The investments in assets is changing with the arrival of tokenization. The tokenization of assets is the next logical step in the technological evolution of commerce, particularly when it comes to the real estate market. This paradigm shift, towards tokenization, will enable us to transcend the fiat-currency-centered view of economics into a more democratic, inclusive and efficient token economy.
But what exactly is asset tokenization?
An assets can be represented on a blockchain by a distinctive digital identifier called a token. Tokenization is a method that converts something valuable into a digital token, in many ways similar to the traditional process of securitization. Transferring the information from a real-world asset onto the blockchain allows ownership rights to be transmitted and traded on a global and secure digital platform. In the case of RealT, the assets being tokenized as residential properties, but, broadly speaking, any asset can be tokenized, for example an piece of art or a precious stone.
The Benefits of Asset Tokenization
The foundation of a token economy offers the potential for a more efficient and fair financial world by greatly reducing the friction involved in the creation, buying, and selling of securities. Features like integrity, robustness, accessibility, and immutability, make blockchain a powerful accounting tool and the process of asset tokenization creates a myriad of advantages, including greater transparency, liquidity, and accessibility as well as faster and cheaper transactions.
Reduced Barriers To Entry
Importantly, tokenization could open up investment of assets to a much wider audience — thanks to reduced minimum investment amounts and periods. Tokens are highly divisible, meaning investors can purchase tokens that represent small percentages of the underlying asset. If each order is cheaper and easier to process, it will open the way to a significant reduction of minimum investment amounts. Moreover, the higher liquidity of security tokens could reduce minimum investment periods, since investors can exchange their tokens on secondary markets which theoretically are global and open 24/7 (subject to regulatory limits).
How they do it?
To tokenize U.S. real estate properties, RealToken LLC, or “RealT” was established. “RealT” is a series LLC, a unique form of an LLC in which allows for unlimited segregation of membership interests, assets, and operations into independent series. Each series of the series LLC is treated as a separate entity.
Each “series” function as an intermediary entity between a token-owning individual, and a piece of real estate property.
Ownership of the various Series is tokenized to unique ERC20 tokens on the Ethereum blockchain, each of which represents one share in the Series, and thus in the real estate property owned by the Series. Because the sole purpose of the LLC Series is to own one single property, the LLC can be abstracted away; ownership of the RealTokens is effectively ownership of the property.
Through the services of a property management company, each property can be maintained with little-to-no engagement from any token holding individuals, while the individuals themselves retain full legal rights over to the property.
Each RealT property has its own set of RealTokens. These tokens are distinguished by their UIN (Unique Identifying Number).
UIN: RET-[Property Address]
You can see the first set of RealTokens for 9943 Marlowe, Detriot MI here!
Receiving Rental Payments
At the moment on RealT, all listed properties will be rented properties. In order to prove the reality of tokenized real estate in its fullest, it is important to illustrate the full rights of RealTokens owners. Receiving rental payments from tenants is one of the most salient mechanisms in which full rights over the property are conveyed. While ownership of property via a token is noteworthy; adding in rights to the cash flows generated by rent from tenants makes things far more interesting.
Daily Rent Payments
With the smart-contracts, there is no reason to retain the archaic system of payment every 30 days. Instead of one lump sum paid out every month, a RealToken Rent Contract will manage the dispersal of funds to RealToken owners, so that they are able to collect rent on a daily basis.
What does the purchase process look like? How long does it take?
Purchasing tokenized real estate is an easy process! However, there are a few steps that must be taken first. First of all you have to register, you can use this link to be redirected to RealT page!
1. Submit your ID Verification
The first after the registration step is to submit a picture of your ID, a selfie, and your preferred Ethereum address to your user-account.
2. Purchase real estate
This is the fun part! Browse the Marketplace and select your favorite property to purchase. Checkout and pay with your credit card or using COINBASE Commerce if you want to pay with cryptocurrencies !
3. Sign the Purchase Agreement
Once you have gone through steps 1 and 2, an email will be sent to your inbox from HelloSign with documents to sign. These documents are the legal documents that link the token to the property as well as provide further details as to the structure of the legal ownership of the property.
4. Receive the token(s)!
Once you have signed the Purchase Agreement, your tokens will be delivered to the Ethereum address that you added in step 1. Rental payments begin within 24 hours!
How do i receive the rental income?
Rental payments are paid automatically to Ethereum wallets that hold the RealTokens. Rent payments go wherever RealTokens are located, so by holding the RealTokens inside your Ethereum wallet, you automatically will be receiving rent.
Rent is paid in a stablecoin on Ethereum (USDC, DAI, etc.). A stablecoin has the same value as a currency like dollars. Using it allows for RealToken owners to receive their rental income in a stable currency that does not fluctuate.
Conclusion
For crypto investors that are looking to diversify into real estate for their portfolio, this is your go-to place. An opportunity like this arises because assets can be tokenized on the blockchain. Blockchain has continued to prove to be an important tool in enabling financial products to the masses due to its properties (no pun intended) and there are many innovative financial products created to be the solution for their target market. RealT is making use of blockchain technology to better serve real estate investors while solving the issues plaguing the real estate industry. I am excited to see how RealT evolves into a worldwide marketplace for real estate investments.
If you like my review and want to give this product a try, I would greatly appreciate it if you sign up through my link.
