Technology evangelists have always proposed blockchain as the primary record-keeping management solution for the real estate industry. Many startups – and even governments – have announced to create public registry systems on the top of private ledgers.
Prime-Ex Perpetual, at the same time, is a Panama-based startup that has taken the applicability of blockchain in real estate to an entirely new level. While it does have plans to utilize blockchain for record-keeping purposes, Prime-Ex Perpetual also uses it to simplify the homebuying process, from start to finish.
To have an insight into the Prime-Ex Perpetual‘s seemingly innovative business model, we reached out to John Gilbert, the CEO/Co-Founder. Here are some excerpts from our conversation:
Gautham N: How would you explain the core business model of Prime-Ex Perpetual to a layman?
John Gilbert: If you’ll bear with me a minute I’ll answer this question in the best way that I know how. I realize there’s a lot of moving parts to our business model. What’s second nature to me given my career history does not always translate well to the consumer! So I’m always reminding myself of that.
I learned this early in my career when trying to explain to my father-in-law why people would choose to use a mortgage broker rather than the local bank. He loved me and we always got along great, but he was a farmer who had done business with the same banker for 20 years and just didn’t see the need for mortgage brokers who largely provided the same service that his banker already did from his point of view. So I had to figure out early on how to tell my story to guys like him because he was right. I hadn’t given him the reasons why mortgage brokers were a better choice than the local bank, I had just told him what I did and that I was better, but I hadn’t explained the reasons why.
How do I tell our story to the guy that just retired off of the Toyota assembly line? I believe that recognizing the need to communicate in ways that everyone can understand is one of the reasons why the story that we tell has gained such broad appeal in such a short amount of time.
Here’s what I tell people: We have re-vamped the second-oldest business known to man to better fit today’s human mobility. Instead of a land developer, a home builder, a real estate agency, a mortgage broker, a mortgage servicer, and a maintenance company each trying to get rich of selling their one thing to the home buyer, we’ve combined all of these layers into one efficient package and we’ve done it in a way that limits risks to the borrower like never before.
For our token holders, we’ve created a token that will experience more and more demand over time as more and more people need to use them to pay their mortgage payments, and they’ll need to purchase them from the existing token holders. Token holders will enjoy not only increasing demand against a fixed supply of tokens, they’ll also enjoy their fair distribution of 80% of the company’s profits for as long as they own the token. Everybody wins!
Denizens usually do not understand blockchain technology. How do you propose to market your model in an established real estate sector?
We are the decentralized, token-powered real estate spaceship landing in the middle of the real estate stone age. No matter where we land, our home packages combined with our Revolution Loan has no rival.
You have to consider all the things that we offer… a great home at a great price point inside of a great loan program that protects the borrower like never before.
When the package that we offer is stacked up against all the other offerings, a Prime-Ex Perpetual home package must be part of every home buyers consideration because nobody else competes with our guaranteed buyback program. Nobody else competes with our streamlined loan process. Nobody else competes with our service after the sale.
There are people waiting in line right now to pay us their 10% down to secure their home purchase, and for very good reason: there’s scarcity involved with our product. There’s a limited supply against great demand, and that’s always a great place to start any conversation about whether or not a given project is viable.
Your use of blockchain is limited to powering tokenized assets. Do you plan to create a blockchain-powered public registry for real estate, anytime in the future?
We foresee multiple uses for blockchain integration in our business model. Much of that will have to be created by us in the form of data retention. For example, we plan on eventually harvesting blockchain technology to keep real-time data on our houses down to the sizes of the plumbing fixtures on the walls and what brand name and color code the interior paint is.
This type of data will be of great use to the community as a whole, as sales data will be available to banks and appraisers, in some cases for the very first time. This will serve to bring up the overall real estate value for everyone.
We always have our eye on increasing efficiency because of the concept of a penny saved is a penny earned. Blockchain will play a vital role in the future of increasing our efficiency but that’s going to be more along the lines of the Phase 2 part of our concept. Phase 1 is proof of concept, and Phase 2 will be developing increased efficiencies while we increase our geographic footprint.
Government integration of blockchain technology could happen as fast as Phase 2 or could play a vital role in Phase 3. Largely it would depend on how receptive a given government is to lead from the front, but we would stand ready to help them understand how blockchain technology is beneficial for all if they prove to be receptive.
Most important: What are the legal complications of running a tokenized real estate business in Panama?
We’ve put a lot of time, effort and money into this very issue. One of the first things that we did was structure our company in such a way as to mitigate both legal exposures as well as the bureaucratic risk that we would face by entering into the cryptocurrency environment. For this reason, we’ve chosen to disallow participation in the ICO from Panamanian citizens. This line of thinking is just smart business planning.
It’s the main reason that we’ve chosen to disallow citizens in the United States from participating as well. While we would have loved participation from U.S. citizens, the risk that we would face from the U.S. Securities and Exchange Commission could not be mitigated, so we simply had to exclude them from participation.
The Republic of Panama is actually a great place to do exactly what we intend to do regarding our tokenized real estate business by allowing for-profit businesses to be owned inside of a Foundation structure, which is exactly how we’ve set up the Prime-Ex Perpetual project. There are many reasons for this. Know that we’ve meticulously thought through them all.
We are fully compliant with all of the laws of the Republic of Panama. We could have incorporated anywhere in the world and still performed the exact same real estate business that we intend to do in Panama. Structuring in Panama made the most sense for us and made the most sense for our Token Holders.
What are your plans for the future?
While most of the specifics remain proprietary, in general, we will most likely expand first into expat havens in Central and South America, and then increase our reach into North America and Europe. There are a couple of scenarios that could factor into play that would accelerate our reach into North America and/or Europe before other Central American or South American countries, but by and large it seems like a Central American play in neighboring Costa Rica or a South American play in neighboring Colombia would be a logical second step.
Regardless of the geographical footprint, we will take advantage of opportunities that present themselves to increase our boundaries and territories while increasing our capacity to build, sell, mortgage, and service our own fleet of residential homes. This will be accomplished by partnering with large-scale builders that see the benefit of replacing their interest rate risk with the Prime-Ex Perpetual model of equity participation in a residential package that knows no rival. Our growth potential is worldwide, limited only by a given locale’s ability to properly title property and a given country’s capacity to meet or exceed basic supply chain minimums.