It would be unwise to start investing in properties without a proper strategy. The properties that will be acquired will be carefully analyzed based upon their potential cash flow and the potential property appreciation based on the location. The goal is to get NFT holders the greatest return on their investment from a cash flow standpoint, but also have the greatest opportunity for price appreciation.
Typically, investors purchase properties with a 20% down loan, and after the mortgage payment, the investor would be lucky to even receive a positive cash flow. We will be purchasing properties outright in cash for two reasons: There is much less risk of owning a property if there is no loan on it, and the cash flow will be much higher because there is no loan payment/interest costs.
For example, let's say we bought a $500,000 single family home. On average, similar properties rent for about $2,500 per month. The home insurance with proper coverage would be about $180 per month, and the real estate taxes, depending on the area, would be about $500 per month. After expenses, that leaves us with a cash flow of $1,820 per month.
A 20% down loan on that same $500,000 property with a 3% interest rate would be payment of $1,686 per month. With a loan, the property would, at best, cash flow $136 per month. So although we would be able to purchase five $500,000 properties at 20% down, the cash flow would only be $680 from the five properties combined, but with one property that is paid in full would cash flow $1,820 per month.
For Chain Estate DAO to reward NFT holders with the highest possible cash flow, it makes sense to not take loans out on properties.