The Best Investment Of The Ages
Investment in property has always been seen as a wise and safe approach to increasing wealth and that is why many people choose to follow this path as a way to protect their wealth for retirement. In many countries, a homeowner is viewed as being financially stable and as a result enjoys a certain amount of perks within society and the financial world. In many cases this is merely a delusion, as the house is in essence still owned by the bank until such a time as the mortgage is payed off.
Tokenized property is rather different in that you actually own the property, howbeit only a fraction. This is all good and well but to be honest, prices are actually inflated at this point. One of the most successful names in real estate is Robert Kiyosaki and even he is offloading properties. If an experienced player like Robert is unable to profit from the current market, how can anyone else. In a recent episode of The Rich Dad Radio Show, Robert mentioned that he had offloaded a number of properties that were not that profitable. In the property game, that is as much as saying, the properties that are still mortgaged.
As a Landlord, the most powerful position to be in is when you own your properties outright and rental revenue only goes towards rates and maintenance. That means that the majority of your revenue is actually profit and regardless of market fluctuations, it makes sense to hold onto your properties as they are bringing in monthly revenue. However, a Landlord that is leveraged through debt is in a very different situation.
Rental Revenue Post Covid
Throughout the world, governments declared it illegal to evict a tenant due to defaulting on a rental payment obligation. This is helpful to the tenant but does have implications for the landlord, no matter his situation. However, all monies owed are not erased, so in the long run it is actually very unstable for both parties. The commercial property sector has been hit much harder than the residential sector, with landlords decreasing rentals by 30% to 40% and more in some cases. Some landlords with residential properties have also chosen to offer a premium of approximately 10% to 15% in order to maintain a stable income.
Numerous malls have entire sections that are unoccupied and landlords are prepared to make all kinds of deals and arrangements in order to keep tenants in their properties. This is not the type of market that I find appealing at all. The main reason being, the worst is yet to come!
What Happens Next?
Currently we are witnessing a wave of first time buyers hitting the property market as they are being lured by low interest rates. This is a fairly smart move, as the property market spews out what appears to be very impressive numbers. The reality is that the market is overpriced and property owners are busy dumping on very naive first time buyers. Many will be seduced, as will many not set their interest rate at a fixed rate. Implications of this global crisis are now only truly starting to surface and more job losses are yet to follow, especially as a second wave of lockdowns are now taking place globally.
In my opinion, repossessions will most likely begin to take place in the 1st quarter of 2021 and rise sharply mid year. This is the end of a cycle and effective investors will be looking to buy after a severe correction.
RealT and others may be great services but the sector that they are exposed to is not looking very inviting to me, especially as BTC is at the beginning of a new super cycle. If I want to be exposed to another sector that is tokenized, I would much rather go with PAX Gold. Tokenized real estate is a great idea but I just believe the time is just not now.
