As an entrepreneur educated and experienced in both Electronic and Electrical Engineering, Sai Mudigonda looks at the world with an eye toward solving problems. To an engineer like Sai, questioning a problem and seeking answers often points to the obvious – so obvious that the problem may not register to the untrained eye.
“I was taking my son around to different after school activities and started observing that there were a number of real estate properties becoming available, perhaps due to bankruptcy or just going out of business,” said Sai. “I started analyzing the details and saw that it was mostly due to the global boom in e-commerce. There was so much real estate already suddenly irrelevant in the market. And I thought, ‘I think I should do something about this.’”
Sai first explored establishing contracts with small business owners to take over the existing real estate spaces large entities were vacating. But the process would drag on.
After a brainstorming session with a friend and fellow engineer and a licensed real estate agent, Sai honed in on the idea that the transaction could be more like a cooperative where multiple “owners” could invest in a real estate property.
“The idea of having a real estate company was really about wanting to see how the real estate deal closing could be expedited. Generally, it takes a long time to close and during that time, the real estate investment is illiquid [meaning not enough cash flow to meet debts]. If someone has a $5 Million property, they cannot just walk away if they need money,” he said.
That thought process led Sai to realize there weren’t many options for non-accredited investors to invest in real estate. To be an accredited investor in the U.S. market requires having a net worth of at least $1 Million, without counting your primary residence, or a minimum $200,000 annual income for each of the previous two years, among other stipulations.
But Sai knew that the passage of the Jumpstart Our Business Startups (JOBS) Act in 2012 eased securities regulations and opened the potential of online crowdfunding for real estate investment. He realized that Blockchain, today’s highly-secure distributed computing system, would enable a faster, more efficient means to facilitate such a real estate crowdfunding initiative.
That’s where his new platform, Real Bit$, comes in. The Real Bit$ prototype is similar to any other crowdfunding campaign except that the investment goes into ownership of a real estate property on offer. And it is built on Blockchain.
Said Sai, “Right now, bitcoin and cryptocurrency get all the attention when you hear about Blockchain. But bitcoin is just one currency. There are millions of dollars changing hands in the crypto market right now. When that market goes bust, there will be many people holding crypto that has little value. The idea is to promote that economic value by diverting your funds into physical, tangible assets, such as crowdfunded real estate.”
He added, “For the Millennial market, in particular, this is an appealing way to get into real estate investing. Millennials don’t do real estate, Baby Boomers invest in real estate. But Millennials do crowdfunding and they do crypto. The idea of Real Bit$ is to give the Millennial a taste of the real estate industry through a channel that is already known to them.”
Another aspect of the appeal for Millennials is the opportunity to assist areas devastated by natural disasters. Sai aims to help rebuild these areas by focusing investments on building energy-efficient, sustainable, near Net-Zero, carbon neutral homes so devastated communities can become self-reliant, resilient and environmentally-friendly.
Putting his prior entrepreneurial, corporate and engineering expertise to work has inspired Sai to pursue the Real Bit$ platform. He recently presented at 1 Million Cups Charlotte’s think tank gathering, which welcomes startup presenters from concept through their first three years. Sai welcomes the additional feedback.
“The past six months have been a huge learning curve and there is still more to learn. Being an entrepreneur, you realize very quickly that it’s not a cake walk. But there are numerous opportunities to learn. And I want to leave a legacy that makes this world a little better if I can.”