This will be long, so read it only if you're genuinely curious about #RWA in web3 and why we're building @lofty_ai in this particular way. I regularly invite our users to chat with me and I always ask them in these calls whether they know what a REIT is and if they do, why do they prefer to pick and invest in their own properties vs having passive exposure through a REIT. In general, almost everyone I've spoken to knows what a REIT is and they're coming to Lofty specifically because they don't want to invest in a REIT or be a passive investor in a fund in general. Some of the responses I've gotten from people are: 1. Lack of transparency, you have to completely trust the REIT managers to pick the best properties and to operate them in a way that's advantageous to you. Turns out, lots of people aren't comfortable not knowing exactly how their money is used. 2. The high management fees a REIT charges. People who actually dive into the financial disclosures and know how REITs work, don't like the fees they're taking from the investors. This was eye opening for me, because a user who was the most adamant about this actually works for a REIT and said "he would never invest in a REIT with his own money, because he sees how they extract value from investors". On Lofty, you keep 100% of your earnings. We only make money through trading fees. 3. The ability to bet on very specific markets. There are some REITs that focus on specific asset types, but there aren't enough micro REITs that let you bet on a particular city or a particular neighborhood of a city. Single family housing is one of the few asset classes that a retail investor can outsmart institutional investors in, because of the information asymmetry. Even with the best analytics, a large firm just won't have as much information on a property or neighborhood as some guy who walks his dogs everyday in that area past the same houses. So, based on what our users tell us (most of them already own their own rental properties outside of Lofty), their own portfolio often out performs REITs year over year. The single-family rental market is responsible for roughly $1.05 Trillion in annual transaction volume here in the US alone. It turns out that the majority of that volume, roughly 70%, is from retail mom and pop investors. Think an older couple who owns a house next to a collage campus and rent it to students etc. Only 30% of the volume are from institutional investors, including REITs. So, it's not true that the average person would prefer to invest in a REIT, it's actually the opposite. We are not building Lofty for everyone. There are genuinely people that would prefer passively investing a REIT and that's totally fine. We're building Lofty to serve the 70% of the market that prefers to buy and manage their own rental properties. We do that by taking every part of the real estate investing process and making them 10x better. Building on the #Blockchain allows us to deliver that promise and create features that don't exist in traditional real estate markets. For example, Lofty is the only place in the world where you can buy direct legal ownership in a house instantly with the same user experience as buying a share of $AAPL on Robinhood , thanks to the automated market makers and liquidity pools we've built for the platform. This level of instant liquidity has never existed in the traditional real estate period and it never will. Owners can also stake their property ownership and earn rental income from the property as well as yield from staking. This type of financial outcome also doesn't exist in the traditional real estate market. This is why a lot of our users are existing real estate investors. They're quickly realizing that over time, as long as a property they want to invest in is on Lofty, there are 0 reasons why they should invest and own it outside of our platform through the traditional way. Long term, our goal is to convert the 70% of single family rental volume transacted annually by retail investors to our platform, becoming the world's first real estate exchange.
