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This 30-year-old Toronto lawyer making $100K paid off OSAP through crypto investments. Can he buy a house in the city?
AlloCoco, the Toronto software engineer behind a new cryptocurrency called AlloCoco, is about to start a new, potentially life-changing business plan.
Using previously unreported information gathered through a process called kitting-out, AlloCoco plans to start amassing an inventory of valuable real estate in the city.
In Canada, the state asset-gathering law is run by two Crown corporations, RentalAct and RedevelopmentAct. Basically, if you use funds from the federal government’s Ottawa Acquisition Corporation, owned by the Canada Mortgage and Housing Corporation, and later redeem them through the federal government’s Home Repayment Program, you’re eligible to buy a property in the nation’s largest city.
“If you want to be a landlord, buying property in Toronto is a no-brainer,” says AlloCoco founder and chief executive Kim Winkelman. “I thought there was no way we could actually go through the entire process by ourselves.”
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AlloCoco isn’t the first fledgling real estate startup in the works in Toronto. Velomino and 3xe, two other blockchain-focused real estate platforms backed by the Canadian business magnate Jim Balsillie, plan to launch a similar plan later this year.
However, for now, AlloCoco is the only company able to go through the kitting-out process.
It plans to act as a fund manager and portfolio manager for the property, using some of the money it collects from its cryptocurrency sale to pay for its construction and renovation.
Once it gets its supply of real estate, AlloCoco plans to bring in experienced landlords to manage the properties and ensure property tax payments are made to the appropriate entity.
AlloCoco is raising funds in several ways: Through a crowdfunding project, which will see it complete round one of its $5m goal; through traditional bank transactions, where it will buy and sell its cryptocurrency in a matter of days; and through asset-based tokens.
Initial coin offerings (ICOs) are new methods of crowdfunder known for promising returns of some kind. Some ICOs like AlloCoco have struggled to retain equity in their companies but in others such as Velomino, thousands of people donated their cryptocurrencies to help fund its real estate project.
Through ICOs, companies can fund themselves and raise money by giving investors digital coins that can then be redeemed in a number of ways; to support the business, or just to get a coffee.
Depending on the level of acceptance of such an approach in the market, the profit or loss for an ICO can vary greatly, depending on factors like the demand for coins sold by the ICO, the coins sold on the secondary market and the amount of time the coins were sold.
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The Canadian prospectus document that can be used to raise money over the web allows investors to decide what level of exchange of crypto they are willing to accept.
By asking investors to pay with actual crypto, AlloCoco is trying to simplify an inherently complex investment, and take advantage of one of Toronto’s hottest start-ups – blockchain – to make its business work.
Investors who have already paid for their tokens will then be given the chance to sell them on to those in the $5m crowdfunding round.
From there, they can decide what amount of future price difference they would like to receive.
It’s still unclear if the property business will stick to its current proposal. Winkelman says the company will go through a later round, but will be discussing what to do for “follow-on fundraises” with investors.
“Our blockchain-based business model is unique in the city of Toronto. I can’t think of any other blockchain investment platform in the city,” he says.
Winkelman won’t say how much he makes from AlloCoco, instead saying the company is run as a “hypothetical business” for its investors.
“They want to know if the company can afford