For any individual, the real estate asset is the most important “pillar” among the 3 pillars of wealth creation. It is said that the main real estate asset, the family home, comprises 2/3 of the family patrimony. Considering these numbers, imagine, what if you can make money selling a piece of your property that is not being used?
Well, now you can!
Real estate tokenization: a brief
Tokenization is essentially a modern innovation that relies on blockchain technology. It is a process of dividing a piece, any asset, into multiple stocks and further increasing the digital tokens on the blockchain platform.
In the case of real estate tokenization, the asset becomes real estate or land. Tokenization allows a physical property to be divided into tokens or digital shares. Each token represents a fractional share of that particular property. Unlike utility tokens, a security token derives its value from the underlying asset.
Tokenization has opened doors to access real estate in a way like never before. He not only gave investors a new tool to invest, but also gave homeowners methods to get the most out of their property.
A real estate security token can further be used to represent fraction of share, equity in a legal entity that owns the asset, rental income associated with the property, etc., etc.
How do owners benefit from tokenization?
Homeowners can enjoy multiple benefits in exchange for symbolizing their property. Let’s look at a few scenarios to better understand.
Sell a fraction of property
In today’s world, it is apparently impossible to sell fractional parts of a single property. There are no viable tools available that allow any homeowner to make an additional source of income by renting or selling portions of property.
Let’s say a homeowner wants to renovate the living room of his house and needs additional income to do so. However, with the methods available, the owner cannot withdraw any income directly from the house. But by symbolizing his home, he can now find a way to generate the income needed to renovate directly from his own home. How? ‘Or’ What?
In theory, the owner’s property is worth $ 100,000. Through blockchain tokenization, he can divide ownership into 100 tokens, with each token worth $ 1,000. The owner can sell 5 tokens thus producing $ 5,000 as the income needed to renovate their house.
Tokenization would provide the necessary mechanism for owners to sell shares of their real estate assets by listing them on secondary markets. Partial shares of the property are converted into digital tokens which can then be sold in global markets
Access to global markets
The current real estate market is bound by regulation and the geography of the real estate asset. Considering these factors, selling a property is very difficult for any homeowner. Additionally, it may take months or even years for the property to be sold on the market. For this reason, liquidity remains blocked in that particular real estate for the owner or the investor.
However, tokenization provides a platform that can completely change the dynamics of selling a home in the real estate market. It opens up possibilities for selling digital tokens in a global market, which is not bound by the geographical location of real estate. In addition, it facilitates long procedures for the sale or purchase of real estate. Thanks to tokenization, the process becomes as easy as transferring information directly from your smartphones.
Owners can take advantage of these tokenization features that ensure a frictionless process.
Any real estate investment requires high liquidity, whether it is just for investment purposes or to buy a house to live. Also, this investment gets stuck for a longer period and it is considerably difficult to extract instant cash from this “pillar of wealth”.
The properties in chips can instantly free up cash by buying or selling a fractional ownership in global markets. Investors can choose from a range of properties anywhere in the world and can purchase digital tokens in multiple investments. This is a huge relief for homeowners who can instantly access cash that would otherwise get stuck in their real estate property.
Any real estate market in almost any country requires a group of intermediaries to monitor the success of any transaction. From buying or selling a property to meeting regulatory requirements, there are a number of intermediaries that charge high fees and make the process long and boring.
Blockchain technology is a medium that guarantees peer to peer transactions without the need for middlemen or intermediaries to monitor the process. Thanks to smart contracts supported on the blockchain, tokenization makes it possible to remove intermediaries such as brokers to buy or sell real estate.
Homeowners don’t have to pay high fees to brokers who help them find their clients. Enlisting their property on an international platform that supports token real estate assets requires minimal transaction fees to pay compared to traditional methods.
Access to premium investments
Our complex real estate network is a niche reserved for leading investors. The average Joe cannot buy high-end real estate with current market prices. Plus, the average Joe can’t invest in real estate without a big cash investment.
Tokenization facilitates an inclusive arrangement for the average Joe and the average Jane. It allows anyone to invest in prime real estate properties through crowdfunding mechanisms and fractional shares. A real estate investment that guarantees high returns seems within the reach of any investor through the tokenization process.
How do owners occupy their property?
On Vave, we have created a platform for owners, investors and developers to symbolize their property in a fluid and frictionless way.
The digitization of real-world illiquid assets benefits homeowners when they sell tokens of their property in a 24/7 global marketplace. Additionally, on Vave, homeowners can access a wide range of properties. investors around the world without paying fees. Landlords can also choose to symbolize their stocks and earn passive income from rental investments.
Real estate tokenization is indeed making the world through its innovation. The possibilities are limitless!