PropertyClub, Blockchain Real Estate Marketplace Whitepaper

A Decentralized Real Estate Marketplace White Paper Prepared by Andrew Weinberger, founder March 15, 2018

CONTENTS 1.

Introduction 3

1.1 Abstract 1.2 Background 1.3 The Problems 1.4 Analysis of Existing Supply Chain 1.5 Finding a Solution 1.6 Our Solution: A Blockchain Marketplace

2.

The PropertyClub Platform 15

2.1 Building the Ultimate Marketplace 2.2 PropertyClub CMS 2.3 Rooms and Mates 2.4 Schools Database

3.

Blockchain and Smart Contracts 24

3.1 Blockchain and Real Estate 3.2 Blockchain and Property Registries 3.3 The Tokenization of Real Estate 3.4 Blockchain and the Mortgage Industry 3.5 Smart Contracts

4.

PCC and Token Launch 29

4.1 Token Sale 4.2 Token Distribution 4.3 PropertyClub Reserve Fund 4.4 Budget Allocation & Strategy 4.5 Risks

3 4 6 9 10 12

15 21 22 23

24 25 26 27 28

29 30 31 32 33

5. Roadmap 34 6. Conclusion 35 7.

Legal Disclaimer

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1. INTRODUCTION 1.1 Abstract PropertyClub is a next generation real estate platform that is revolutionizing the way people market, search for, buy, rent and invest in real estate. We’re using blockchain technology to create a decentralized global real estate marketplace that is free of third party agents and solves the overwhelming supply problems faced by existing centralized marketplaces. Through the introduction and deployment of our erc-20 token, PCC (PropertyClubCoin), we will create a new paradigm where real estate listings are verified by the community, quality is guaranteed, and everyone benefits from greater transparency and cost savings. Our smart contracts will enable anyone to conduct real estate transactions digitally and securely, recording such things as contracts of rent or sale, transfers of title, and the purchase of real estate assets with PCC tokens on the blockchain, saving all parties time and money in the process as well as creating entirely new opportunities and markets such as allowing for the tokenization and purchase of any piece of real estate through a crowdfunded REIT, therefore removing the barrier to entry associated with the high costs of investing in real estate.

The purpose of this white paper is to detail how we will achieve this.

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1.2 Background Property listing information has long been controlled by listing brokerages and MLS’s (Multiple Listing Services). Traditionally this has meant that consumers would go to a brick and mortar brokerage to get help as only realtors had access to this information.

However, since the creation of the internet brokers and MLS’s have begun to market real estate online (Currently over 93% of home buyers user the internet to search for a home.

This includes over 99% of millennials1). This system has not been without problems as brokerages & MLS’s insistence on maintaining control over their listings coupled with their lack of cooperation with one another has led to the rise of listing portals like Zillow who buy and aggregate listings from multiple sources. The success of these portals is based on home buyers and renters preference to have access to as much data and as many listings as possible. They therefore gravitate to large portals over small brokerage websites (brokerage sites will have higher quality listings, but only feature their own listings, therefore only accounting for a small slice of the market). These large listing portals then manipulate the listings and data they collect to monetize it. The deception performed by Zillow Group et al is best described as a bait-and-switch; potential buyers & renters are drawn in by a listing, their personal information is collected, and is then promptly sold to the highest bidder (a third party agent). These third party agents pay hefty fees to buy leads and are oftentimes unqualified and unfamiliar with the market.

They have likely never set foot in the aforementioned properties. The current model is dishonest and deceptive and benefits no-one except for Zillow Group and their ilk. Recent surveys have shown frustration with the process among homebuyers to be extreme with 42% (including 46% of millennials) calling the process “stressful” in a recent nerdwallet report2. Meanwhile a survey conducted in the UK by Which? Mortgage Advisers found home buying to be the second most stressful event in life, narrowly edged by getting a divorce, but ahead of arranging care for an elderly relative, having a child, and changing jobs among others3.

1 . NAR 2016 prof ile of home Buyers and Sellers: https://www.nar.realtor/sites/default/f iles/ reports/2016/2016-profile-of-home-buyers-and-sellers-10-31-2016.pdf 2. Nerdwallet Home Buyer Reality Report: https://www.nerdwallet.com/blog/mortgages/2017home-buyer-reality-report/ 3. Which? Mortgage Advisors Stress Survey: https://www.which.co.uk/news/2016/01/moving-house-more-stressful-than-having-a-child-427204/

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Real estate professionals are no less enthused by the current model. Borrell Associates estimates that US real estate agents and brokers spent over $10.5 Billion on advertising in 2017 (90% of which was on digital advertising). Another $4 Billion is spent on advertising by rental property managers and real estate developers. Meanwhile mortgage brokers spent an estimated $14 Billion on advertising4. Zillow Group is estimated to have approximately 64% of online market share5, but only generates revenues accounting for 6% of ad spend of realtors, property managers and developers. This is clear evidence of the lack of enthusiasm real estate professionals have for Zillow Group and its dishonest practices and signifies a broken model.

Our marketplace eliminates third parties and the friction they bring, improves listing quality, and rewards members of our community with PropertyClub tokens.

4. Borrell Associates Real Estate Advertising Outlook (2017): https://www.borrellassociates.com/ industry-papers/papers/2017-real-estate-paper-detail 5. Inman; Zillow Snags more market share than ever: https://www.inman.com/2016/05/19/zillowsnags-internet-market-share-ever/

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1.3 The Problems The main problems with the current environment are poor listing quality and accuracy coupled with an overall lack of transparency. These stem from the facts that (i) real estate pros have consistently sought to maintain control of their listing data and failed to work together to create a comprehensive and transparent consumer facing marketplace. This has led to an overly complicated supply chain as there is no uniformly streamlined process to list, distribute and market listings; and (ii) that the interests of listing aggregators like Zillow Group do not align with either the interests of real estate professionals or those of buyers, sellers and renters. These can be split up as follows‌

1.3.1 The Supply Chain Problem High Fragmentation: Due to real estate professionals’ refusal to cooperate the listing supply chain is highly fragmented. This makes aggregating/ sourcing listings challenging for marketplaces as they need to set up and manage listing feeds from dozens of different sources.

Third Party Lead Buyers

Original Listers

Buyers/Renters

Listing Aggregators/ Publishers (zillow)

Brokerage website

CMS vendors (rentlinx)

Local & Regional Multiple Listing Services

Listing Brokers

FSBO/FRBO

Listing Distributors (listhub)

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No universal listing standards: Due to the high amount of fragmentation there is a lack of any type of universal listing standard. Many vendors have little or no quality control whatsoever. Publishers also typically lack proper quality control resulting in marketplaces that are filled with fake, bait-and-switch, and/or duplicate listings.

There is also a rampant, fundamental lack of understanding of the listing supply chain among existing marketplaces and even many real estate professionals. The process is overly convoluted and listing information often passes through multiple parties before reaching consumers. A common theme among new marketplaces is to recognize issues with transparency and poor user experience, but their solutions are superficial and lacking as they do not address the quality issues created by the existing supply chain and typically aggregate bad listing data without any quality control. Essentially while many of these marketplaces may have good intentions they are simply unaware of and unprepared to solve the fundamental listings supply issues (Rentberry is an example of one such marketplace that is filled with poor quality, duplicate and expired listings and is in many ways nothing more than a type of Craigslist with a nicer UI).

1.3.2 The Problem with Zillow Group et al 1)

Listers (listing agents, landlords, owners, etc) lose control of their data once it’s distributed/aggregated by portals like Zillow Group. These portals then manipulate the listing data to suit their needs, to generate as many leads as possible, and to maximize their revenue. The effects are that: a) leads are sold to third parties aggravating listing brokers and causing confusion amongst consumers; and b) portals have little incentive to ensure listing quality as fake, bait-and-switch, or expired listings can still be monetized as leads can be sold to third parties who then try to convert such leads to other listings.

2)

Consumers (buyers, sellers, renters, etc) are left feeling deceived as they constantly encounter the following issues when browsing portals like Zillow Group: a) listing quality is poor with many duplicate, fake, bait-andswitch and expired listings; b) consumers are duped when their personal information is sold to third parties as leads. The user experience is poor as they are unable to get real time information as contacting the lister directly is not possible. Once the lead is sold to a third party a

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game of telephone ensues where the third party has to put the consumer on hold each time the lister asks a listing specific question so that he/she can reach out to the lister for the answer. Furthermore additional information/ knowledge received from third party agent(s) is poor as they are typically far less qualified and knowledge of the listing/building/neighborhood/ market than the listing agent; and c) this lack of transparency results in a major loss of end users’ time and increased costs as listers and third party agents are forced to pass along the large costs imposed on them by these portals.

Finally a sort of domino effect typically occurs where listing quality and consumer confidence is continually falling. As costs and the number of fake listings increases many listers are forced to either withdraw from the marketplace (increasing the number of third party agents) or to also engage in less than ideal marketing practices to ensure their listings can compete. Consumers then mistakenly blame listing agents for the lack of transparency and quality as they are unaware that the problem is actually caused

by Zillow Group and other aggregators who have created the existing “bait-and-switch� style model in an effort to monetize their product.

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1.4 Analysis of Existing Supply Chain

Listing quality coming from CMS’s varies greatly. CMS’s with high quality listings send them to the MLS. Those with fake, bait-and-switch listings will syndicate directly to publishers and bypass the MLS.

Publishers like Zillow profit off of your personal info by selling it as leads to third parties who are typically poorly qualified to help you and have likely never even seen the property you’re interested in.

Many owners/landlords share listings with brokers as open listings.

Some brokers post listings without permission or create fake, bait-andswitch listings intending to converting a buyer/renter to a similar listing.

Unlike MLS’s who verify listing information to ensure quality, Publishers only care about their bottom line and will gladly accept bait-and-switch listings from subscribers.

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1.5 Finding a Solution To find successful solutions it’s necessary to understand the root cause of the problems as well as to have thorough knowledge of how the current real estate market operates.

It’s simple enough to point to what’s wrong in the current environment, but finding a practical solution is much more challenging. To illustrate this we’ll analyze proposed solutions from the real estate industry as well as from other startups in the space. Many real estate professionals believe that they can simply retake control of their listings by no longer feeding/listing/syndicating them to Zillow Group and similar portals. They suggest that they would then create their own competing portal. There are multiple problems with this line of thinking. Firstly comes the issue of cooperation between competing real estate agencies (on a local level) and multiple listing services (on a national level).

For years this has proved too difficult to overcome as agencies often consider it in their best interest to maintain control over their listing data. There are various reasons for this, but a major factor is the varying business models of agencies. Large firms with wellknown brands would benefit less than smaller firms with little brand recognition. Large firms also typically employ a more traditional model (where splits between agent-broker range from 50-50 to 70-30 ) and need to justify their lower splits. Giving competitors access to their listing data can be seen as a major risk as it would greatly benefit the low/no commission split firms which pose a major threat to the continued success of their business. If we look at NYC for example, REBNY (The Real Estate Board of New York) adopted an opt-in IDX (internet data exchange) in 2016. This IDX would allow REBNY members that opt-in to display all IDX listings. A large majority of firms have opted in, but the two market leaders, Corcoran and Douglas Elliman, have not as they clearly see little benefit in it. A second issue with real estate professionals dropping their listings from Zillow Group and other portals is that of fiduciary duty. A real estate professional is required to act in a way that suits the best interest of the owner/landlord they represent and while dropping listings from Zillow Group may help the agent or brokerage regain control of their listings in the long term removing them from a large marketplace most certainly won’t help the owner/landlord get their listing sold or rented.

If we look at the proposed solutions of other startups in the space we also find major flaws. Here are a few of the most common solutions proposed by our competitors.

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a)

To create a peer-to-peer marketplace or a decentralized marketplace. This is a common theme among other blockchain companies (REXMLS, Realista), but is also being tried by a number of other startups as well (Opendoor, Homie, Flip). While going upstream and getting listings directly from the source is a good idea in practice all of these companies naively seem to ignore the marketplace liquidity problem. How will they attract listers without a large supply of consumers, and more importantly how will you attract consumers without a large supply of listings?

Without an effective solution it is almost certain that all of these marketplaces will fail as the cost of acquiring new listings and users will be prohibitively high. Finally, additional challenges will be ensuring the quality of their listings and effectively scaling.

b)

To create a more transparent marketplace that automates certain processes and creates a better user experience. This has been repeated ad nauseam by a vast majority of startups (Rentberry, Zumper, NakedApartments, RadPad, etc). It’s particularly popular among rental startups who do not always consider Zillow Group to be a direct competitor (as Zillow Group’s core business is focused on sales), and simply regurgitate the same pitch of how Craigslist is the dominant rental marketplace and how they will disrupt the space and create a better, more transparent marketplace. While it may be easier to get such marketplaces off the ground (as they all aggregate listings and do not typically concern themselves with any sort of vertical integration) most will fail due to the simple fact that they lack even the most basic understanding of the listing supply chain, and are therefore fundamentally unprepared to create a disruptive marketplace. Features like “instant applications”, “renter profiles”, or “Uber-esque showings on demand” are best described as gimmicks and provide little value to users without first solving the supply problem.

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1.6 Our Solution: A Blockchain Marketplace Our solution is to use blockchain to build a fully decentralized real estate marketplace. This will be achieved by creating what would in effect be a global MLS (Multiple Listing Service) that would allow real estate professionals, owners and landlords to publish listings on the blockchain.

There is a tremendous amount of synergy between blockchain and marketplaces. Let’s imagine for a moment a world in which our legal framework has evolved to recognize Ricardian contracts and in which there exists a global, distributed property ledger (on the blockchain), which can be updated digitally through the use of the aforementioned smart contracts. PropertyClub will take advantage of blockchain technology to do things never before possible. Here are 5 key ways in which we will use blockchain to enhance our marketplace: (i) New Experiences - Our marketplace will enhance the existing online real estate market by offering a tremendous amount of new user experiences such as rewarding users with PCC, facilitating the digital transfer of property and the tokenization of real estate. Additional exciting opportunities include approving mortgages digitally, faster and at a fraction of the cost. (ii) Expanding the Market - PropertyClub will expand the market in ways few marketplaces ever have. The ability to achieve this cannot be overstated enough as the current market suffers from a lack of frequency; people do not buy, sell or rent a home that often. To understand what it means to expand the market we’ll look at one such example, Uber: through their incredible convenience and competitive pricing they have greatly expanded demand for car services. We will achieve increased demand through the tokenization of real estate and introduction of the PCC token. Properties on our marketplace will be more accessible as we remove the barrier of entry to invest in real estate and make purchasing internationally easier and safer than ever before. (iii) Global Network Effects - Most marketplaces can achieve network effects on a local or regional level, but few are able to achieve a global network effect. Using existing real estate marketplaces as an example there is currently little to no benefit to a home seller in France when a new buyer in the US signs up. Blockchain changes this as we will be able to tokenize real estate making it easy and accessible for anyone to invest in real estate anywhere in the world.

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(iv) Payment Flow - Blockchain allows us to offer much more than just a marketplace to search for properties. These additional services will enable us to be part of the payment flow. Existing real estate marketplaces are unable to do this as they simply operate as media companies. (v) Monetary Advantages - There are tremendous economic advantages to using blockchain technology. The lower marketing costs associated with a decentralized and transparent marketplace will in turn result in lower commissions and better prices. Savings for international investors as well as the title insurance and mortgage industries will be in the tens of billions of dollars. Additionally legal, management, and other fees associated with the sale, purchase and management of real estate can be reduced.

However, we do recognize however that adoption of a completely decentralized MLS will not happen overnight and aggregating supply will be necessary until we get listers to make the jump to our platform. It goes without saying that we will deploy PCC to facilitate the quick adoption of our platform, but it would be naive to assume as others do (we’re looking at you REXMLS & Realista), that simply sprinkling some tokens around mixed with the buzzwords “blockchain” and “smart contracts” would lead to a critical mass of supply and demand miraculously materializing. Therefore we will achieve said critical mass through the implementation of the following strategy: Vertical Integration - Our platform is being built vertically to get listings as close to the source as possible. We cut out middle-men saving users time and aggravation.

2) Aggregating Supply - Supply will be aggregated from an extensive network of qualified sources. All listings will run through our import api which flags and rejects listings it deems to be fake, suspicious or duplicates.

3) Peer to Peer Listings & CMS - We currently support by owner/by landlord listings and will also be launching a room/roommates marketplace. The PropertyClub CMS is our listing management solution for real estate pros, allowing them to upload and manage all of their listings quickly and easily.

4) Removing Third Parties - We’ve removed all third party agents to help create a transparent and frictionless marketplace. This will result in a better experience for everyone. Costs to real estate professionals will be lowered enabling the savings to be 1)

passed on to buyers, sellers and renters.

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With PropertyClub and Blockchain

Our CMS/MLS will use blockchain technology to help create a decentralized peer to peer marketplace.

No Third Parties.

PropertyClub’s marketplace cuts out the middle man and removes friction.

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2. THE PROPERTYCLUB PLATFORM 2.1 Building the Ultimate Marketplace The key to building a successful marketplace lies in creating marketplace liquidity. Without sufficient supply and demand users will find little value in a marketplace, regardless of how much better it may be than competing marketplaces. Failing to address this is precisely why the vast majority of online marketplaces fail. All other existing real estate marketplaces working with blockchain have taken the issue of marketplace liquidity for granted. The few marketplaces that do attempt to address it typically lack a proper understanding of the listing supply chain and are unable to fully address it as their marketplaces will be plagued by low quality and fake listings.

Listing Source

Supply

Creating Demand Blockchain & (strategy) Smart Contracts

Aggregate, CMS and Peer to Peer

Strong supply with high quality listings & unique peer to peer listings

Leverage supply, listing rewards, unique features, unique content, better user experience

Tokenization of Real Estate, Decentralized MLS, Mortgages

Mostly Aggregate, some Peer to Peer

Strong supply with lower quality listings due to less quality control while aggregating

Leverage supply quantity, unique features

Rental Applications & Leases, Security Deposits

Rexmls

Peer to Peer

Weak supply

Not Clear

Decentralized MLS

Realista

Peer to Peer

Weak supply

Magic beans*

Not clear

Property Club

Rentberry

* Magic Beans refers to a go to market strategy that is primarily focused on dropping buzzwords like “smart contracts” & “blockchain” and hoping that will somehow lead to supply and demand magically materializing.

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Due to their fundamental lack of understanding the listing supply chain as well as their naive attitude regarding the marketplace liquidity problem many of our competitors typically spend their time focusing on creating use cases for blockchain technology rather than on developing their marketplaces. This is a major strategic mistake as blockchain technology is best utilized by healthy marketplaces with good liquidity. Blockchain is not a tool to build a marketplace from scratch or to create supply and demand on its own. We are therefore adopting the following 4 step approach to build our marketplace and ensure its healthy growth and development:

The PropertyClub Marketplace

Blockchain Blockchain technology will enhance and 4 expand our marketplace Platform Adoption Widespread adoption of our CMS & global MLS will lead to a descentralized 3 marketplace Demand Strong demand enables us to change behavior of suppllers resulting in 2 adoption of our platform Supply Great supply is the foundation 1 of any successful real estate marketplace

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Listing Supply PropertyClub will achieve strong supply through a mix of aggregating listings, our pro CMS and peer to peer listings. i)

Aggregating listings - We import listings from pre-screened sources and run all aggregated listings through our verification api which flags and rejects duplicate, fake, and suspicious listings. On average we receive 40,000 listings in NYC each day, only half of which are accepted. Imported listings are updated every six hours.

Since launching in NYC we’ve been REBNY’s (The Real Estate Board of New York) first partner to accept both their rental and sales feed, and received listings from over 18,000 realtors.

ii)

PropertyClub Pro CMS - Our proprietary CMS is an ideal solution for realtors who wish to post and manage their listings quickly and easily, enabling them to reach consumers in real time. Since our launch over 3,000 realtors have used our Pro CMS to post listings in NYC. More importantly our Pro CMS is robust enough to replace all other marketing tools realtors use and to potentially be offered as an off-the-shelf solution to power brokers' individual websites and MLS syndication. This makes it an effective end-to-end marketing solution for real estate professionals. In the future we will also incorporate CRM features.

iii) Peer to Peer - Typically posted by small landlords or tenants looking for lease breaks, assignments or sublets these listings are oftentimes unique to PropertyClub as well as being priced below market value. Peer to peer listings bring a lot of attention to our marketplace as the listers actively promote them and they are typically a great value. On average we receive approximately 650 peer to peer listings/month.

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Demand Our focus on having the highest quality supply will help drive demand. This is amplified by the fact that the biggest pain points for buyers & renters tend to be related to low quality supply and the poor user experience provided by other marketplaces. In addition to providing the best listings possible we will also employ the following strategies to help drive strong demand: i)

Unique Content - We are focused on creating unique content that will not only benefit users, but also drive organic traffic. Examples include our neighborhood guides and blog articles.

ii)

Data - There is unprecedented access to a variety of data that is useful to our users.

This includes school data, neighborhood data, and price/sale history of individual homes. Our school database and ratings will be introduced shortly followed by a comprehensive property database along with sales history. The introduction of these will give our users access to invaluable information while also helping with SEO (search engine optimization) and organic traffic.

iii) Deployment of PCC - PropertyClub tokens shall be deployed to help foster demand.

One way users will be able to collect PCC is through listing rewards for viewing and reviewing listings. iv) Reviews - We are planning on introducing user generated reviews for listings, buildings and neighborhoods. Users posting reviews will go through KYC to verify their association with the address being reviewed and PCC will be rewarded for posting reviews. v)

Roommates - Additional demand will also come from roommates matched through our end-to-end solution for roommates. Other marketplaces rarely offer a solution for roommates while roommate sites typically act only as a matching service and roommates navigate to large marketplaces to search for suitable listings.

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Platform Adoption Getting customers to change their habits is extremely difficult and getting real estate professionals to switch to our platform is easier said than done. The following strategy will be employed to ensure we achieve platform adoption for our Pro CMS and global MLS. i)

Leveraging Demand - The greater demand we have the easier it will become to convince RE pros to use our global MLS. We will further incentivize use of the MLS through various means, for example implementing a search filter to show only “PropertyClub MLS listings�, denoting these listings with a unique badge, etc.

ii)

Vertical Integration - Through our Pro CMS we are becoming vertically integrated and helping to simplify the process of posting, marketing and managing listings for RE pros. By using our system directly they are essentially saving time and cutting out a third party vendor (unless they happen to have their own proprietary CMS). Our CMS is also robust enough to be offered as an off-the-shelf solution for brokers who wish to use it to power their own websites.

iii) SaaS & additional features - Various enhancements and additional features will be developed and offered to RE pros who use out platform. A CRM tool will be the most important as it helps keep everything under one roof and cuts our third party vendors. Other examples include an open house management tool/application as well as a CMA (comparative market analysis) tool. iv) Deployment of PCC - PropertyClub tokens can also be deployed to reward customers for switching to our Pro CMS.

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Blockchain Through the use of blockchain technology and smart contracts we will constantly enhance and expand our marketplace, enabling us to perform transactions never before possible.

We explore some of the benefits of blockchain marketplaces in section 1.6 in detail (pages 12-13). Below is one example (an analysis of the effects of the tokenization of real estate) of how dramatically blockchain will directly impact our marketplace. Additional examples are found in section 3 (pages 24-27).

1

New Experience Tokenisation of Real Estate

Marketplace Expansion

2

More demand for Real Estate due to lower barriers of entry and greater asset liquidity

Global Network Effects

3

Simplified transactions & low barriers of entry globaly in all new users benefiting the entire community Payment Flow

4

Performing transactions digitally on the blockchain enables us to be part of the payment flow, removing frictions

Monetary Advantage

5

Smart contracts lower transaction costs while improving security and reducing risks of fraud

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2.2 PropertyClub CMS Our proprietary real estate CMS was built to create an end-to-end solution for the large scale marketing of real estate and is the frontrunner to what will be our global MLS. It is the key to creating a decentralized marketplace. We currently have over 3,000 agents using our CMS and are focused on engaging them and using their feedback to continuously improve our product to meet their needs. Our CMS saves real estate pros time and money while helping to create a better marketplace for end users.

RE Pro Benefits

End User Benefits

Cost Savings

Time Savings

Additional Features (lead tracking/CRM)

Improved UX Real Time Updates Greater Transparency

Higher Quality Listings

More Listings & UniqueListings

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2.3 Rooms & Mates We’ve built the first end-to-end solution for roommates. Other roommate sites are limited to roommate matching or just rooms and mates, forcing users to navigate to other sites to search for properties once they’ve found a roommate. Our marketplace allows users to find a roommate and then search all available properties or vice versa. All under one roof.

Through blockchain we can also do KYC and/or background checks on roommates to ensure everyones safety and provide a better roommate matching experience.

Createyour your profile Create profile Create an in depth profile specifying Create an in depth profile specifying who you are, what you’re who you are, what you’re looking looking for & what makes you great! for & what makes you great!

Find FindRooms Rooms

Search available rooms or simply Searchaavailable simplyyour find a place that suits your find place rooms thatorsuits needs needs and create aaroommate wanted listing for the available and create roommate wanted room. for the available room. listing

MessageRoommates Roommates Message Connect with potential roommates Connect with potential roommates or send your favorite rooms or send your favorite rooms or proor properties to your friends. perties to your friends.

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2.4 School Database School Data We have begun aggregating local and national school data that will give prospective buyers/renters access to valuable information about local schools including zoning, academic performance and PropertyHub’s overall grade of the school.

School Grades Our school grading api looks at various data points to grade schools.

These include…

— test results/academic performance — graduation rates — attendance rates School Reviews PropertyClub users will also be able to review schools creating unique and valuable usergenerated content.

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3. BLOCKCHAIN AND SMART CONTRACTS 3.1 Blockchain and Real Estate Blockchain technology has the potential to revolutionize a number of industries, including the real estate industry and real estate marketplaces.

A blockchain is a type of distributed digital ledger (made up of cryptographically linked blocks) which can be used to record virtually any type of transaction. Due to their distributed nature (blockchains are hosted and maintained by a large number of independent actors and each new transaction is verified and agreed upon through a general consensus of the members) blockchains are extremely secure and widely considered incorruptible.

The Ethereum blockchain was built to enable the use and execution of complex applications through the use of smart contracts (smart contracts are pieces of code written on the Ethereum blockchain)6. These properties make the Ethereum blockchain ideal for the management of various real estate transactions through the use of smart contracts while creating an extremely high degree of accountability and security in the process.

Numerous use cases exist for blockchain technology and real estate, but the most interesting are related to the digital transfer of property title, the tokenization of real estate assets, and mortgages. This technology has tremendous synergy with marketplaces and this is discussed in great detail in section 1.6 (pages 12-13).

6. The Ethereum White Paper: https://github.com/ethereum/wiki/wiki/White-Paper

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3.2 Blockchain and Property Registries Blockchain technology will revolutionize the way real estate assets are transferred and purchased. Currently the transfer of real estate assets is typically performed on local property registers in an archaic manner with no uniform national or international standards. Blockchain technology will allow property to be transferred on a public, immutable ledger, providing a history of past transactions and recording proof of ownership. Through the use of smart contracts property will be able to be bought and sold digitally, and recorded on the blockchain. This will greatly reduce transactions times while also reducing costs, in particular those related to title insurance (a 2016 Goldman Sachs study estimates that the creation of a complete decentralized property ledger would drastically reduce title insurance premiums creating a cost saving between $2-4 Billion in the US alone)7.

There are currently multiple blockchain real estate registry projects already in place throughout the world (Sweden, Japan, Georgia, Ukraine, and various US States), the most notable of which is taking place in Sweden where the Lantmäteriet , the country’s landownership authority, is developing a blockchain based property ledger which could reduce transaction times from months to hours8.

7. Schneider J. et al, Goldman Sachs Equity Research Profiles in Innovation, Blockchain Putting Theory into Practice: https://drive.google.com/file/d/ 0B1OEwCJXDaKAazZfS3kxMTZ4VXc/view 8. Coindesk, Swedish Government Land Registry Soon To Conduct First Blockchain Property Transaction: https://cointelegraph.com/news/swedish-government-land-registry-soon-toconduct-first-blockchain-property-transaction

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3.3 The Tokenization of Real Estate Once government property registries adopt blockchain technology and enable the recording of real estate title transfers through the blockchain we will be able to integrate with them to tokenize real estate allowing users to buy/sell real estate assets with PCC tokens through the use of smart contracts.

Transacting and buying real estate through the use of smart contracts has many benefits including: i)

Lowering transaction costs, especially for international investors who currently

ii) iii)

need to deal with multiple intermediaries Greatly reducing transaction times Eliminating risks of fraud and human error

The tokenization of real estate will also create a completely new market for Crowdfunding/ REIT (real estate investment trusts). Using smart contracts will increase transparency and reduce costs associated with investing in REIT’s while being able to transfer title on the blockchain will enable virtually all real estate assets to be tokenized (currently only large residential developments or commercial properties are open to REIT/Crowdfunding due to the legal and management fees involved). This will lead to the barrier of entry to invest in real estate being removed while the liquidity of real estate assets will also be increased. The overall effects of this will be dramatic for our marketplace as we will be offering users a new experience while increasing overall demand and generating global network effects in the process (discussed in section 2.1, page 20).

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3.4 Blockchain and the Mortgage Industry Similar to the digital marketing of real estate, the mortgage industry has remained relatively untouched by modern technology and is prime for disruption. Blockchain technology will eventually automate what is currently a long, stressful, and labor-intensive process. Currently the average cost of originating a mortgage in the US is approximately $4,500 and the process involves multiple parties physically handling sensitive information.

Blockchain technology will significantly lower costs, speed up transaction times, and increase security.

Currently many real estate marketplaces generate significant revenue from mortgage providers advertisements (mortgage providers currently spend over $14 billion each year on digital marketing9). We envision even greater opportunities for our marketplace to disrupt the mortgage industry however.

We are actively working on developing new ways to use blockchain and smart contracts to disrupt this multi trillion dollar industry (the estimated value of total mortgage debt in the US is approximately $10 trillion with approximately $2 trillion in new mortgages being originated each year10).

9. Borrell Associates Real Estate Advertising Outlook (2017): https:// www.borrellassociates. com/industry-papers/papers/2017-real-estate-paper-detail 10.US Mortgage Market Statistics (2017): https://www.magnifymoney.com/blog/mortgage/ u-s-mortgage-market-statistics-2017/

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3.5 Smart Contracts Our marketplace will employ smart contracts to ensure listing quality, verify identity, and help facilitate real estate transactions. Smart contracts that have already been developed include our Identity Contract, Listing Verification Contract and Bounty Contract.

Identity Contract: - Records personal information of users - Will verify legal identity with KYC verification (through third party) Listing Verification Contract: - Records listing data and information - Verifies the quality and accuracy of listings and reward users for their reviews.

Bounty Contract: - Allows listers to reward potential buyers and/or renters with a PropertyClub token bounty - Records listing data and information, including listing bounty information as well as identity information of leads As blockchain technology and our legal framework evolves to permit and recognize Ricardian contracts as well as the digital transfer of property we will continue to develop and introduce new smart contracts designed to facilitate the aforementioned tasks.

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4. PCC AND TOKEN LAUNCH 4.1 Token Sale

Pre-ICO:

Total Supply:

Price: Minimum Purchase: Soft Cap:

Hard Cap: Bonus:

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4.2 Token Distribution PropertyClub tokens will be distributed as follows: A maximum of 1 Billion (1,000,000,000) PCC Tokens shall be created, the exact number depending on how many tokens sell during the Token Sale.

50% 20% 15%

of PCC will be allocated to the Token Sale (Public ICO and Pre ICO); of PCC to be created will be held in the PropertyClub Reserve Fund; of PCC to be created will be held in the PropertyClub reward wallet to be distributed as rewards for using the website;

10%

of PCC to be created will be distributed to investors who participated in the private sale; of PCC to be created will be distributed to the PropertyClub team.

These coins will vest and be distributed over a 36 month period commencing at the end of the token sale. There shall be a 12 month cliff.

5%

5%5% 10% 10%

15%15%

50%

50%

20%20%

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4.3 PropertyClub Reserve Fund 20% of PropertyClub tokens to be created will be held in the PropertyClub Reserve Fund.

PropertyClub tokens in the reserve fund will be used at PropertyClub’s sole discretion.

Tokens in the reserve fund will vest under the following schedule…

25% of Reserve Fund tokens shall vest immediately following the close of the Token Sale.

25% of Reserve Fund tokens shall vest 12 months from the Token Sale End Date 25% of Reserve Fund tokens shall vest 24 months from the Token Sale End Date 25% of Reserve Fund tokens shall vest 36 months from the Token Sale End Date Reserve Fund tokens are intended to be deployed as needed to ensure a healthy supply of PropertyClub tokens as well as the continued growth of the PropertyClub ecosystem.

Examples of possible uses for the PropertyClub Reserve Fund include, but are not limited to: — new promotions and/or initiatives — topping up of the PropertyClub reward fund — raising of additional capital and/or the acquisition of other companies If we elect to sell any tokens in the Reserve Fund the sale price shall not be lower than the Token Sale token price and no bonuses shall be offered to purchasers.

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4.4 Budget Allocation/Strategy The precise budget allocation shall depend on the amount of funds raised.

The minimum raise of $400,000 represents the estimated funding needed to take PropertyClub to profitability on the local level (the New York City market). An estimated minimum raise of $1,200,000 is necessary for an effective national expansion and $5,000,000 for a global expansion. Precise budget allocations are described below‌ If the Token Sale raises between $400,000 and $1,200,000 PropertyClub will focus exclusively on New York City and expand to other key cities (San Francisco, Washington DC, Los Angeles, Chicago, Boston) from there.

A $400,000 minimum raise would ensure approximately 18 months of runway at the end of which we estimate to reach profitability.

The estimated budget allocation would be as follows.

60% Design, Development & Maintenance 20% Sales, Marketing & Content Creation 10% Office, Administrative & Operations 5% Legal & Accounting 5% Miscellaneous If the Token Sale raises over $1,200,000 PropertyClub will begin a national expansion in earnest. The estimated budget allocation for a national expansion is as follows‌ 30-45% 20% 5-7.5% 2.5% 5%

Design, Development & Maintenance Sales, Marketing & Content Creation Office, Administrative & Operations Legal & Accounting Miscellaneous

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4.5 Risks Although there are many reasons to be optimistic about PropertyClub’s prospects, participants in the Token Sale should keep in mind potential risks of participation. These risks are set forth in the Token Sale Terms & Conditions.

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5. ROADMAP 2018

Launch of propertyclub.nyc End of Token Sale Finalization of smart contracts and introduction of PCC token rewards

National expansion Development of blockchain based MLS system Launch of school statistics and reviews

2019 Development and launch of PropertyClub CRM Development of national property database Strategic partnerships with other RE blockchain startups and blockchain property registries

2020 International expansion Tokenization of real estate; Offer ability to purchase real estate with PCC tokense

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6. CONCLUSION We are certain that blockchain technology will disrupt the way real estate is marketed in the immediate future and our mission is to harness blockchain technology and smart contracts to create a decentralized marketplace where real estate listings are verified by our community, quality is guaranteed, and everyone benefits from greater transparency, reduced friction and cost savings.

As our legal framework evolves to permit and recognize Ricardian contracts as well as the digital transfer of property we envision our marketplace using blockchain and smart contracts to tokenize real estate as well as to facilitate the digital transacting and transfer of real estate completely revolutionizing the way real estate is bought, sold, and rented.

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7. LEGAL DISCLAIMER THIS WHITE PAPER DESCRIBES THE PLANNED PROPERTYCLUB PLATFORM AND THE USE OF PROPERTYCLUB TOKENS. THIS IS BEING PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND IS NOT A BINDING LEGAL AGREEMENT.

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