How to Increase the Liquidity of Your Real Estate!

[Julio Gonzalez]

Real estate is a great investment for multiple reasons. It’s a relatively safe investment due to the fact that regardless of stock market position, people still need a place to work and live. It’s also advantageous compared to many other investments due to the fact that it depreciates over time, which can help you preserve wealth. However, real estate is considered a fairly illiquid asset since real estate transactions are typically very complex and expensive.

With new technology, real estate may no longer be considered as illiquid as it once was. This new technology is referred to as tokenization of real estate. So what does that mean? Tokenization is the process of creating a virtual token to represent ownership of a real estate interest through the use of blockchain technology. The underlying technology used is same as cryptocurrency such as Bitcoin, but it is adapted to be compliant with securities regulations.

How can tokenization be utilized in real estate?

Digitization and tokenization will transform the purchase, holding and sale of the real estate property. A token can represent 1) an equity interest in a legal entity that owns that real estate property 2) a right to share in profits arising from the use of the asset 3) ownership of the underlying asset or 4) an interest in a debt secured by the asset. Tokenization can be used for 1) The tokenization of Real Estate Investment Trusts 2) timeshares 3) Real estate ownership using an SPV 4) Investing in new projects 5) Loans for developing projects and 6) shares in real-estate funds.

Many types of real estate can utilize tokenization including office buildings, retail spaces, single-family homes, and multifamily structures.

What are the advantages of tokenization over traditional methods of real estate investing?

Tokenization replaces the outdated method of using paper documents by using digital tokens for transactions instead. It also provides enhanced security, simplified management and increased liquidity and transparency.

One of the companies that we partner with has designed a platform to aid investors looking to digitize their capitalization tables through blockchain technology and trade on a regulated alternative trading system.

Are you familiar with tokenization of real estate? What questions can I answer?