Real Estate industry is slowly becoming everyone’s priority which is why a lot of innovation and new ideas are being introduced every day which are completely eliminating the traditional methods and replacing them with quick ones in order to generate a more friendly user experience. This article is about the role of tokenization in the real estate industry and how it is the key in online real estate crowd-investing.
What is Tokenization?
Tokenization is the process of representing fractional ownership of a property in a blockchain based digital token. In short, presenting the ownership of an asset in a token is tokenization. Tokenization is becoming the most important factor of the modern-day real estate industry. Manual ownership transfer procedures are very lengthy and time-consuming processes and it takes forever to close a deal. This is where tokenization comes into play as instead of a big pile of legal documents, a digital token is given to the investors that represent their ownership of a particular share in the company enabling them to participate in the asset’s appreciation and cash flows. Moreover, these tokens are also tradable in a secondary market as long as the legal restrictions are not violated.
The question being raised here is why investors or property managers would tokenize their assets? It is because tokenization creates liquidity. Anyone who fulfills the eligibility criteria and has an active internet can start investing. The development of crowdfunding platforms has also made it possible for anyone to invest in real estate with only a few thousand dollars. The increased liquidity also lowers the barriers new investors have to face upon entering the real estate business as entry costs are reduced. The security tokens are managed through smart contracts which would automate the processes making them less costly. The tokenized assets are tracked on blockchain which is accessible to all the participants and is impossible to be hacked into by any means.
When to tokenize an asset?
Is there an ideal situation when tokenization is a must or there are no limitations or regulations? When there are opportunities open in a secondary market, tokenizing the assets can become very beneficial as that token can be traded in that market where the value of the token could increase as well. There are several times tokenization may seem an optimal solution. Anyone who wants to invest in real estate should be aware that tokenization grants earlier access to broader investment opportunities and higher capital. On the other hand, tokenization is also not a very simple process and demands complete guidance of legal advisors with both traditional and technological experience.
Vairt is an online crowdfunding investment platform for tokenization and liquidation of the real estate assets through blockchain and all-in-one solution for property managers to efficiently manage their properties. Through our platform, it is possible for the first time to be one country and invest in another country’s properties with just a few clicks and make profitable returns.