This story was first published by Aaron Mondry of Outlier Media. WXYZ is a proud partner of Outlier.
Starting in July 2023, a Florida-based real estate startup made a pitch to foreign investors: For as little as $50, anyone with a crypto wallet could buy into a portfolio of 39 homes on Detroit’s eastside.
Watch below: City of Detroit files lawsuit against company for allegedly neglecting 400 properties
It was a rousing success for the company, RealT, which sells “fractional ownership” of properties in cities like Detroit, Cleveland and Chicago. Collectively, investors shelled out more than $2.72 million for the bundle — much more than the $1.1 million RealT agreed to pay for the homes, according to the seller.
But the deal never closed. The deeds for all the homes still list the owner as Brewer Park Homes LDHA LP — not RealT — well over a year after investors bought up the last shares, called tokens. It doesn’t appear that RealT has informed investors that the sale hasn’t gone through.
RealT’s owners, brothers Remy and Jean-Marc Jacobson, claim to operate the world’s largest real estate marketplace of its kind. The company buys properties, subdivides them into thousands of digital tokens, and sells them — mostly to investors who pay in cryptocurrency. U.S. residents are barred from investing.
It’s unclear whether RealT’s investors understand what they’re actually buying. It’s doubtful many — or any — have seen the more than 650 tokenized properties scattered throughout Detroit’s neighborhoods.
RealT also hasn’t been transparent with investors, withholding or misrepresenting critical information. The company claims its tokenholders are legal owners of properties. But without deeds for the eastside homes or many others in its Detroit portfolio, it’s unclear how RealT can make that claim — or back the value of investors’ tokens.
Outlier Media’s monthslong investigation into RealT reveals serious questions about the company’s integrity and viability. RealT has sold digital tokens for Detroit homes it doesn’t own, misled investors about their condition and occupancy, and continues to pay out dividends for properties that haven’t collected rent for months — or years. Now RealT’s tenants, real estate experts and even its own investors worry the enterprise might be a scam dressed up as tech innovation.
The City of Detroit is taking action as well. It filed, according to Corporation Counsel Conrad Mallett, “the largest nuisance abatement lawsuit” in the city’s history against RealT in Michigan’s 3rd Circuit Court last week. The suit seeks to compel RealT to bring its entire portfolio up to code.
“The citizens of Detroit are paying the price in the form of their neighborhoods being inundated with dangerous structures that invite squatters and criminal activity,” the complaint says.
Despite the litany of concerns, RealT continues to tokenize new properties almost every week: 87 so far this year.
“We’re getting closer to a Ponzi/Madoff-type scheme,” said a person claiming to be a longtime RealT investor who independently contacted Outlier by email. They declined to identify themselves, citing recent kidnappings and violence against crypto investors, but provided evidence to Outlier that they held RealT tokens.
“If this is true, the very notion of a Real World Asset is void, and I would call into question my entire investment strategy,” they wrote. “More clearly stated, I’m withdrawing all my investments from RealT.”
More properties, more problems
Detroit is ground zero for RealT’s operations. It claims to own far more real estate in the city than any other location. The company is responsible for about 1,600 rental units in the city.
Previous investigations by Outlier Media revealed that the company owes the City of Detroit millions in unpaid taxes and blight tickets, and its tenants have been clamoring for essential repairs.
RealT doesn’t appear to have filed property transfer affidavits, as required by state law, for hundreds of properties. Paperwork for state-subsidized housing is years overdue.
The company’s business practices have alarmed and baffled industry experts.
“You have absentee landlords that are not doing right by their tenants and not being held accountable,” said Mark Hays, senior policy analyst with Americans for Financial Reform. “On top of that, you have this distributed ownership model that introduces another layer of complexity, opacity and lack of accountability that could exacerbate either the abuses or make it harder to find accountability.”
Caught in the middle
According to an offering memo sent to investors, RealT signs a purchase agreement with the seller before putting the property on its marketplace to raise funds. If enough tokens sell, it closes the deal.
That’s not what happened with the 39 eastside homes on Lillibridge and Fairview streets. RealT sold all the tokens it offered to investors between July 2023 and March 2024, according to a third-party platform that tracks RealT data.
But the deal never closed.
By all indications, Brewer Park Homes LDHA LP is still the legal owner of the homes. It holds the deeds, pays the taxes and receives the blight tickets.
Kathy Makino-Leipsitz, the state’s listed owner of Brewer Park Homes, confirmed that RealT doesn’t own the properties.
“It’s been under purchase agreement for over a year but hasn’t closed,” Makino-Leipsitz said.
Shaun Wilson, a spokesperson for RealT, said in a brief emailed statement Tuesday that Makino-Leipsitz is to blame for not closing the deal.
“The seller has not provided adequate documentation to allow Realtoken to exercise its last remaining option at this time,” Wilson said.
He added that RealT has until May 2026 to make a final payment on the acquisition and has already paid 80% of the purchase price — an amount Makino-Leipsitz disputes.
“Bottom line, they’re making excuses for not completing the purchase,” she said.
Brewer Park Homes may be the owner on paper, but residents say RealT has taken over day-to-day property management.
Tenants like Chiona White are caught in the middle of this ownership limbo. She said she moved into a Brewer Park home with her two children in late 2023.
She said she has no formal lease and has never received any maintenance from RealT. White said she and her father spent $5,000 on repairs themselves — fixing broken doors and walls, electrical problems and plumbing.
White didn’t know who she was supposed to pay rent to when RealT’s in-house property management company contacted her earlier this year. It never demonstrated that it was the owner — because it couldn’t.
Then, in June, she got a notice to quit — often used to initiate the eviction process — saying she had until July 8 to move out.
“No one has come to do anything, fix anything,” White said. “I’ve spent my own money. I feel like I’ve done more than what they were supposed to do.”
More deed questions
In a January interview with Outlier, the Jacobsons blamed a local property manager for the problems in Detroit. They later sued Shawn Reed, claiming that he misused funds, fabricated receipts and neglected renovations. Reed denies the allegations.
But even if everything in the lawsuit were true, it still doesn’t explain basic inconsistencies in RealT’s account of the situation.
Outlier examined all 25 properties RealT offered to investors in January — long after it cut ties with Reed and several property management companies and started its own in-house property management company.
The same issues persist: 21 properties are already delinquent on taxes. Fourteen are vacant, according to U.S. Postal Service data provided by Regrid. RealT reported at the time of the offerings that 24 were occupied.
In only three cases do records at the Wayne County Register of Deeds indicate that RealT is the owner.
Instead, Coastal Line Homes LLC holds or recently held the deeds. The LLC is tied to Erdem Sezer, a Turkish real estate investor.
Outlier was unable to reach him for this story.
RealT spokesperson Wilson said in a statement that “title issues” were holding up the deed transfers, and that the company expects a resolution in the coming weeks. He didn’t elaborate on the nature of the title issues.
Baffling business model
Investors told Outlier that RealT doesn’t provide purchase agreements to prove how much it pays for properties. That allows the company to inflate the value of homes it puts on its investment platform.
Darin McLeskey was astounded when he discovered that homes he sold in 2023 popped up on RealT’s marketplace — with price tags more than double what he sold them for.
McLeskey, owner and principal broker of Denovo Real Estate, told Outlier he sold 45 homes in a bundle to another real estate investor, Jerry Watha, for a little over $20,000 each.
Soon after, Watha transferred the properties to LLCs associated with RealT, which listed them at around $55,000 each. Watha did not return messages asking for comment.
“I have no clue how someone can justify paying that much,” McLeskey said.
The properties are part of Ephesus Homes, a low-income housing development. McLeskey said the homes “aren’t really designed to make money” because tenants’ rents are capped. Yet RealT promised investors a 10% return.
“It’s a physical impossibility (to get that much in rent) unless you have zero tax bills and do zero maintenance,” McLeskey said.
RealT needs rental income in order to pay dividends to investors — at least, in theory.
The company has claimed a 2% vacancy rate when marketing properties to investors. But that doesn’t square with U.S. Postal Service data showing around 20% vacancy.
Yet, RealT continues to pay out dividends nearly every week, for nearly every property.
Scrutiny builds
Detroit’s public nuisance lawsuit demands that RealT get certificates of compliance for all 408 properties mentioned in the complaint, and fix up the worst properties within 90 days — or allow the city to make repairs at the company’s expense.
It’s also asking the court to hold the Jacobsons personally liable for the cost of bringing properties into compliance.
RealT could also face fines for failing to file property transfer affidavits for at least 300 properties it has tokenized, according to data from the city assessor’s office. The affidavits, which inform assessors about a change in ownership, must be submitted within 45 days of a purchase.
Real estate experts told Outlier some buyers skip this requirement to avoid higher taxes.
The state is also watching. RealT owns at least six low-income housing developments comprising hundreds of homes. Those come with strict compliance rules, including annual reports and inspections overseen by the Michigan State Housing Development Authority (MSHDA).
Outlier obtained emails from MSHDA showing RealT is years behind on compliance for all six developments.
“RealT is a relatively new owner and we are working with them to get paperwork back into compliance,” said Katie Bach, MSHDA’s communications director. “They have inherited issues and are actively working through them. We have provided an action plan to RealT, and they have agreed to it. If they do not meet the submission dates, they will be sent a noncompliance letter, consistent with our policy.”
A noncompliance letter would start the process that could lead to fees, recapture of tax credits from previous years and legal action from the state’s attorney general.
This article first appeared on Outlier Media and is republished here under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.
