AI-generated summary reviewed by our newsroom.<\/p>\n
Read our AI Policy.<\/a><\/p>\n MegPrime<\/a>, a crypto\u2011based rent\u2011rewards platform that says it can help renters save for a home, launched nationwide this week, including in the Triangle.<\/p>\n Read more Brandon Bussi thrust into action for Hurricanes, nearly steals Game 3 from Vegas<\/a><\/p>\n The Dallas startup pitches itself as a way for renters to earn meaningful monthly rewards \u2014 and eventually put those rewards toward buying a home \u2014 simply by paying rent using digital currency through its app.<\/p>\n Among its claims<\/a>: If you\u2019re paying $2,000 a month in rent, you can receive up to $100 back \u2014 or up to $800 at their \u201cMax Reward\u201d properties. Meanwhile, every dollar you spend on rent earns a point. When you buy a home through MegPrime, those points can become \u201cup to $12,000 in cash back.\u201d<\/p>\n \u201cThe model is straightforward,\u201d MegPrime co-founder and CEO Zach Ipour<\/a> told The N&O in a video call. \u201cMost of the rewards are funded through the pooled marketing budgets of participating parties, such as developers, lenders and brokerages, who are all invested in the same outcome.\u201d<\/p>\n \u201cWe didn\u2019t come from Silicon Valley,\u201d he added. \u201cWe\u2019re homebuilders and private\u2011equity people who built this to solve our own buyers\u2019 problems \u2014 and realized it could help everyone.\u201d<\/p>\n MegPrime received an SEC non\u2011action relief<\/a> letter earlier this year, which the founder described as the key regulatory hurdle.<\/p>\n The letter means the SEC will not treat MegPrime\u2019s crypto\u2011based rewards as securities. Without that clarity, the company says it couldn\u2019t legally offer rewards redeemable for cash.<\/p>\n But not everyone is sold on MegPrime. In addition to larger questions about the use of cryptocurrency, some of MegPrime\u2019s terms could raise alarms for renters, said Nick MacLeod, executive director of the North Carolina Tenants Union<\/a>.<\/p>\n And the rewards do little to address the existing power imbalance between tenants and landlords, MacLeod said. There must be a systemic shift to address the housing crisis, and one way to do that is by allowing tenants to collectively negotiate with their landlords to determine, for example, rent increases and services provided, MacLeod said.<\/p>\n \u201cI think that functionally lowering rent and functionally giving people down payment assistance for buying a home, those are good things,\u201d MacLeod said. Questions to keep in mind, though, are whether the program is sustainable and whether there may be unforeseen downsides, MacLeod said.<\/p>\n Below is what the company does, how it works, and what renters should pay attention to before signing on.<\/p>\n MegPrime is a blockchain\u2011based payment platform<\/a> that uses a type of digital record\u2011keeping system to move money, instead of relying solely on banks or credit\u2011card networks.<\/p>\n It combines several businesses under one umbrella: a rent\u2011payment app, a crypto rewards system, an apartment\u2011locator service, a real\u2011estate brokerage and a mortgage lender.<\/p>\n The company says the goal is to turn rent \u2014 traditionally a \u201cdead cost\u201d \u2014 into something that builds savings and eventually helps renters transition into homeownership.<\/p>\n Renters pay rent or mortgages using USDC<\/a> (a stablecoin) or MegPrime Token (its own volatile cryptocurrency).<\/p>\n Rent is then paid via an automated clearing house to the landlord or mortgage company. MegPrime claims its technology allows same\u2011day settlement from crypto to a bank account.<\/p>\n \u201cCrypto is just the vehicle. It\u2019s faster, more efficient and borderless,\u201d Ipour said. \u201cWe couldn\u2019t build this on traditional banking rails.\u201d<\/p>\n MegPrime offers two layers of incentives: monthly rewards and homeownership points.<\/p>\n Any renter can earn 2% back, up to $100 per month.<\/p>\n At \u201cMax Reward\u201d partner properties, including dozens in Raleigh<\/a> and Durham<\/a> such as Lexington Farms Apartments<\/a> and Hudson at Georgia\u2019s Landing<\/a>, renters can earn $500 to $800 per month (10% to 20% of rent).<\/p>\n Read more Amazon finds itself in hot water over Ring camera feature<\/a><\/p>\n Rewards are paid in MegPrime Token but can be instantly converted to cash.<\/p>\n Every dollar a renter pays through MegPrime earns one \u201chomeownership point.\u201d Example: A renter paying $24,000 a year in rent would accumulate 24,000 points.<\/p>\n Those points can later be redeemed for \u201cup to $12,000\u201d toward a home purchase, but only if the renter uses MegPrime\u2019s own real\u2011estate brokerage and mortgage company to buy the home.<\/p>\n Even though renters can convert rewards to cash, the value of the MegPrime Token can fluctuate. Renters who wait to convert may see rewards rise or fall.<\/p>\n If you convert the token to a stable coin, or USDC, right when you receive it, \u201cthere\u2019s a small window of volatility where the token price can change, but the risk is minimal,\u201d said Ipour.<\/p>\n Renters only get the down\u2011payment credit if they buy a home through MegPrime\u2019s own brokerage, and use MegPrime\u2019s own mortgage company.<\/p>\n It\u2019s not a universal credit \u2014 it\u2019s a marketing tool.<\/p>\n The large monthly incentives ($300 to $800) come from commissions MegPrime earns when renters sign leases at partner properties and marketing dollars the company chooses to redirect to renters.<\/p>\n But if landlords are looking for tenants, there\u2019s a straightforward, existing way to attract them: lowering rent, the N.C. Tenants Union\u2019s MacLeod said.<\/p>\n At the time of the interview, fewer than 50 renters were paying rent through the app, though the company claims \u201c10,000 people\u201d are on a waitlist.<\/p>\n Full bill\u2011pay is just launching. This is early\u2011stage adoption, not a proven national system.<\/p>\n The SEC\u2019s non\u2011action relief means the agency won\u2019t take action based on the specific structure MegPrime described. It does not mean the SEC endorses the product or guarantees future regulatory stability.<\/p>\n Renters can pay any landlord via ACH, but the biggest rewards only exist at \u201cMax Reward\u201d properties. Availability varies widely by state and market.<\/p>\n MegPrime can adjust tiers, reduce payouts or change incentives at any time. Rewards are not contractual.<\/p>\n That could pose a problem for renters making decisions about what they can afford, MacLeod said. They may expect to be paying one price, but later learn the terms have changed.<\/p>\n \u201cI think that that stability, consistency feels quite important,\u201d MacLeod said.<\/p>\n The North Carolina attorney general\u2019s office had not received any complaints about MegPrime as of May 29.<\/p>\n \u201cIn general, we urge consumers to be vigilant about any offer that seems \u2018too good to be true\u2019 and to be cautious when it comes to cryptocurrency,\u201d the office said in an email to The N&O. \u201cScammers often capitalize on cryptocurrency, and it has fewer legal protections.\u201d<\/p>\n The office recommends that residents protect themselves and their cryptocurrency from scams by taking steps including: watching out for impersonators, never authenticating activity using a prompt from an unknown caller and being wary of unsolicited messages asking for payment in cryptocurrency.<\/p>\n Keep up with the latest Triangle real estate news by subscribing to On the Market, The News & Observer’s free weekly real estate newsletter. Look for it in your inbox every Thursday morning. Sign up here<\/a>.<\/p>\n