The digital reinvention of real estate investing and asset management

The term “real estate tokenization” has been doing the rounds and getting quite the buzz among circles of economic discussion for some time now—and rightfully so. The global real estate market has been on the rise in the last few years; in 2016, the sector was worth nearly $7.4 trillion, followed by $8.5 trillion and $8.9 trillion in 2017 and 2018, respectively. Amidst these developments, real estate tokenization began stepping into the spotlight. According to market experts, this trend will only continue to grow over the next decade.

What is tokenized real estate? 

In simple terms, real estate tokenization has pulled out the concept of owning a property from its conventional form of ownership and put it into a more convenient and flexible option. It is a method of representing fractional asset ownership of real estate through blockchain technology tokens. As such, this form of tokenization gives the owner the time and feasibility to accumulate funds more effectively. For a particular asset, there can be several tokens; if one of them is owned by a certain person, the rest can remain available to others. In these cases, the tokens signify a specific portion of shares—and thereby ownership—of the property.

Given that the US dollar currency can fall only as far down as $0.01, the value of a token can be priced at a figure that has as many as 18 decimals. Such an arrangement will automatically relieve the investors from spending a fortune on properties, while having access to proprietorship. For instance, if a property is worth $500,000, an investor can pay as little as $500 to get her hands on fractional ownership. 

How can tokenized real estate benefit you as an investor? 

Tokenization enables investors with ease of liquidity 

The biggest and most crucial benefit of tokenized real estate is that it can be readily converted into cash. Marketplaces like RealT DeFi for Real Estate offer investors the opportunity to qualify as partial owners, who can capitalize on bright investment opportunities with the benefits of transparency and liquidity. This enhanced liquidity inevitably widens the scope of fractional ownership.

Person Holding 100 Us Dollar Banknotes

Blockchain immutability is reflected in real estate tokenization 

Blockchains come with immutability; when this feature is utilized in tokenization, it can turn things around for the better. With the existence of a digital history of all transactions, the investor and stakeholder can benefit from it as far as proof of tenure. This system additionally narrows down the chances of fraud and eliminates the necessity of requiring a mediator in establishing the contract. If the investor initiates selling and reselling of his tokens to multiple investors, the system will have a record of all the transactions, thus making it unviable for anyone to tamper with the authenticity of the transactions or attempt to land the investors in a mess of unverifiable data.

Automation improves investor management 

Investor management of tokenization is now easier than ever. When there is a third-party exchange to rely on, tracking secondary transactions are no longer as complicated of an ordeal. The built-in compliance of the exchange of tokens will permit swift settlements and transparent dealings to remove even the slightest risk of deception. 

If you like the idea of owning a fraction of real estate through tokenization, you can take a look at the portfolio of opportunities offered by RealT.