Real Estate Tokenization Through Blockchain Could Make Commercial Real Estate Investment Much Easier for the 99 Percent
Most people who made their fortune by investing in commercial real estate already had a considerable fortune to start with, whether in the form of family wealth or extraordinarily good luck. Investing in a multifamily dwelling or a shopping center requires more capital than most of us have. Unless you are already rich, your real estate investment projects are usually labor-intensive and bring in a modest income, such as flipping houses or living in one half of a duplex and renting out the other half. Blockchain technology could hold the key to making it more feasible for people who do not have vast amounts of capital at their disposal. Specifically, real estate tokenization using blockchain could simplify the process of investing in real estate and make fractional ownership more affordable.
What is Real Estate Tokenization?
In the context of blockchain technology, tokenization means creating digital assets, called tokens, to represent offline assets, such as real estate properties, or even shares of ownership in large real estate property. The encryption and automated record-keeping involved in blockchain technology are such that it is possible for investors to buy tokens, representing a partial interest in a real estate property, by concluding legally binding smart contracts. Blockchain records are virtually impossible to falsify, which means that tokenization protects investors from the scams and high-risk speculation that plague so many real estate investment ventures.
If you are a career venture capitalist, then losing large sums of money because you got scammed, or spending hundreds of thousands of dollars, if not more, clearing up an instance of title fraud is just business as usual. Most people do not have enough capital lying around to weather the storms of high-risk investing, though. Real estate tycoons have enough of a financial cushion to move forward with a deal even though other stakeholders might not be telling the truth, but the rest of us don’t. Real estate tokenization makes it possible for investors to participate with lower risk and less start-up capital. It also allows for greater transparency, so they can make informed decisions about what they buy and sell. Best of all, it makes the process of buying and selling shares of ownership and collecting distributions easier and more efficient.
Advantages of Real Estate Tokenization
Transparent transaction history protects investors from fraud
Eliminates middlemen, thus saving time and money
Enables ownership of large real estate properties to be broken into small fractions, enabling a larger and more diverse group of investors to participate
A Real Estate Lawyer Can Help You Get Started with Real Estate Tokenization
Real estate tokenization is the wave of the future. It will make business more efficient and transparent, saving you countless delays and costly legal battles. Best of all, it will make commercial real estate investing accessible to a greater number of investors, creating wealth for a larger number of people. Contact a real estate lawyer to find out more.
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