If you own real estate, this asset can be used to put you in a far stronger financial position. But whether you own a commercial property by yourself or serve as a member of a fractional real estate strategy, it’s imperative that you develop a modern approach to make the most of your liquid asset. Like many things, digitization is the key to success, and tokenizing real estate is the answer.
Whether you want to unlock value of real estate at a time when the market is at an all-time high or you wish to protect yourself while simultaneously facilitating faster transactions, tokenization should be at the top of your agenda for 2022.
The concept of tokenizing real estate sounds complex but starts to make sense once you get into it. Essentially, it involves breaking a real estate asset (property) into lots of little digital tokens. So, if you had a 250,000 sq ft property worth $25m, it could be broken down into square inches with each inch being worth under a dollar each.
In turn, those individual tokens that represent a square inch of the building become equity tokens that can be traded on an end to end platform for real estate transactions, such as Reitcricles. This subsequently makes investing accessible to a far larger audience, which can make it easier to raise funds and utilize an asset to its full potential, particularly if you wish to sell a small percentage of the property to raise cash flow for other investments or to fund your retirement.
Tokenizing is another example of digitization in the modern world and can facilitate quick transactions in relation to real estate (where traditional transactions can take months) with a view to creating NFT bonds or smart contracts. Blockchain technology allows for the digital equity tokens to be transferred in a secure way through encrypted transactions using a decentralized autonomous organization (DAO).
Aside from speeding up transactions and simplifying the process, it can reduce transaction costs and promote greater transparency for all parties. When looking to make the most of your real estate asset, the digital landscape of equity tokens can, therefore, be used to leverage greater returns and create a far more fluid approach to asset utilization.
In short, if you own property either as a personal investment asset or as a member of a fractional real estate group, tokenizing can be a very useful method. It can be used by property owners looking to boost their pension using peer-to-peer financing, real estate owners looking to build cash flow or raise capital in deflationary currency, or investors wishing to use corporate real estate, vacation rentals, and workspace rentals to their full potential.
To find out more about tokenizing real estate, contact the Reitcricles team.