Raising Earnest Money: CougarDAO turns toward farms as income property
We're now a cougar looking for property prey.
We did it. The decentralized, distributed, real property group, CougarDAO LLC, building on-chain ownership and management of real estate, got together in-person! It happened on October 8th, 2022, in Nashville, TN. Well, at least 3 of the team members got together. Sardor Umarov, Ben Baker, and Nick Rishwain.
After more than a year of working on a project through the LexDAO Real World Assets Consortium, these guys and several others recently raised earnest money in a very rapid timeframe, to go out and buy a piece of property. Thereafter, they got together and shared a classic Uzbeki meal in Nashville, TN, with some additional legal technology friends.
Earnest Money Raised:
Over the last year we’ve discussed a variety of properties, property types, sales prices, location, etc. All the while we knew that the biggest benefit of crypto, Blockchain, and Web3 tools, was the ability to rapidly raise capital. At first, we tried to find property we could all agree upon. Turned out we were getting a soft-consensus for just about any type of income property.
In the end, we were all in agreement that the goal of taking crypto money, converting to fiat money, and using that fiat money to purchase income generating property has to happen. The type of property is less important. It just has to have income. The income is necessary for the second aspect of our efforts: moving that real estate income back on-chain and distributing it to members of the LLC and using on-chain governance over the farm asset.
At a meeting before our in-person meeting, we asked the members of the LLC to signal 10% earnest money by putting the value into a smart contract. Showing their commitment to invest a larger amount once the correct property is located. In about 2 hours, we raised approximately $8,000 in $USDC for our treasury. Our current treasury filled with only earnest money, approximately $12,000.
I know what you’re thinking. “If that represents 10% of the committed investment, you’re not going to find much in the way of income generating property for a value of $120,000?”
You’d be right if you were thinking this. We agree, which is why we’re not done seeking earnest money. If you’re interested in this story please join us in the TaterDAO Discord or DM us on CougarDAO LLC Twitter.
We are not accepting anyone and everyone as CougarDAO, LLC is a member-managed LLC. We’re only accepting members from the US and who want to actively manage the LLC and the property.
So if actually putting on irrigation boots, or learning how to put a farm into USDA CRP sounds fun, please help us out. Can we buy a farm and harvest rents, carbon credits, or CRP payments?
The point of the matter is how quickly a significant chunk of earnest money was signaled. No wires. Nobody had to send a check. Nobody had to visit the bank to deposit the funds. The two hours taken to raise 10% of $80,000 is impressive for any capital formation effort. Stay tuned as we continue to coordinate to bite the farm.
What Property Can you Buy?
Admittedly, we are unlikely to raise $1,000,000 worth of $USDC. A seven figure purchase, has not necessarily been our goal for the proof of concept stage. We do not want to overcommit funds while we’re trying to prove this is possible. This is the early stage. We’ll happily do bigger investments in future iterations. Here the idea is to work on governance over the asset, managing the ability for members to “unsignal” their support of on-chain proposal, etc.
Financial and risk-related constraints have us looking at farmland. We’re going to become farmers. We’re going to “buy the farm.” Well, hopefully not the secondary meaning of “bought the farm.” We’re actually looking at agricultural land that hopefully already has a tenant in place. Returns on agricultural land are not massive. They have cap rates of maybe 1.5-4% according to Cougar Daddy, James McCall, who is actively in agricultural finance and owns his own farms.
The property types we’ve looked at are based on CougarDAO LLC members experience and knowledge bases. I.e. short-term rentals such as Airbnb properties, apartments, hotels, self-storage, and farms.
Agricultural real estate is within our current financial and risk constraints and without depreciating assets.
Where will you buy the farm (or ranch)?
As I’ve elaborated a little on our financial and risk constraints, some of that risk is mitigated by purchasing property where one or more of our LLC members is located. Just in case there is a reason for someone to visit the property (damage, signing papers, meeting realtor, meeting tenant, etc.).
One of the reasons for the in-person meetup: Ben Baker and Sardor Umarov are located in Memphis. We’ve been looking at properties located in Memphis.
There are also many farms available in Colorado, where Thomas Morgan is located and is a real estate broker.
Finally, there are many farms located in Idaho where James McCall is located. Which leads us to our 2nd in-person CougarDAO LLC meetup. Next month, Nick Rishwain will get on a plane and head out to Boise, meeting another member of CougarDAO LLC and looking at some farms to buy.
None of our efforts could happen without the help of our friends at Kali: On Twitter @kali__gg. Visit their website where we’re managing our member managed LLC: app.kali.gg.
From an island to the Sagebrush sea
Did you have a website that presented your vision, need for seed investment, etc and was also able to accept crypto payments/donations/investments online?