5 Real Estate Tokenization Benefits
Real estate is one of the most promising industries in the world. It is worth over $217trillion and growing by the day. This figure comes at the background of the many challenges the sector is battling with. There are so many bottlenecks some of which are artificial due to lack of transparency and the growing number of middlemen.
With the entry of blockchain technology, real estate tokenization is set to offer a wide range of benefits to the investor and the consumer. Asset tokenization is set to harmonize the otherwise complex sector by eliminating the number of stakeholders involved.
Real Estate Tokenization Overview
Real estate tokenization simply refers to the process of allowing property owners to use blockchain based systems to issue tokens. These tokens are a representative of a fraction of the real estate asset value.
To gain ownership of the asset, you need to purchase the tokens. By so doing you contribute to the cash flow and the token value grows making the asset price to rise. Once you invest, you can sell your shares at the online market place. According to Funder One Capital Co-Founder, Ced Celestin, Real estate tokenization is the future of real estate.
What are the Real Estate Tokenization Benefits?
Immutability in Real Estate
With blockchain tokenization of real estate asset makes proof of ownership easy. The technology eases transactions since these are stored and makes it easy for stakeholders to track and prove ownership and reduce the level of fraud in the sector.
To eliminate fraud, investors cannot sell assets twice. The system protects users from fraudulent double spending since transactions history cannot be manipulated. No investor can change any real estate asset ownership without being detected.
Real Estate Easy Share Management
Real estate tokenization creates a programmable environment where systems are automated. All events taking place in the ecosystem are captured and transaction can only take place once set conditions are met. This goes a long way in making investor management seamless.
What’s more; secondary transactions can be easily tracked using third party exchanges. A programmable system means fast transaction speeds since tokens have in-built compliance. The process is seamless compared to the traditional real estate processes.
Asset Tokenization Increases Liquidity
Tokenization of real estate assets means investors can own fractions of an asset in the marketplace. Tokens can be broken down into micro units while fiat like the USD can only go to a low of $0.1 which creates increase uptake by the crypto user.
Low entry point means more investors will own the assets compared to investing $150,000 to own a real estate asset. Tokenization means investors pay less to own part of an asset using tokens.
Implementation of Smart Contracts in Real Estate Tokenization
In real estate tokenization, use of smart contracts ensures faster speeds once set transaction conditions are met. With these contracts, individuals cannot make decisions. This will lock out many third parties and instill transparency. A smart contract lowers the cost of real estate assets, eliminates third parties and makes ownership affordable to many.
Access to Financing Channels
Real estate tokenization ushers in a new era where investors have access to better financing channels. It creates a new entry point for the unbanked population to participate and get a piece of the real estate pie. It is no doubt that real estate investors are keen on tapping on this blockchain potential.