The Real USD treasury will use DAI ingested through the minting process to purchase property TNFTs currently listed on the Tangible marketplace. This will be automated, any properties listed at a price within a 1% of Tangible’s True Property Valuation (TPV) will be purchased by the treasury using DAI inflows.
This means the Real USD treasury purchases properties both directly from Tangible labs and from anyone who has previously bought a Real Estate TNFT and has it listed for re-sale on the marketplace.
The USDR treasury will not purchase any properties that are more than 1% above the Tangible TPV.
The TPV is true value of a Real Estate TNFT and comprises of the property valuation and the associated tokenization costs. This ensures the treasury is acquiring properties at fair market prices and can dispose of them at the values displayed.
During the initial growth phase, Real USD Treasury DAI that's spent on real estate in the Tangible marketplace will move into the Tangible Labs multisig where it's held prior to the offline purchase of the real estate through legacy systems. Once the sale is complete, property pages will be updated with completed sales documents. As we scale at a predictable pace, properties will eventually be purchased upfront by Tangible, prior to listing in the marketplace. At this time, USDR treasury DAI will simply be used to purchase post-sale assets in the marketplace and will no longer be held in escrow by the Labs multisig.
Tangible TPV comprises of the following:
Independent valuation by a 3rd party
Independant property valuations in the UK are primarily provided by hometrack.com. They are the largest Real Estate data provider in the UK and the majority of UK mortgages are issued using Hometrack valuations. We are working with Chainlink to provide direct data feeds using the Hometrack API that will update once monthly. Updated price oracles allow for collateralization ratios and minting on gains to be in 'real time".
In some circumstances where the property is a commercial one, for example a HMO then Hometrack are not able to provide a correct valuation, in these cases we use a reputable local independant valuation company. The valuation report is always available in the dropbox folder for the specific property.
At initial purchase of a Real Estate TNFT, 2% of the purchase is moved into a vacancy reserve, to support continued rental disbursement during periods without an active lease. Should the reserve capital fall below 2% of the property valuation, a recurring 20% of rental yield will be held back until the vacancy reserve is replenished.
Should an owner take possession of and redeem the TNFT, all capital in the vacancy reserve would revert to the owner with the property, therefore this is included in the TPV, as the value transfers with the TNFT.
At initial purchase of a Real Estate TNFT, 5% of the purchase is moved into a maintenance reserve. This reserve will be accessed should any repairs or maintenance, including possible major costs both planned and unanticipated, become necessary. (Repairs and maintenance covered by property insurance will not affect the maintenance reserve.) Should the reserve capital fall below 5% of the property valuation, a recurring 20% of rental yield will be held back until the maintenance reserve is replenished. Invoices and quotes for repairs above $100 will be uploaded to the real estate owner’s portal.
Should an owner take possession of and redeem the TNFT, all capital in the maintenance reserve would revert to the owner with the property, therefore this is included in the TPV, as the value transfers with the TNFT.
Tangible Custody manages the properties for an annual fee of 2% of the property value. It is charged upfront upon tokenization for the first year then deducted from the rent monthly after the first 12 months. The value of paid management fee transfers with the TNFT and therefore is included in the TPV.
Whenever a property is purchased in the real world local taxes apply. In the UK this is called stamp duty and is typically 3% (can vary based on total value etc.) These taxes are part of the initial real world purchase transaction and therefore the tokenization costs, but do not apply when a TNFT is transferred or resold, for this reason the one of taxes are included in the TPV.
Each property tokenized by Tangible is always insured, upon tokenization the first years insurance is included as part of the tokenization costs. The value of paid insurance fee transfers with the TNFT and therefore is included in the TPV.