Brelion is an online platform that connects investors with real estate companies looking for loans. The company primarily lists non-owner occupied residential projects lasting 12 to 24 months, as well as small to mid-size apartment and commercial property ventures.
“Brelions goal is to bring together investors and developers of all sizes—through debt, mezzanine, and equity financing—and facilitate opportunities that would otherwise solely be available to corporate investors and big-name developers.”
The website currently lists 32 properties, four are accepting investments, although Brelion only serves accredited investors. According to the SEC, “accredited investors” (i) earn at least $200,000 per year, or $300,000 per year with their spouse; or (ii) have a net worth of at least $1 million, excluding principal residence.”
Brelion projects typically fall into two investing categories, debt financing or equity financing. For debt projects, investors receive interest payments from real estate companies each month after a project is funded. The principle paid when a project is completed and the company exits. For equity projects, investors receive a percentage of the profits that the project ultimately yields.
“Brelion does due diligence on individual projects and on each company. However, due diligence is as much an art as a science, and we cannot be 100% certain that our due diligence process has uncovered all relevant information. We recommend doing your own due diligence to supplement what Brelion does.”
The Ohio-based company recently started a pilot project, “driven purely by our love for innovations.” The website now hosts a Bitcoin digital currency real estate investment option, a four bedroom suburban residence.
The 12 month project will involve renovating the property, and then refinancing to return equity to investors. The property was purchased for approximately 30.83 XBT, renovations are expected to cost an estimated 65.49 XBT. The project manager expects the property to appraise for approximately 120.21 XBT on completion.
“If your investment is made in bitcoins, interest will be paid only in bitcoins. For example, a 100 bitcoin investment earning 15% interest should have expectations of return of 100 BTC + 15 BTC.”
The company’s website follows the crowdfunding format popularized by Kickstarter and Indiegogo, but offers investments on property projects. The site claims to be highly secure, with “several layers of advanced software security and data encryption protocols, including SSL 256 bit certificate, hosted in Microsoft Azure Cloud.” The website also claims to offer some of the IT industry’s “most cutting-edge security features.”
The business model was made legal last year, when the SEC announced new rules allowing equity crowdfunding. One of the first operational equity crowdfunding platforms in the USA was EquityNet, and other early platforms include CrowdCube and Seedrs in the UK. Kleyner points out that his business also falls under the Exchange Act Rule 3a4–1, which other fundraising platforms use to legally skip registering as a broker.
BraveNewCoin spoke with Vadim Kleyner, Brelion Founder and CEO, about the pilot project. According to the Brelion site, Kleyner has more than 20 years of IT experience and a decade of real estate experience. Tthe new Bitcoin pilot is a “proof of concept,” the CEO explained. “We are setting up systems and processes, policies and procedures of accepting Cryptocurrency globally […] As well as evaluating the interest.”
“Opening Brelion to investments in the form of Bitcoin further supports his mission to make investing more accessible through the use of technology.”
– Brelion Pilot Announcement
The minimum investment is 5 bitcoin, which Kleyner says he protects in a multi-step, secure process that requires an AML/KYC check. “Until project is fully funded BitCoins are being held in the wallet with multisig security,” he explained.
However, the company lists no insurance plan in case they are hacked or otherwise disappear. “There is no insurance or option play to protect Brelion as essentially it is Brelion who will be losing out if price of bitcoin goes up,” explained Kleyner. “Brelion will insure investors against BitCoin fluctuation, but not against sponsors performance.”
If and when the project is fully funded, Brelion will convert the bitcoins to fiat, and pass them on the the project manager. The 13% annualized return will be paid in fiat, minus the platforms 1% fee. Brelion will then exchange it for bitcoins and distribute it to investors.
“Brelion cannot guarantee that investors will receive an anticipated return, or even that they will get their money back.”
Although Brelion may have been the first to offer investments in their niche through bitcoin, real estate has been available through sites like BitPremier for some time. The company is headed by Alan Silbert, brother of Digital Currency Group Founder CEO, Barry Silbert.
Other bitcoin investment platforms with track records, such as BTCJam and BitBond, offer various types of loans. They also provide an auto-invest feature to make diversification easier.