The tokenization of property is something that caught my eye back in 2020. What makes it so appealing is the ability to gain fractional ownership via blockchain technology. Many people want to gain exposure to the property market but are financially unable to take on the burden of a mortgage. Owning property has always meant that investors needed to purchase an entire property or piece of real estate. Tokenization makes this a thing of the past and literally enables anyone to gain access to the real estate market.
One of the companies that caught my eye is RealT, which enables property investors to gain exposure to the real estate market from as little as $40 to $50! A property is assigned a specific amount of tokens. The value of each token is measured in a similar way to that market cap is calculated. In other words, by taking the value of the property and dividing it by the number of tokens, you arrive at the value of each token. These tokens will obviously appreciate and depreciate in accordance with the market value of the property.
This is how I understand it. Someone wanting to offload their tokens should be able to obtain a better price than what they paid for the tokens, provided real estate valuations are up. This will definitely require your own research. Due to property prices dropping, thanks to excessively high interest rates, this might be a good time to consider such an opportunity. This is especially true due to the fact that fractional ownership doesn’t require a mortgage, which increases your purchase price significantly.
Back In 2020
I specifically delayed looking deeper into this idea in 2020, as I had said that new homeowners were being baited with amazing interest rates that were unlikely to last long. I don’t recall anyone actually agreeing with me at the time, but hindsight has revealed just that. When dealing with real estate, it is important to note that the market is very unique to the location, and especially, the country. I know that RealT, for instance, only deals with American-based real estate. As I said, it’s something that I am now more willing to investigate due to the shift in the market and other key factors.
Provided, the company is reputable and above board, it sounds like a great way to gain exposure to the global real estate market. However, with all the recent chaos of centralized companies, it might be more difficult for investors to consider such an investment at this stage of the game. In the same breath, the relatively stable environment of the real estate sector might actually be more attractive to investors, given everything that has occurred. It’s difficult to say.
Whether it’s property, or other collectibles, tokenization is still going to become a lot more prevalent as time marches on. Provided, it is executed effectively, tokenization is an extremely valuable tool for investors and society at large. In terms of real estate, it’s a great way to gain access to real estate ownership and rental income. The return on investment is generally 10% per annum and also comes without the usual stresses that accompany a landlord.
I am not sure if I will actually go on to utilize this tool, but I am going to be doing some more research into this investment idea. It’s always good to have a few steady earners, even if future growth is not that impressive. I have to still however discern how viable an idea it will be for me, personally. I am keen to hear the opinions of those who are actively investing in this space, especially, RealT. Anyway, that’s it for this one. See you next time!