Franklin Roosevelt once said: "Real estate cannot be lost or stolen, nor can it be carried away. Purchased with common sense, paid for in full, and managed with reasonable care, it is about the safest investment in the world."
Of course, getting into the real estate market is not always easy. Buying houses, apartments, and condos requires substantial capital, something not everyone has. But fear not, there is a new and more affordable way to invest in real estate: real estate tokens.
What Is a Real Estate Token?
As we dive deeper into the world of blockchain technology, anything that can be tokenized will be tokenized. This includes real estate, and many Security Token Offerings (STOs) have already become available in 2019.
In simple terms, a real estate token is a virtual asset used to represent ownership of land, apartments, homes, and other real properties. The goal is to eliminate outdated methods of dealing with real estate and instead facilitate transactions with digital tokens.
While this may sound like something out of a sci-fi movie, real estate tokens are already a reality. They are being developed for various purposes, such as timeshares, shares in real estate funds, tokenized Real Estate Investment Trusts (REITs), and investment opportunities with developing projects.
Advantages of Tokenization
Real estate tokens have the potential to disrupt the industry and offer several advantages for both investors and issuers.
Liquidity
One of the most significant advantages of tokenized real estate is liquidity. Currently, real estate is considered an illiquid asset, making buying and selling properties a cumbersome process. Tokenization makes the market much more liquid, providing an easier method to buy and sell real estate investments. It also captures additional value that was previously lost due to the perception of real estate as an illiquid market.
Fractional Ownership
With real estate tokens, buyers are not required to purchase a whole unit. Each token can be divided, allowing sellers to sell fractions of tokens at lower prices. This creates a lower cost of entry, making the market accessible to a broader range of investors.
Global Investors
Tokenization in real estate expands the investor pool. Instead of limiting opportunities to local or regional investors, anyone with enough money and an internet connection can participate. This globalization of the market opens up possibilities for buyers and sellers from anywhere in the world.
Blockchain Benefits
Tokenizing real estate assets comes with all the benefits inherent to blockchain technology. This includes transparency, immutability, security, and decentralization. Users can track their investments on the blockchain, ensuring transparency and accountability. Additionally, the decentralized nature of the blockchain prevents any single entity from having complete control over the network, making it less likely for changes or manipulation to occur.
How to Invest in Real Estate Tokens
Although real estate tokens are not yet mainstream, there are platforms available to start investing right now. Here are a few options:
Harbor
The Harbor platform allows users to trade real estate on a blockchain network. It offers assets like private Real Estate Investment Trusts (REITs), real estate funds, building ownership, and land. Harbor provides transparency, efficiency, fractional ownership, and liquidity through its blockchain technology.
Slice
Slice is another platform for tokenized real estate investing. It offers granular control over real estate assets and provides tokens to represent investments. Users can hold, trade, or liquidate their tokens on the platform's built-in security exchange. Slice is available to anyone with a minimum investment of $10,000.
Meridio
Meridio enables users to invest in shares of real estate on the blockchain. The platform splits properties into digital shares, allowing seamless interaction between investors and owners. Meridio ensures compliance with regulations through its Know Your Customer (KYC) and Anti-Money Laundering (AML) processes.
Conclusion
The tokenization of real estate has the potential to revolutionize property investment worldwide. However, integrating this new approach requires careful planning and collaboration between professionals in the real estate and blockchain industries.
While challenges such as regulations and compliance need to be addressed, the benefits of tokenizing real estate are undeniable. From increased liquidity and fractional ownership to global investor reach and blockchain advantages, the future of this market is promising.
We are excited to follow the development of this industry as it continues to grow. Subscribe to our newsletter at Bitcoin Market Journal to stay updated on the latest news and opportunities in real estate tokenization.