes that crypto investors are fully informed and act rationally, which we all know that they don't. So while there's no fundamental reason for the REAL token to trade above the ICO price, who knows what will actually happen.

[Back to your regularly scheduled PPP discussion]

I played around with it a little bit after my last post and it does work fairly well.

I don't understand why this token would ever trade above its ICO value. All it does is provide you with the right to buy into their real estate assets (by acquiring RPP tokens), but there are no other benefits to REAL token holders. For that reason, it should always be pegged to fiat value, with a potential illiquidity discount.

It's the the RPP tokens that should fluctuate in price based on the value of the underlying real estate.

The only point where REAL tokens should maybe appreciate is after the team has realized a long track record of successful investments based on a competitive advantage they hold. At that point people might be willing to pay a premium to buy REAL tokens just for the chance to invest in the real estate.

On the other hand, it makes sense for the tokens to be trading below ICO value until the first properties are available to invest in. Until then, they are just sitting idle so there's a big opportunity cost for holding them.

So the when the tech is ready should theoretically have no impact on the token price either. The big question is when will that first property be available?

Am I wrong in how I'm thinking about this?

Thanks for the info. I still don't understand where you're finding email addresses that aren't public, but I'll try installing your plugin to see if that helps.

Yes, there's a separate fiat liquidity pool.