10410 Cadieux, March 2025. A so-called “commercial” building owned by RealT goes up in flames. The fire tears through the structure. Months later, the site is still a partly charred wreck, open to the elements, never secured.
Still from a YouTube video showing the fire34
The building after the fire
What makes this fire scandalous is that the building had been the subject of a damning inspection report on 22 January, six weeks earlier. The inspectors had flagged the risks precisely: no smoke detectors, dangerous electrical wiring in breach of the NEC, fire doors not up to NFPA standards, rodent and cockroach infestation. RealT did nothing. Six weeks later, the building was burning.
Excerpt from the report of 22 January 2025
In practice, a fire breaking out just weeks after that report puts the LLC that holds the property in serious trouble. An insurance expert I spoke to explains the problem.
If the company’s liability is established, he says, the insurer will refuse to pay out.
Jean-Marc Jacobson plays it down.
Everything is negotiable in the United States, he says: they won’t pay everything they owe, they’ll pay part of it.
This fire is only the tip of the disaster. Since late 2024, the City of Detroit has been waging war on speculators that a senior local official, speaking on condition of anonymity, calls crooked. Before going on to explain at greater length.
Property prices in Detroit, he explains, are among the lowest in the country: a few tens of thousands of dollars for a house. The speculators’ bet is that the market will eventually pick up again over time. So they buy and, while they wait to cash in, they rent out, sometimes at very high prices, without looking after the properties.
More than 3,000 problem landlords have been identified, with $4M in unpaid fines between them. Among them, Dennis Kefallinos35 and other notorious investors. And RealT36.
Excerpt from city council minutes on unpaid fines
The number of cases documented by local media, community groups and public bodies is such that this cannot be isolated behaviour. Detroit is systemically riddled with property speculation, and the impact on some tenants is brutal.
Between January and April 2025, systematic inspections reveal the scale of the disaster. RealT racks up more than 1,000 blight tickets37, for a total of $2M in unpaid fines. 52 properties are classified as “dangerous buildings”, representing $21M of real estate deemed unfit for habitation. More than 400 RealT buildings never obtained a certificate of compliance38, and renting without one is illegal.
Jean-Marc Jacobson disputes some of these violations:
You buy a building, he says, and six or seven months later you are charged with a violation, one of which dates from 12 years before you bought the property. He has hundreds of blights like that, some going back to 2005, when he only entered the Detroit market in 2019.
An inherited legacy, granted. But one that, more often than not, carried on.
Take, at random, 9624 Abington. The property is acquired by Michigan RealToken II LLC, managed by Remy Jacobson, in September 2022, then transferred, on an unknown date, to RealToken 9624 Abington Ave., Inc., a transfer recorded on 25 September 2023. The property was apparently bought from Joyful Homes I LLC, which had itself held it since 2015, from MBRE Holdings LLC, which apparently bought it in 2011 from a private individual who had owned it since at least 2005. A whole string of opaque LLCs whose real owners are impossible to trace.
What RealT could not have missed was the state of the property. Because a simple look on Google Maps was enough to see that the outside of this 1936 house was not exactly fresh.
Nor could it have missed that for 20 years, the owners of the property had been found liable again and again for failing to obtain a certificate of compliance.
Worse, between the acquisition and the transfer to the SPV, which may explain the delay, the property was the subject of 5 proceedings that ended in a judgment against the owner, notably for:
All of which made it one of the first buildings inspected by the City of Detroit in March 2025, because city staff knew the house had been gutted by fire.
Excerpt from inspector Danny Shufford’s report
The building is immediately classified as a Dangerous Building. 50 more will follow.
At 19000 Fenton, north of the notoriously rough The Eyes, a property that has had no front door for months. Temperature recorded: 3°C in January 2025. More than $10,000 in unpaid fines since 2010, with a fresh surge since RealT bought it in 2022.
Same story at 12641 Elmdale, where RealT raised $1.3M for its 24 units in spring 2023. After Michigan Realtoken VI buys it from Elmdale Building, the city points out that the building has no certificate of compliance. With no response, and at the tenants’ request, several inspections take place in the second half of 2024, revealing a massive rodent presence, chunks of wall fallen on the floor and numerous safety problems. Every letter sent to the LLC goes unanswered, leading to more than $100K in fines, half of which are still unpaid. Possibly because the letters were sent to the property manager rather than to RealT’s head office. That, at least, is what the company claims.
On the other side of town, 1345 Monica has no more heating than the others. The broken windows have been replaced with flimsy cardboard, and the safety report is so long that the summary alone runs to 24 pages! Out of just under $900K invested, a mere $12K had been budgeted for works. Roughly the amount of the fines over the past 18 months.
But above all, the tenants have been living with this absence of management for years39.
A tenant on the East Side:
The shower, she says, has no working taps. The walls are covered in mould. In winter, the heating cannot get above 3°C.
A resident in the north:
He reported the rats several times, he says. They told him they would send someone. That was six months ago.
A mother:
In January, she says, it was 3°C inside. She had to move in with her sister, with her children. But she keeps paying the rent, otherwise they end up on the street.
Another, anonymous:
No heating for two winters, he says. The windows don’t close. Water pours through the ceiling when it rains. All for $700 a month.
Real people, poor and mostly Black, paying between $600 and $800 a month to live in homes that are not tokenised in any real sense. Just falling to pieces.
The tokens are worth more than their roofs.
In his defence, Jean-Marc Jacobson tells me at length that he was conned by one of his property managers, Shawn Reed, who allegedly falsified work orders and receipts while hiding the true state of the properties. Because in reality, RealT’s business model is the same as most fund managers and intermediaries: find the right assets, collect the cash and outsource the management.
Their business model, he says, meant they did not do the property management themselves. That was the foundation of everything. Especially since he and Remy, his brother and business partner, came from the property management world and did not want to go back to it.
Which is fairly consistent. These are different trades, and most asset managers use property managers, sometimes subsidiaries, but staffed by specialists. It is also what Cédric O’Neill of Bricks told me two years ago (in French): their inability to manage properties had nearly sunk the French fractional property platform. In hindsight, you could even argue that the requirement from the AMF, France’s financial markets regulator, to switch from royalties to bonds, and therefore to stop investing in properties it managed, probably saved Bricks.
Had Reed been lying to RealT for years?
Reed, he says, sent them fake timesheets, and sometimes did not even bother to change them from one week to the next.
Still according to Jacobson, Reed allegedly diverted RealT’s management resources, and possibly its management funds.
They were diverting RealT’s maintenance crews to their own properties, he says. Reed sent them to his own building, which is now in perfect condition: it was RealT paying the workers on his job.
Worse. Reed allegedly ended up trashing the properties.
They found walls smashed in with sledgehammers and copper wiring ripped out, he says. Reed would empty buildings of their tenants, then let squatters in.
For his part, Reed denies it, saying that RealT cut costs and was well aware of the state of the properties40.
And for investors, there is no way to check how much rent was actually collected. Originally, each property had its own wallet, and the flows were traceable. Today, RealT has centralised everything into a single wallet. How much comes in? How much goes out? Total opacity.
That said, several things do not exactly play in favour of Reed’s version. Starting with his track record in real estate.
The Jacobsons say they found out after hiring Reed. But for Jean-Marc, it was not a dealbreaker.
When he was in Canada, he says, the superintendent of one of his buildings had also done time, and was the best superintendent he ever had. Everyone, in his view, deserves a second chance.
But above all because today the situation is far more complicated: in May 2024, Reed launched Landlord Token, a platform competing head-on with RealT, with a similar pitch, similar customers, similar tenants.
In September 2024, Shawn Reed is fired by RealT, which takes back management of the properties in a hurry. The intermediary, who defends himself by saying he was only in charge of minor repairs and photos, will have pocketed $2.2M in commissions on top of a salary of $7,500 a month44.
Since March 2025, he has been attacking RealT head-on across social media, posting photos and videos of the properties he used to manage and using them as an argument to promote his own platform.
Tweet posted by Shawn Reed’s company
Which eventually pushed RealT to sue Reed last April.
Excerpt from the complaint filed by RealT against Shawn Reed
But Reed is only a symptom. The problem is the system. A chain of diluted responsibility in which nobody is to blame. The Jacobsons can blame Reed. Reed can blame RealT. Investors can say they didn’t know. The tenants, meanwhile, are still living in ruins.