Which direction should we pursue for our real estate acquisition?

Community Wallet Balance: ~$225,000 USD

This proposal is being brought forward to allow token holders to exert governance on the direction we should proceed with the real estate acquisition. A lot has changed in the past week regarding market conditions and our overall actionable opportunities. This proposal will define the direction the community will proceed with.

The Holland House: One our very own holders, SkyPenguins, has come forward with an opportunity for the Watering Hole Fund to purchase an up and running AirBNB. His wife decorated the place very meticulously and the property comes with all furnishings. The property has performed well in the past few quarters and SkyPenguins is also willing to carry financing. Asking price is $195,000 USD and the location is in Fayetteville, North Carolina. Average gross revenue is $3,200 USD and FCF is ~$900.00 (This is after paying off a minuscule mortgage and also building equity). The property currently has infrastructure for management and cleaning in place. We can change it to improve operating margins in the future but this property is ready to be short term rented!

Link: https://abnb.me/9oj4Q7VtOpb Metrics from 09/15/2021 - 04/25/2022: Average Daily Rate: $94.20 Average Rent per Stay: $472.57 Gross Rental Revenue: $22,210.82

Cleaning: $440/month Property Management: $690/month CapEx: $200/month

Propy: Propy is a blockchain company that is leveraging the technology to revolutionize the way real estate ownership is verified and transferred. They sold their 2nd home as an NFT in Florida. It was a 1B/1Br condo in Tampa which was auctioned off to users in the form of an NFT. To bid on the property, you had to use the stablecoin USDC. The winner of the auction, and now owner of the house, spent $215,000 in USDC and successfully owns the property via the NFT. This emerging company has an already sizable market cap (>50 million USD) and has tremendous room to grow as it aims to tackle a large market using a solution integrated with blockchain. Crypto Hippos shares the ethos behind blockchain technology and could have multitudes of value by engaging in a purchase of a home using Propy’s technology along with engaging in a joint marketing campaign to capture the event.

Link(s): https://www.tampabay.com/news/real-estate/2022/03/24/tampa-condo-the-latest-to-sell-as-nft-as-crypto-real-estate-interest-grows/

https://propy.com/browse/tampa-condo-nft/

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Option 1: Purchase SkyPenguin's house in cash

Timeline: ~2 to 3 weeks from 05/13/2022

Community Wallet Balance after this transaction: ~$30,000 USD Community Wallet Debt: $0 USD Estimated Monthly Cash Flow: ~$1,200 - $1,400 USD

Advantages: This house is beautifully designed and all set up in terms of infrastructure. The timeline on this option is the most accelerated with the property already being set up on AirBNB, property management & cleaning infrastructure in place, and due to the house coming fully designed and furnished. The asking price is within our budget and would leave us in a position of being debt free.

Disadvantages: We would be unable to use Propy to accomplish this acquisition. No blockchain adoption + no marketing campaign with them. Despite SkyPenguins being receptive to using Propy for this transaction, the company itself is limited by state laws surrounding real estate. North Carolina, falls in the category of states where they are not allowed to deploy their blockchain technology in order to transfer ownership of real estate. Cash reserves for the community wallet will be thinner versus leveraging capital for financing however zero debt will exist.

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Option 2: Purchase SkyPenguin's house with Owner Financing

Timeline: ~2 to 3 weeks from 05/13/2022

Community Wallet Balance after this transaction: ~$145,000 USD Community Wallet Debt: $115,000 USD borrowed at 6% interest for 5-15 years. (To be determined if we go this route)

Estimated Monthly Cash Flow: ~$400 - $650 USD (We will also be building equity in the house by paying down our principal)

Advantages: This house is beautifully designed and all set up in terms of infrastructure. The timeline on this option is the most accelerated with the property already being set up on AirBNB, property management & cleaning infrastructure in place, and due to the house coming fully designed and furnished. The owner financing price is within our budget and would leave us in a position of having healthy cash reserve while bringing on manageable debt.

Disadvantages: We would be unable to use Propy to accomplish this acquisition. No blockchain adoption + no marketing campaign with them. Despite SkyPenguins being receptive to using Propy for this transaction, the company itself is limited by state laws surrounding real estate. North Carolina, falls in the category of states where they are not allowed to deploy their blockchain technology in order to transfer ownership of real estate.

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Option 3: Propy Public Sale Auction

Timeline: 3 houses in Cocoa Beach, Jacksonville Beach, and Orlando. All being auctioned off in the first week of June.

House Prices: Between $400,000 - $550,000 USD. Furnishing: $15,000 - $25,000 USD

Propy has partnerships with companies that offer borrowing/lending with crypto.

Community Wallet Balance after this transaction: ~$100,000 - $125,000 USD Community Wallet Debt: ~$320,000 - $440,000 USD borrowed at 6-7% interest for 30 years.

Estimated Monthly Cash Flow: ~$200 - $750 USD (We will also be building equity in the house by paying down our principal)

Advantages: We will be the 3rd people/entity to purchase a home as an NFT. Marketing and PR coverage will be a positive. Integrating blockchain to achieve our roadmap. Strong performance of properties in Florida from a tourism perspective.

Disadvantages: The house will require furnishing and design. Finding infrastructure for cleaning & property management will also take some time and research to execute. The timeline of this direction to achieve short term rental fruition is likely 4-6 weeks longer than SkyPenguin's property. Heavy Debt that could be subject to become a pain point if macro economic conditions affect tourism and the short term rental market.

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Option 4: Propy Private Sale Auction

Timeline: Variable (Contingent on us finding a house that fits our demographic and budget along with having data to prove its successful performance as a short term rental)

House Prices: Between $175,000 - $205,000 USD. Furnishing: $15,000 - $20,000 USD

Community Wallet Balance after this transaction: ~$15,000 - $30,000 USD Community Wallet Debt: $0 USD

Estimated Monthly Cash Flow: ~$1200 - $1750 USD

Advantages: We will be the 1st people/entity to purchase a home as an NFT through their Private Auction mechanism. Marketing and PR coverage will be a positive outcome. Integrating blockchain to achieve our roadmap. Strong performance of properties in Florida from a tourism perspective. Hand pick the property we want without a deadline forcing a rash decision. No debt, all cash purchase.

Disadvantages: The house will require furnishing and design. Finding infrastructure for cleaning & property management will also take some time and research to execute. The timeline of this direction to achieve short term rental fruition is likely 4-6 weeks longer than SkyPenguin's property. Cash reserves for the community wallet will be thinner versus leveraging capital for financing however zero debt will exist.

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Founder's Opinions: We as a founding team are very torn as well with the direction to proceed in. All options have pros and cons to consider. We personally believe that taking on debt that out weighs our assets is the riskiest direction which would mean Option 3 would be our last pick. Debt for SkyPenguin's house is manageable and doesn't encapsulate our wallet's assets. Option 2 is a viable option. In terms of instant gratification, Options 1 & 2 are the best methods to proceed. In terms of longer term benefits, building a relationship with Propy would be fruitful. Along with that, the PR and Coverage makes Option 4 fairly attractive as well. There is no incorrect choice, only comparatively better options for their specific use cases.