How to Scale Commercial Real Estate Podcast with Sam Wilson On the New York City Podcast Network

The Future Of Transactions With Tokenization

Is tokenization the future of real estate investing Vernon J the founder and CEO of EquityCoin discusses the potential of blockchain technology in the real estate industry He emphasizes the importance of community explaining that a token is similar to stock and that before launching a token it is important to have credibility and a track record of success He goes on to say that this is the next frontier in blockchain technology and regular companies will be able to tokenize their assets and share the profits with their shareholders He also mentions that tokenization provides the infrastructure for quick transactions just like with stocks on the stock market 00 01 – 04 42 Behind EquityCoin Combating two issues in the commercial real estate market Lack of funding available to underserved communities High cost of traditional financing Removing the bureaucracy and the middlemen 04 43 – 14 06 Blockchain Technology and Tokenization of Assets Blockchain begins and ends with community Creating empowerment ecosystems Building trust and having a good track record Security tokens are actually backed by a company and by assets and are bound by SEC rules and regulations Soon every company is going to have a tokenized component of their business Build things in a place of credibility and not hype 14 07 – 17 04 The Tokenization Movement Vernon on what they are working on right now Being a missing link between the developer and the community Empowering and helping developers and leaders to tokenize through EquityShare 17 05 – 18 51 Closing Segment Think about blockchain technology as the internet of accounting Reach out to Vernon Links Below Final Words Tweetable Quotes I think blockchain technology is providing a solution where you re kind of removing the middleman You can remove lawyers you can remove different people in that ecosystem or in that cycle that is kind of like superfluous – Vernon J I would say before all of that it s a track record It s making sure that you have credibility in the game and skin in the game – Vernon J When you think about blockchain technology it s the basis of cryptocurrency It s the basis of security token It s the basis of NFTs It is the underlying technology behind it – Vernon J —————————————————————————– Connect with Vernon Follow him and EquityCoin on Instagram Visit the EquityCoin website to know more about blockchain and real estate Connect with me I love helping others place money outside of traditional investments that both diversify a strategy and provide solid predictable returns Facebook LinkedIn Like subscribe and leave us a review on Apple Podcasts Spotify Google Podcasts or whatever platform you listen on Thank you for tuning in Email me sam brickeninvestmentgroup com Want to read the full show notes of the episode Check it out below Vernon J 00 00 I want to be able to delineate between a cryptocurrency and a security token because when people hear blockchain they go right to Bitcoin Oh you re talking about that Bitcoin thing right But that s the wrong way to think about it You know when you think about blockchain technology it s the basis of cryptocurrency It s the basis of security token is the basis of NFTs It is the underlying technology behind it Intro 00 25 Welcome to the How to Scale Commercial Real Estate Show Whether you are an active or passive investor we ll teach you how to scale your real estate investing business into something big Sam Wilson 00 37 Vernon J is the founder and CEO of EquityCoin the first digital token backed by affordable housing Since 2006 Vernon has facilitated over 160 million in commercial real estate transactions And I actually think that number is probably closer to 200 At this point Vernon welcome to the show Vernon J 00 54 Sam thank you so much for having me I m excited I m thrilled to be here to talk about you know not only EquityCoin but also giving general pointers in general gems about how to scale commercial real estate which is near and dear to my heart so Sam Wilson 01 08 I love it Man I love it 90 seconds or less Where do you start Where are you now how d you get there Vernon J 01 12 Started in Brooklyn went to Massachusetts for high school and college Then I came to LA now I m in LA area had my grassroots had my teeth in New York you know like they say you know you start in New York you can go anywhere And I truly believe that And now I m on the West Coast you know doing the same thing just trying to create more opportunities Sam Wilson 01 32 You ve spent a lot of time in commercial real estate scaling commercial real estate but you ve kind of taken a left turn or shall we say a spin on what you saw in the market What need did you see in the marketplace And then how are you solving it Vernon J 01 46 So you know Sam I ve been blessed man And I ve been blessed to work with family offices throughout my career you know wealthy individuals you know developers and what I ve noticed I ve actually noticed two things Throughout my journey And throughout my career I ve noticed that there s a handful of families and people and individuals and companies that own the lion s share the most of the real estate in these large cities Second thing that I ve noticed is that when I get financing for my clients they re doing workforce housing maybe it s 200 units or you know they re doing a new development it s actually exponentially easier to get funding for those types of projects than it is to go to a community that may be in blight or maybe underserved that really needs the funding It s exponentially harder to get financing for projects in those neighborhoods and in those communities So I created EquityCoin as a way to combat both of those scenarios So that one I can create use the blockchain as a mechanism to allow thousands of people within the communities that we own properties to own the assets but not only that be able to you know combat or kind of replace the bank in the sense where they re not really providing funding in those communities So I m saying you know what I can come in I can create this infrastructure where the community can come together and replace the bank and actually be another component of the capital stack if we can t completely replace the bank So that s EquityCoin In a nutshell we started in the East New York section of Brooklyn with portfolio of assets over there And we re expanding to North Miami and South Los Angeles Sam Wilson 03 25 So if you had your way it sounds like you d like to just replace the bank entirely And you guys would just come in as a pure equity partner in these deals Vernon J 03 33 That s right That s the big idea You know where we are right now I think there will be a need for a mixture within the capital stack to have some financing But I think you know for all intents and purposes the grand vision is to be able to replace you know those centralized organizations that they re convoluted with so much bureaucracy you when you get your funding you ve ended up paying so much more than I think you need to pay And I think blockchain technology is providing a solution where you re kind of removing the middleman you can remove lawyers you can remove different people in that ecosystem or in that cycle that is kind of like superfluous Sam Wilson 04 12 Yeah I love the idea of blockchain I love the potentials it has for a lot of industries especially the real estate industry It s which is just I don t think I m telling you anything new so disjointed in the way that deals get packaged up and done I mean title searches alone will just tell you that there s a lot of room for improvement Are we actually reading a scanned document that was handwritten in 1895 We are reading okay great Just want to make sure it s illegible I mean that s the type of stuff we re dealing with And this will help solve that But talk to me more practically about the nuances of launching a coin of getting investors to trust that coin then having that money then get deployed into the right projects That s a lot of moving steps Can you break that down for us Vernon J 04 57 Yeah for sure It is in everything on the back blockchain begins and ends with community right So if it weren t for the fact that I ve been building a community of stakeholders within the East New York section of Brooklyn and you know 2014 I purchased eastnewyork com with my family And that is the go-to place for everything dealing with East New York the community it doesn t matter if you re running for office local office if you re building a new development you re opening up a new store opening up a new business whatever it is all roads lead through eastnewyork com And we have over 30 000 members who are stakeholders within the community So we ve spent years developing and harnessing the trust within the community so that they trust who we are they trust know what we re about And the idea behind it is to create empowerment ecosystems right so where we not only own the media aspect of it but then we also own the real estate And we also are connected politically we re also connected you know with all the stakeholders within the communities I would say that s where it starts because none of where we are today would have been possible without first building out the community And then it s also credibility right I ve got 16 years of experience in the real estate market as a CEO of EquityCoin So I think when we think about blockchain we think about this technology it s not a way where you just come in and you re all of a sudden you can create this billion-dollar company or multi-million dollar industry I think what is required is a credibility and kind of like the steps to take with any business you know that you have So I use blockchain as a way to create more efficiencies in what we do Right And I think that s how we need to think about it Because most of these companies that are coming today are doing really well with blockchain technology they already have a track record of success I would say before all of that it s a track record it s making sure that you have credibility in the game and skin in the game Sam Wilson 06 56 Yeah that makes a heck of a lot of sense It is an add-on to your business It is not the creation of a new business is what I m hearing Vernon J 07 03 That s right And when you re creating a token it s similar to creating stock right It s very similar in that I want to for the audience say I want to be able to delineate between a cryptocurrency and a security token because when people hear blockchain they go right to Bitcoin Oh you re talking about that Bitcoin thing right But that s the wrong way to think about it You know when you think about blockchain technology it s the basis of cryptocurrency it s the basis of security token It s the basis of NFTs It is the underlying technology behind it So a cryptocurrency similar to 1 right Or the yen or the euro is not an investment where you believe don t get a promise of a return from a currency And that s an important factor when you re dealing with the SEC But when you have a security token like EquityCoin security token is actually backed by a company it s actually backed by assets And that s different components of blockchain technology And that s where we feel is the next horizon regular companies are going to be able to tokenize their assets tokenize their company and allow other people to come in and share the fruits of that labor One more thing Sam is like 20 years ago when the internet was starting to bubble up right 20-25 years ago if you had a website as a company you are hot stuff even simply having a website kind of gave you a competitive advantage you know with your peers But now today you can go to GoDaddy Squarespace you can create your website within five minutes and a pretty comprehensive site you know And back then in order to develop a site you needed an HTML guy you needed a PHP guy it was costly But again today it has become commoditized So I think we re in that same space with tokenization Tokenization today EquityCoin is a tokenized company It s a hot-button topic And I think it s cool But in 20 years it s going to be commoditized you re going to be able every company is going to be using Blockchain or having a tokenized component of their business it s no longer going to be a novelty but more of like a necessity and more like what you need to do in the business So I think right now if you re tokenizing your company it better have a utility it better have some sort of advantage You know you re not just tokenizing for the sake of tokenization That s an important piece to interject it Sam Wilson 09 26 Appreciate you taking the time to really give some clarity around the difference between crypto security tokens NFT s all of that So you took the step you created EquityCoin right You did that and then I know you said you kind of piggyback that on eastnewyork com So you said hey you started go out to your network What do people do Do they just trade their dollars for EquityCoin How does that work That s right Vernon J 09 49 So you re trading your fiat currency or it could be a cryptocurrency that you might have Etherium for example You can trade that into EquityCoin and now as EquityCoin holder you re entitled to quarterly dividends that are paid out from the income from the real estate But the beauty of tokenization of a company or a real estate or an asset is that it gives you the ability to liquidate quickly In a normal real estate transaction if I have 1000 investors in this investment normally you can t get out of your position until we sell the entire asset Or if you find somebody who might want to purchase your shares then we got to have to get a lawyer involved Sam Wilson 10 27 200 pages later we ve traded money Vernon J 10 29 Later now we finally transferred but with blockchain and with tokenization it provides the infrastructure for you to be able to transact as if you were on the NASDAQ or the Russell but you can be a company that maybe only has 10 million in assets or 20 million in assets But now you can trade as if you were you know publicly-traded or similar to a REIT Sam Wilson 10 50 What are the securities considerations around this I mean this seems like it s an ever-evolving landscape where it s like oh one day you can do this And oh the next day yo is 10 million bucks Because you made a mistake buddy I mean you see this stuff in the news all the time How are you navigating that landscape Vernon J 11 06 Right So here s the things Sam when you have increased freedom you have increased responsibility right And when you re talking about cryptocurrency if you own your crypto and again there s a difference between cryptocurrency and security tokens right But if you own your cryptocurrency and you have it on an exchange or you have it on your hard wallet which I like to use ledger for the audience if they re interested but you own that and you are in full control of that So if somebody steals your keys your wallet keys or somehow hacks you there s no you know authority you can go to because that is kind of like the essence of the cryptocurrency world that you don t have ownership right But on the flip side you ve got security tokens And since security tokens are bound by SEC rules and regulations I ll give you an example one of my token holders lost their keys to their wallet So we had to replenish we had to burn their previous tokens and then replenish their new tokens This is something that s required with the SEC This is again Sam why I believe that the tokenization of companies and security tokens as a whole is on the horizon is on the cusp of something big because I think people are looking for that balance They want some security but then they also want some freedom and they want it in the middle at this moment And I think security tokens brings those dynamics to the table Sam Wilson 12 31 Yeah and I think that is an interesting difference between a cryptocurrency and a security token and that you as the sponsor can issue those security tokens What have you found on the implementation side of it Like I know it s touted as Hey these are things that make it easy we can have 10 000 investors each put in 1 And it s no more work than if I had one investor for 10 000 It s all the same So I ve been told I don t know because I don t do this Is that true Vernon J 12 58 Again Sam it all comes back to community right Have you created that trust within your community or are you just creating this token out of thin air with no credibility and saying hey I want to do this big idea And now people are investing in that idea But then they don t have the complete trust So if they don t have the trust in you or in the project it becomes a lot more cloud And I ve seen projects kind of falter because they ve kind of built things from a place of hype When you build something from a place of hype it s easy to crumble it s easy to come down Everybody listening to this you know if you re thinking about tokenization if you re thinking about you know using blockchain technology you know tap into your credibility of what makes you great and what makes you unique because that combined with blockchain technology is super powerful Sam Wilson 13 47 Right And I think one of the takeaways from this is to demystify some of it is that it isn t the recreation of a new business it s a different way of doing business Same thing we were doing before it s a different way of doing it That brings just some new communication some new potential ease of implementation to the operator to the investors but it s not it s still the same actual business Last question for you I think I might have more is on the how you guys are selecting projects I know you re one of your big pushes the affordable housing side I m assuming you guys put the money together and then go out and find quality operators to work with or are you guys as well doing the projects yourself Vernon J 14 27 So for EquityCoin we are doing the projects ourselves We actually have a call this afternoon with a developer in Brooklyn who s doing a 250 million development and they re looking to equity coin to be a part of their capital stack so that we can bring the community in so they can own a piece of the asset They own a piece of this new development because they re getting a lot of pushback from the community because the community said hey you guys are coming into our neck of the woods from outside and you re not even giving an opportunity for people within the community to own a piece of this right So now you know EquityCoin can come in and be that missing link from you know that bridge between the community and the developer That s one component The other Another big thing that we re working on right now is a system called EquityShare And what we envision an equity share to be is sort of like the coin base for real estate tokens And we want to empower other community developers and leaders you know like myself all over the country who are looking to tokenize and create a token for their movement So we can actually help them with the infrastructure of legal compliance you know the smart contract you know all the SEC FINRA making sure that they are breeding a holistic approach to tokenization And now on equity share you know we ll have 100 different tokens that are backed by other assets It can be a student housing token it could be a retail token it could be Amazon warehouse token Airbnb token you know the options are endless But I think what s important is having the right infrastructure And again like I said before when the internet started it was hard to create a website it was costly Now you do it in five minutes And right now if you want to create a token it s pretty costly If you want to create a comprehensive token that has rate network bring working in the smart contract but in five to 10 years you re going to be able to do that in a snap of a finger And for EquityShare Our goal is to get there pretty quickly So we can yeah Sam Wilson 14 41 If you were taking a stab at what the cost is right now to develop a quality token what do you think that is Vernon J 16 32 I would say a minimum of 100 000 minimum of 100 000 Because if you look at our balance sheet most of our capital goes towards compliance right So making sure that the token is created in a way that is congruent and consistent with SEC rules and regulations You know that s one piece of it But then also you ve got to make sure that you have the KYC AML So know your customer anti-money laundering these are all things that need to be baked in so that you can avoid fraudsters on your system It all comes together I would say about 100 G s Sam Wilson 17 03 Right Got it Man Vernon I love what you re doing I love your mission And I love the way you re taking it down That s absolutely awesome I mean and just the idea of you building eastnewyork com and then coming in and just augmenting that with obviously blockchain technology security tokens all that stuff And thanks for taking the time to really explain that I think you explain in a very clear way that for a lot of us myself included it s commonly like I think I get it but not quite sure So thank you Vernon J 17 32 Let me leave you with this sample When I explained blockchain technology I tried to explain it as the internet of accounting right When you start thinking about it like that it s like okay you know you ve got it s simply a ledger and it s a ledger that can t be disrupted can t be you know messed with And when you have that you create this trustless society where you now can every transaction that you make on the blockchain is recorded and recorded forever as long as you have an internet connection Yeah Sam Wilson 17 59 That makes a heck of a lot of sense Vernon if our listeners want to get in touch with you what is the best way to do that Vernon J 18 05 Best way is most likely Instagram My Instagram is vpeso and then also Instagram equitycoin follow our journey We just did a filming for PBS So we re going to be in their next segment for their Nova documentary series Really cool So look out for that in November Sam Wilson 18 22 Awesome man Vernon Thank you again for your time I do appreciate it Vernon J 18 24 Sam Thanks a lot bro Sam Wilson 18 25 Hey thanks for listening to the How to Scale Commercial Real Estate Podcast If you can do me a favor and subscribe and leave us a review on Apple Podcasts Spotify Google Podcasts whatever platform it is you use to listen if you can do that for us that would be a fantastic help to the show It helps us both attract new listeners as well as rank higher on those directories so appreciate you listening Thanks so much and hope to catch you on the next episode Click here to visit this podcast episode