What You Need To Know About Tokenization of Real Estate

Real estate is a sought-after sector thanks to its relatively stable nature, and the fact it is one of the few asset classes that one can be truly experienced-you can’t touch, smell, or get the feeling of a stock. It is however a notoriously difficult market to break into, with large and unpredictable upfront costs, and long, complex transactions often pushing out eager investors looking to get some skin in the game.

The traditional structure of real estate investments, with all its intermediaries and middle men, has meant that real estate investments cannot be easily and readily sold or exchanged for cash without a substantial loss in value, that is, they are illiquid.

Enter Blockchain technology. You may have heard of Bitcoin or Spotify, two famous examples of the burgeoning technology, but how has it revolutionized and democratized real estate investing? For a start, Blockchain itself has nothing to do with cryptocurrencies. It is a shared, unhackable database that allows the process of recording transactions and tracking assets in a business network. Using blockchain, real estate tokenization would allow developers to signify fractional ownership interest in an asset using token stored on Blockchain. So, you can buy a token and own a piece of the real estate asset.

More and more, developers and real estate agents alike have been turning to tokenization, slicing up developments into digital shares, to pave a streamlined way for investors around the world to buy as much, or as little as they want.

By its very nature, Tokenization offers: a level of transparency not easily afforded in traditional deals, irrefutable documentation; and by extension of these two, massive cost reductions. This is both because it would allow, in theory, more investors to come on in manageable terms, and would deem many of the intermediaries and the costs they incur, redundant.

So, what changes?

Less gatekeepers: Less lawyers, brokers, banks, and appraisers.

Cut costs: ​​Saying bye bye to the middle men and gatekeepers also means less secondary costs.

Inclusivity: The removal of so many upfront costs break down the barriers that keep people with less capital out of the game. An investor can own as much or as little as they can afford.

Less deadlines: More liquidity means transactions are easier to track and transfer, investors will be able to buy and sell with the market instead of against it.

So who benefits?

Just like the internet revolutionized real estate at it’s advent, Tokenization offers an entirely new way for investors to interact with the market by offering an efficient solution for making real estate investment more streamlined and accessible. It may very well be the future.