On-chain DAO real estate company purchasing farm as income property
Cougars bought a farm! Well, one of our members is buying a farm (it's under contract). Now we’re working out the details for assigning the farm to CougarDAO LLC.
It was time to get into agriculture. Growing up on an orchard of walnut trees that I never harvested and barely knew how to water, buying a farm was the obvious next step for a legal technologist and web 2.0 professional.
When people think about farmers, they definitely think of a guy in his 3rd floor office suite sitting behind multiple monitors in a reclined chair. As a soon-to-be farm-owner, I too, understand what it is like to work with my hands… I always have to clean the dirt from between the keys of my keyboard. Now, I just need a country song written about the difficult life and times of an office farmer.
What happened?
Seven of us in CougarDAO LLC are in the process of buying farmland in Phillips County, Colorado. Never heard of it? Me neither. Never been there? Me neither. Nor have any of the soon-to-be co-owners. Lucky for us, we have James McCall as an experienced farm operator/investor and can draw from the many real estate and legal talents of the group at large.
Last week, James got tired of the common “talk, talk, talk,” that takes place in a DAO, without necessarily pushing the proof-of-concept forward. So, while we’re doing our weekly Real World Asset Consortium call, he decided to put a bid on a farm that was up for auction. Before the call was over, he had won the bid.
As you may recall from our last edition, we had raised earnest money from a variety of CougarDAO LLC members. This at least gave us an indication of who was willing to come along on the journey. They are not yet committed and still have the opportunity to rage quit our Kali DAO. We will be member managing the farm via voting power through the Kali interface using $COUG tokens.
What’s next?
A variety of tasks have to happen in the next 24 days or so. James had 30 days to close on the property under contract. The contract is assignable and it will likely be assigned to CougarDAO LLC.
We got the property for $172,500. Why did we get such a low cost piece of property? Because we’re paying cash for the property with our own funds. No venture money. No other peoples’ money. No massive investor backing. No giant DAO support. No Maker or Aave behind us. We’re taking the risk ourselves to prove the following:
We can move cryptocurrency to fiat money.
Buy income generating property.
Take that fiat (property income) and transfer it back on-chain to distribute income to the members of the LLC.
Manage the real asset through on-chain governance.
It’s not sexy. It’s not even that we have massive scale in mind. We have to prove we can make this transaction work, to bridge the Blockchain world with real world assets.
A variety of decisions now need to be made. First we will put an on-chain signal vote to acquire the property as described and linked with Tater #20 (switch your digital wallet to Arbitrum to view). As far as earnest money in our treasury. We likely won’t require current LLC members to add their full investment into the treasury. We’ll probably send closing funds to our Mercury bank account and then on to the escrow. Beyond the earnest money, it may make sense for members to do direct wire transfers to the bank account/escrow, for the difference between the earnest money and the purchase price.
Is this perfect? No. Personally, I wanted to see us place all of our cash into our treasury and then go direct from treasury to bank account. It would make accounting easier. Plus, for every $USDC deposited into CougarDAO LLC, the depositor would be provided $COUG tokens representing their ownership of the LLC. Given real world timelines and transaction costs (one of the things we want to eliminate), it probably makes more sense to deposit in the bank account. As real world use cases develop, so to will ease of ramps between blockchains and the banking system.
Now, we’ll have to do some more reconciling between treasury, bank account, and appropriate amounts of $COUG tokens to represent ownership interest in the LLC that owns the property. This is similar to any LLC where the “Exhibit A” of the members is often shuttle diplomacy between the members, tax professionals and lawyers.
It’s messier than we’d like. Alas, there are more steps right now so that we can do fewer steps in the next iteration, with the next property, or adding layers of complexity (i.e. financing, tax depreciation, borrowing, lending, short-term rentals, multi-family residential, estate plans, commercial properties, storage, LLC ownership transfer via NFT, etc.).
As we continue down this path we expect fewer steps and more streamlined processes to bring real estate on-chain.
How do I get involved?
Now you want to help? You non-farmers always want to come in when the work is almost done.
You can meet us in the #go-cougars channel of the TaterDAO discord. TaterDAO LLC and CougarDAO LLC are sister projects.
We aren’t really looking for more members, but if you have expertise then hit us up. We might accept more US-based LLC members interested in member managing this property on-chain. We’re not desperate to have more people at this time. We want to make it work and a DAO with too many people is usually ineffective and well, not very “organized.”
Also, we only have a couple of weeks to close, so we really need to know who is in. So if you want to help, you can share this post with others, subscribe for updates, and enjoy the show while we waste our money for your entertainment.