Roast this Masterplan.

[angels2apples]

Alright, so I'm a BTC whole coiner and have a sizeable amount of Ethereum(not enough to stake though) as well as some XRP. All of it is in cold storage on a HW and I don't plan on selling any into fiat unless I absolutely have to. Some people might buy cars or jewelry with their shit and I'm not critical of those decisions as that is their liberty. I personally, want to make my coins produce as much capital as they possibly can.

So gaining interest on coins through providing liquidity through platforms like Blockfi and the like at ~8% at the most is very tempting especially the exponential upside of those gains later on...but the risk of market volatility and the non-custodial nature is too much for me to handle. I don't care if they have multi-sig private keys in faraday cages encased in lead in a mile deep underground bunker only accessible by retina scan and built into the Himalayas. I have "Not your keys, Not your coins" tatted on my ass cheek(jk). Someone recently told me that there are companies through which you can actually insure your coins when they are lent and I'm willing to explore that but I'm still entirely against it.

Next option is using my coins as collateral for a loan to start a business. Reliable ventures are liquor stores, dispensaries, strip clubs...all things that directly service human pacification are very reliable but accordingly very competitive. I have a myriad of ideas for cutting edge business ideas and models but such risky endeavors should only be pursued when was has a substantial amount of capital to fall back on. In general, There are so many variables with owning a business: Your employees could ruin everything if you don't hire stringently, unforeseen supply and demand shocks can happen that evaporate your bottom line and force liquidation, a host of natural disasters could destroy your building(one benefit of online business), or some new invention or drug could evaporate your industry. Plenty of business owners got absolutely wrekt by this pandemic through no fault of their own.

So what's left? Real Estate. Due to rampant debt and staggering wages, more Millennials live at home than not and automation is going to absolute eviscerate jobs which pretty much guarantees UBI will be inevitable. So, after a few years of appreciation and stabilization of cryptocurrencies' valuation and reputation, I want to use my coins as collateral for a loan to purchase a rental property...preferably a duplex within a metropolis thats not to close to the city or outskirts where I can live as well to keep an eye on the tenants. Given reliable tenants and time, I can pay off the loan with the rent and now have all my coins and a rental property. From there, I would use the equity in the property to get another loan to purchase a new property....rinse and repeat. As far as I know, this is the safest and most reliable way to build one's wealth while also having passive income.

Now for all the bitcoin maximalist that say I wouldn't need to get a collateral loan and could just buy the property outright with btc or eth....well even if that is an option, why would I do that when I could have both? Whether it be a loan or outright selling, the risk is the same and only one strategy guarantees I'll have less crypto(selling). Such are the downsides of deflation instead of inflation. It should be obvious that btc in particular is not primarily being used as a currency but a store of value so even if the rails exist, I am not incentivized to actually use as a currency because of it's tremendous value. As long as governments exist, fiat will too(albeit as a cbdcs in the future) and they honestly do a great job of facilitating value exchange..they simply don't hold value because they're susceptible to human greed and corruption (which is where crypto comes in).

So that's the plan. Please destroy it in any logical way you can.  

[mk4]

Ehh.. you seem to have thought of this deeply enough, and I'm pretty sure you already understand the risks anyway. While I'm personally not a fan of using my bitcoin as collateral for anything, you do you. In the first place, only you yourself understand your knowledge, expertise, and how good/bad you are in general with real estate so we really can't encourage/discourage you.

Personally, I prefer starting(and growing) small, low-initial-capital businesses. But then again, that's just me, and the "best" ways of earning wealth is going to differ from person to person.

[pooya87]

You have already taken the first step wrong in the first line of your wallet of text, which is allocating any money to two of the worst altcoins that happen to also be the two most centralized coins that have been dumping ever since 2017 and never recovered the price they lost even after all these years and the attempts to pump them again.

For example ETH has gone downhill from its 0.150BTC ATH all the way down to the current 0.032BTC. -78%
Same with XRP that has gone down even harder from 0.00025600BTC to the current 0.00000969BTC. -96%

[davis196]

Using cryptocurrencies as a collateral to get a loan and buy real estate seems like a very risky and stupid idea to me.I don't know about websites,that accept crypto collateral for fiat loans.Do you know any?
1.Cryptocurrency prices might crash.You need a collateral that has a really stable price/value.
Getting a mortgage is a better option.
2.Everything in the real estate business is all about one thing-location.Buy a property at the wrong location and you are done with this business.Real estate isn't that easy and you will have to learn.

[20kevin20]

I would not take loans using cryptocurrencies as a collateral. Especially not if I'm expecting to get a property using loaned money because I might end up getting loans for loans rather than paying my first one and owning the coins and a property.

Fiat is more unstable than it looks. If you look at how fiat moved along the years, you'd see that some of the national currencies are falling, some are standing.. but in the end, your money is only going to only keep losing value. I can't call it a safe bet to get loans when you never have the safety that someone will actually rent your place. And when, during a crisis, you won't have the place rented no more, how will you pay the money you owe?

We're quite close to a big, big crisis and that puts real estate under risk. I would actually rather count more on something new such as Bitcoin than real estate because I know that, as a matter of fact, during recessions a lot of people will lose money and have no more budget for rentals.

Now.. why should you purchase rather than borrow? Here's the trick: the chances of ending up with both are actually quite slim! Otherwise, banks would run out of business. When you think about borrowing money from criminals (banks), you should be already contemplating how you'll be able to pay it back not only today, tomorrow or 1 year from now. Are you sure there will never be an unfortunate event until the end of the loan that will make it impossible to pay it back, hence making you lose?

I hate loans. I hate banks, and I will never agree that loans are good ideas tbh. The main tip I have for you is, think about it over the longer term.. is it worth the double-risk? Giving collateral a very unstable asset to borrow money for a property you're not 100% sure you're going to actually own in the end?

[angels2apples]

Ehh.. you seem to have thought of this deeply enough, and I'm pretty sure you already understand the risks anyway. While I'm personally not a fan of using my bitcoin as collateral for anything, you do you. In the first place, only you yourself understand your knowledge, expertise, and how good/bad you are in general with real estate so we really can't encourage/discourage you.

Personally, I prefer starting(and growing) small, low-initial-capital businesses. But then again, that's just me, and the "best" ways of earning wealth is going to differ from person to person.

So low-initial-capital businesses would be like online reselling, youtube channel/streaming, 3D printing trinkets, shit like that? Giggish stuff?

Using cryptocurrencies as a collateral to get a loan and buy real estate seems like a very risky and stupid idea to me.I don't know about websites,that accept crypto collateral for fiat loans.Do you know any?
1.Cryptocurrency prices might crash.You need a collateral that has a really stable price/value.
Getting a mortgage is a better option.
2.Everything in the real estate business is all about one thing-location.Buy a property at the wrong location and you are done with this business.Real estate isn't that easy and you will have to learn.

Yea, there actually alot of companies that offer that service. Salt is the only I can think of off the top of my head but they exist. Also, this loan would happen years in the future when crypto has basically proven itself or failed. Only in the former would I get the loan and it would be much more stable then...and Real Estate isn't easy by any means and I'll be spending money on education for that as well but it seems like the lowest risk with the highest reward as far as financial strategy is concerned.

I would not take loans using cryptocurrencies as a collateral. Especially not if I'm expecting to get a property using loaned money because I might end up getting loans for loans rather than paying my first one and owning the coins and a property.

Fiat is more unstable than it looks. If you look at how fiat moved along the years, you'd see that some of the national currencies are falling, some are standing.. but in the end, your money is only going to only keep losing value. I can't call it a safe bet to get loans when you never have the safety that someone will actually rent your place. And when, during a crisis, you won't have the place rented no more, how will you pay the money you owe?

We're quite close to a big, big crisis and that puts real estate under risk. I would actually rather count more on something new such as Bitcoin than real estate because I know that, as a matter of fact, during recessions a lot of people will lose money and have no more budget for rentals.

Now.. why should you purchase rather than borrow? Here's the trick: the chances of ending up with both are actually quite slim! Otherwise, banks would run out of business. When you think about borrowing money from criminals (banks), you should be already contemplating how you'll be able to pay it back not only today, tomorrow or 1 year from now. Are you sure there will never be an unfortunate event until the end of the loan that will make it impossible to pay it back, hence making you lose?

I hate loans. I hate banks, and I will never agree that loans are good ideas tbh. The main tip I have for you is, think about it over the longer term.. is it worth the double-risk? Giving collateral a very unstable asset to borrow money for a property you're not 100% sure you're going to actually own in the end?

"....during recessions a lot of people will lose money and have no more budget for rentals."
Then where are they going to live? RV's? Their cars? Like we have a homeless problem sure, but if people go into debt for one thing consistently, it's housing.

[orions.belt19]

I get that you're skeptical of the interest-earning platforms but since you're intending on holding your coins for the long term, why not allocate a portion of it? There is huge potential for gains especially since you're just letting it sit there. Nothing ventured, nothing gained.

Just a curious thought, will you be opting to allow crypto as payment for rental from your tenants? That would be cool though.

I like your plan because real estate is a sound investment unlike how other coiners out there dream of buying a lambo with their coins in the future. Cars are not the best choice to spend your money on because the moment you purchase it, it depreciates in value whereas real estate does the opposite. You should consider buying in a location situated where you think there is possibility of development. Location is very key in real estate investing. Right now is actually a pretty good time to buy because of the pandemic.

[mk4]

So low-initial-capital businesses would be like online reselling, youtube channel/streaming, 3D printing trinkets, shit like that? Giggish stuff?

Those stuff— the "giggish stuff" that you can attempt to slowly but surely grow into a bigger sized and more sort of "professional" business that's not-so-"giggish" anymore.

I get that you're skeptical of the interest-earning platforms but since you're intending on holding your coins for the long term, why not allocate a portion of it? There is huge potential for gains especially since you're just letting it sit there. Nothing ventured, nothing gained.

While I'm personally not for those kinds of platforms, if I were to use them, use only a small portion would definitely be the way to go. Though of course, allocating only a small portion means that the annual yield is going to be really small also, to the point that it might not be worth using them in the first place.

[aoluain]

I suppose there is no rock solid money generating plan really, legal plan that is.

Everything has a risk.

I understand the OP's quest for passive income, I think most of us are interested in that.

Personally I have Bitcoin on loan on Blockfi so that is generating interest at a rick of course.

Property is definitely a viable option depending on its location, financing it is the key,
what would be wrong with setting a target price of say $150k and buy a property outright
while still holding a bigger portion of your crypto. There would be far less pressure to have
it rented to pay a loan.

[NeuroticFish]

Alright, so I'm a BTC whole coiner and have a sizeable amount of Ethereum(not enough to stake though) as well as some XRP.

Diversification is nice if you have enough assets, but especially XRP is imho not worthy for long term hold.

on a HW and I don't plan on selling any into fiat unless I absolutely have to

Make sure you have enough safe copies of the seed and make sure you understand that "when you absolutely have to" sell the crypto prices may also be bad. This means you better think on something else too, unrelated to cypto, you can maybe hold and sell in dark times, even if its price doesn't have so big potential to rise greatly over time.

So gaining interest on coins through providing liquidity through platforms like Blockfi and the like at ~8% at the most is very tempting especially the exponential upside of those gains later on

Now you are getting greedy. I think that Bitcoin rise should be just fine, you should not risk into those. The insurance may cover the fiat value of your funds, with in Bitcoin terms is bad direction.

Next option is using my coins as collateral for a loan to start a business.

The business depends greatly on you. It's you who have to make sure the business is developing in the correct direction, it is started in the right location,... and you also have all the precautions (including overview on the interviews) to get the right employees. All this can easily lead to many sleepless nights. If you have the material for it, it can be something. I don't have the material, hence I will advise extreme caution. If you go into it, don't go "all in", keep some funds for the case if fails.

I want to use my coins as collateral for a loan to purchase a rental property...

Make sure the property is properly insured 
It's not a bad idea overall, but this will mostly bring income to the bank and not you.
And it will be fun to see how can a bank (or similar) handle crypto as collateral.

Imho if you have the guts of a businessman you can do better real estate businesses, where you can actually earn more added value; one would be to buy land around smaller cities (not necessarily in USofA!), hire a proper team and actually build homes. In many countries it can be a better business than a liquor store.


All in all, if you have all it needs to a businessman, you can do better than these ideas. If you don't, you better diversify into safer assets too than crypto (for safer dark days) and wait. With some patience your wealth could grow pretty fast even without unnecessary risks.

[20kevin20]

"....during recessions a lot of people will lose money and have no more budget for rentals."
Then where are they going to live? RV's? Their cars? Like we have a homeless problem sure, but if people go into debt for one thing consistently, it's housing.

There are solutions to that. When you are in a financial crisis and have no more money to afford rent, what do you do? Would you rather die of hunger or find a better solution? They'd probably move to the cheapest rental they can find, or with their family (parents/grandparents). Or maybe they simply go homeless. But this is the wrong thing you are thinking about. The real question is.. what do you do in that case?

What happens if you're in the middle of a recession and the people currently renting your property will not be able to pay you anymore? If you kick them out, how do you find someone else quick enough to rent your property so that you can still afford to pay for the loan?

If during a crisis people lose something consistently, it's real estate properties. During the 2008 crisis, a quite significant percent of the people I currently know lost their properties, which is quite sad. Remember that rents usually go down during a recession, so if the people currently renting your place are kicked out, chances are you'll end up earning a smaller rent.. hence probably having to take money out of your own pocket to pay for the debt. Even if they stay in your property, you will probably have to lower the rent so that you don't lose them. Rents go down, but the monthly sum you now owe to the bank doesn't. Now add the yearly taxes you have to pay for your properties and you're good to go...

Theoretically, if a lot of people are losing their homes then there are going to be a lot more people interested in renting your place. However, if a lot of people are losing their homes then you're under the exact same risk yourself.

People have already been losing homes since Covid.. and we aren't even in the actual crisis yet. Renters have been under problems as well - see this article for reference. You can barely predict what's going to happen within the next month, let alone the next decades during which you're willing to be the bank's slave. This is my personal view though - if you're very sure you can do this, then go ahead. I'd be happy to see you proving me wrong

Final edit: also, remember that you're asking this on a forum of Bitcoiners. I'm strongly against banks and I'm quite sure any other true Bitcoiner should be since.. BTC is supposed to remove third-parties. If you asked me, between the risk of holding cryptocurrencies over the long term and the risk of losing your property as a slave of the bank, I'd happily choose the former.

[DeathAngel]

I’ve got a better idea, why don’t you just HODL your crypto for another 4-5 years & you might not every have to work again. The tactic that’s worked for me over the years is HODLING, I’ve never got involved in trading so to speak.

Good luck any way.

[stompix]

Given reliable tenants and time, I can pay off the loan with the rent and now have all my coins and a rental property. From there, I would use the equity in the property to get another loan to purchase a new property....rinse and repeat. As far as I know, this is the safest and most reliable way to build one's wealth while also having passive income.

Rinse and repeat how many times?
I doubt that no matter what one deal in a million you will manage to find with that building you won't be covering your investment plus the interest in less than 15 years. Around here the cheapest rent is going for around 300-400 euros but you won't get any apartment for less than 80 000, those are some full 200 months of rent till ROI not even considering the damage that time will put on that house.

Of course, in your specific case the situation might be different but if it were that advantageous to rent stuff everyone would have already bought all the cheap homes, is not that you're the only one with this plan.

Now for all the bitcoin maximalist that say I wouldn't need to get a collateral loan and could just buy the property outright with btc or eth....well even if that is an option, why would I do that when I could have both? Whether it be a loan or outright selling, the risk is the same and only one strategy guarantees I'll have less crypto(selling).

Let's analyze the two scenarios, from the worst point of view.
You have 10 BTC, you sell them you get $500000, you buy your house.
You plan on getting a loan, you must come with at least 15 BTC if not 20 as collateral for the same amount, a flash crash happens, your collateral is liquidated to pay the debt.
I don't think the risk is quite the same, in one scenario you risk future gains in one you risk actual losses.

[Hydrogen]

As far as I know, this is the safest and most reliable way to build one's wealth while also having passive income.

Sounds like a good plan to me.   The most important thing is playing to your interests and strengths.

If you want negative commentary:

Real estate was considered a solid investment pre 2008 subprime mortgage crisis. Back when most could not remember a time when real estate had depreciated in value & thought it was impossible for such a thing to occur. Rent and real estate prices are declining in US regions like california and new york which are hemorrhaging residents due to high taxes, high regulation and similar factors. While real estate and rent could be increasing in states like florida and texas which may be experiencing an influx of new residents drawn by low regulation and low taxation.

The big question with real estate is whether we'll soon experience a fiat devaluation / hyperinflation event. If so when. And how long such an event might last. It could be worthwhile to keyword search "best performing assets during a recession". If indeed this pandemic could send us spiraling into a recession/depression.

In terms of generating passive income. There are many podcasts and youtube channels devoted to side hustles and passive revenue. There are small business owners who don't mind disclosing vital information on their ATM side hustle, in terms of how much revenue it generates, what the main difficulties are, and so on. Whatever your interests or mind there are related methods of generating passive income.

I have seen 3 foot tall fruit trees selling for $100 across the internet. Avocados, mangos, lychee, rambutan, etc. Like bitcoin, fruit trees and plants tend to appreciate in value over time. They might be considered a passive form of income requiring mostly sunshine and rain. Both of which fall naturally from the sky. There are avocado pits I threw into a compost heap last year that sprouted and are growing into 2 foot trees this year. I could never get $100 for something that grows that easily and plentiful here. But I would guess there are people growing avocado pits they got for free in $5 of soil. They turn around and sell for $50 to $100. That seems like a decent return on investment if I might say so.

There are many opportunities everywhere. I literally just saw one browsing amazon of all places.

Good luck! Hope you succeed!  

[palle11]

I’ve got a better idea, why don’t you just HODL your crypto for another 4-5 years & you might not every have to work again. The tactic that’s worked for me over the years is HODLING, I’ve never got involved in trading so to speak.

Good luck any way.

But which ever we think is better, there are other songs from them. Coins that are not trading, just there in hodlers wallet, they are still going to drop if bitcoin is dropping. I think trading and taking coins to wallet are not same but fall in same manner.