As they eyed further expansion in Detroit, the brothers worked with real estate professional Shawn Reed, who, according to court documents, started to identify and sometimes help renovate properties for RealT to tokenize. Unbeknownst to the Jacobsons, Reed had a checkered past; he had previously served prison time for conspiracy to commit bank fraud and once agreed that he could be described as a “slumlord.” He teed up deals that helped RealT to keep pace with the now-soaring demand for its tokens.

I spoke with one investor, who posts on Telegram as TokNist, who said that when they first heard about RealT, they understood the proposition immediately. A French national living in Asia, TokNist (who asked to not be named out of fear of retaliation by other RealT investors) had wanted to buy real estate but couldn’t secure a loan. RealT offered a way to invest small sums without any bank involvement. “A lot of people are like me,” says TokNist. “They are not wealthy speculators. They are simple people who want a piece of real estate, and they want fixed income.”

In 2022, TokNist began to snap up RealT tokens. It wasn’t always straightforward. Whenever RealT was due to list a new property, they waited at their computer and watched as a timer ticked down. The website frequently failed, and their screen would go blank, or tokens would vanish from their cart. “The houses were sold instantly. You could have six or seven for sale the same day and, after a few minutes, every token was gone,” TokNist tells me. “It shows you, there is really a demand.”

Behind the scenes, the Jacobsons were beginning to run into problems with administering their swelling property portfolio. In 2023, a bank foreclosed on a commercial property the brothers owned as part of a separate business venture in Miami, Florida, after they defaulted on a loan and were ordered to pay $10.4 million. The City of Miami also happened to have classified the property as unsafe. (The Jacobsons describe this episode as a strategic decision in light of the Covid pandemic and an outlier in their track record in Florida.) That same year, the City of Chicago brought multiple fines against RealT LLCs over alleged blight violations, failures to adhere to building code, and debt delinquency. It was an early indicator of the troubles brewing in Detroit.

In the summer of 2024, Aaron Mondry was casting about for a fresh lead. A reporter at nonprofit local news organization Outlier Media, Mondry had been writing a series of articles, “The Speculators of Detroit,” about the city’s housing market. Then a contact pointed him to a curious pattern in the deed register for Wayne County, Michigan.

Scanning the register, Mondry saw that a large number of Detroit properties were owned by LLCs whose names were variations of “RealToken.” By that time, through these many LLC subsidiaries, RealT had bought and tokenized hundreds of properties across Detroit and become one of the city’s largest landlords. Many of the properties were single-family homes that RealT acquired in batches by striking deals with other landlords, sometimes without visiting the units in person. The RealT properties are concentrated in low-income, predominantly Black neighborhoods in the east and west of Detroit.