Not only should you familiarize yourself with the terms and practices used in real estate, but you should also be aware of the financial aspects of real estate and property. That means knowing the ins and outs of digital tokens and assets.
Now, let's discuss the latest trend and which includes real estate tokenization.
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Blockchain technology, which has been closely linked to Bitcoin and other cryptocurrencies, has a huge impact, not just on the financial industry but on other industries as well. Blockchain-based solutions will have a major impact on different fields and niches in the years to come—one such blockchain-based solution is real estate tokenization.
In simple terms, real estate tokenization is the process of creating tokens on a blockchain and then assigning them to actual properties. So, the idea is that the tokens will be representatives of the actual properties.
This can then be used for raising capital to develop a property and making the investment more accessible to a lot of people.
Property owners can use tokenization to raise funds by offering it to consumers. In a way, that's similar to crowdfunding but the investors will be getting something in exchange for their money. Tokens can be used in the form of loans, a share, or even the ownership of a property.
Right now, there are two kinds of real estate tokens that are in use.
Those two types of tokens can be very useful to property owners and investors who are out looking for opportunities in the market.
When a property owner wants to tokenize a property, all permits and documents must be in place. The next step involves security tokens being issued which correspond to a section of the property in question.
For example, a token can be equivalent to one square meter of the property. Having that token would mean the person owns the one square meter to which it corresponds.
If the property in question is a rental property, then the owners of the token will be receiving a share of the rent proportionate to the section of the property they own.
Aside from being used to represent ownership, the tokens can also be monetized and used as a kind of reward for loyal clients and customers. They can use the tokens to avail of special services.
There are numerous benefits to real estate tokenization. We have listed the most important ones here.
What's one of the biggest things to consider for using tokens in real estate? It is the flexibility of their use as an investment as anyone can invest up to a certain amount. Moreover, one can own a piece of property—even for a relatively small amount.
The practice of tokenization also transcends the usual limitations of more traditional means of owning property. For example, no matter where you are in the world, you can own a piece of property in a different country through tokens.
Perhaps the biggest thing going for tokenization is the ease with which people can invest. Before you can own a piece of property in the past, you will have to go through a lengthy process. It will have to go through some processing and all the papers should be in accordance with the law. There's none of that with real estate tokenization.
You don't need a lot of money to start investing in real estate through tokens. As long as you can afford a single token, then you can make your investment. Real estate has always been the playground of rich investors and now the barrier is being lowered even further.
Do you like the idea of real estate tokenization? If you want to learn more about this excellent form of investment and real estate investing or commercial real estate investing, then check out our website.
You may also reach out to us by filling out our online form or contacting us at 949-881-7128 at Saint Investment Group today!
A master in Investment, Marketing, and Capital Raising.
Nic has honed his focus on the Real Estate and debt markets with Saint Investment Group and pursues large-scale Distressed Asset purchases with his partners and syndications.