Tokenizing Real Estate: A Win-Win for Investors and Renters
Real estate is a multi-trillion global market that remained the same for a long time and then started to transform all of a sudden. A market that is still substantially illiquid for investors and very complicated to access for young adults willing to buy their own house.
Although today’s families are generally more highly educated, and in some cases, have better jobs than previous generations, they generally find it more complicated to have access to homeownership. As an example, for young adults living in the UK, the chances of owning a home have more than halved in the past 20 years.
So, why is it not possible to find a way to open up access for small investors while helping renters with a better alternative? Well, there’s a way, and it involves the use of tokens. But let’s go step by step.
First thing first, what do we mean when we talk about tokenization? Tokenization refers to the issuance of tradable tokens representing tangible assets. With tokenization, you combine the best of both worlds, real and virtual. Here we talk about real estate, but tokenizing assets also applies to art, commodities, company shares and every asset that you can think about. The potential this can have on the whole financial services sector is immense.
In fact, the benefits of real estate tokenization are many. It’s not just about adding liquidity to a historically illiquid sector. It’s also a solution to lower the entry barriers for small investors, enabling them to build a diversified portfolio with fractional ownership of real estate properties. It’s a way to give small investors access to high-value and high-return investments.
Source: CBInsights — How Blockchain Technology Could Disrupt Real Estate.
Thanks to blockchain-powered tokens using smart contracts and a fully distributed ledger, there’s the opportunity to bring trust and transparency to the market. In this way, it’s possible to create a fully auditable history of the ownership of every token — removing the risks attached to a highly centralized system where intermediaries decide the rules.
So, if there are so many advantages, why has mass adoption not happened yet? For various reasons, including a technology that was not mature enough, lack of education on the topic, and instruments that have been sometimes presented in an overcomplicated manner. All complemented by a natural resistance to change, unwelcoming government regulations, etc.
Nowadays, the reality is different. Blockchain has reached a more advanced level of maturity and both consumers and investors are becoming more and more familiar with Bitcoin and other cryptocurrencies. But also with other instruments using this technology, like the art and sport-related non-fungible tokens (NFTs), which volumes have been exploding in the last twelve months. At least in this sense, the current pandemic situation helped to further accelerate digitization, amidst a boom of interest for all things digital.
The time for real estate digital tokens is now.
That’s what we believe in, and that’s why we are building ReTok — aiming to provide a solution for those interested to invest in real estate and those looking to buy their first house. With ReTok tokens, investors can help a whole generation to become homeowners and get paid for it. Not bad, right?
It’s one of those situations where it is not enough to just look at one side of the coin while ignoring the other. A solution that can bring benefits to both young families and real estate investors is what we need.
Locked out of homeownership by high prices, young families run the risk of being renters forever and that’s not fair. People with a good income should be able to become homeowners. Our mission is to provide a better alternative to mortgages that can help them to buy their new home.
How ReTok works
- Investors buy the ReTok tokens
These tokens are backed by real estate assets. Real properties, accurately picked by a committee of investment experts and purchased with equity — no mortgages, no banks, no loan default risks. The price of the ReTok tokens will move with the value of the underlying real estate assets — no complex financial instruments are needed.
- Investors receive their returns
ReTok token holders get rewarded with a share of the rent paid by the tenants. The share received depends on the number of tokens holded by the investor. As simple as that.
- Renters become homeowners
That’s right. The tenants will have a chance to buy the home where they live. It’s a win-win: for tenants, as they can buy a home at their own pace, without the need of a mortgage; for the investors, because having renters that own part of the property, means that they will treat it as their own, staying there for a longer time.
A whole new system, based on the ReTok token, is now taking shape. Here are the key peculiarities:
- Safe: there are carefully selected properties backing the token value. Furthermore, it’s an investment that protects your savings against inflation.
- Accessible: you only need as little as €100 to start building a real estate investment portfolio.
- Liquid: the token will be listed on an exchange and you can buy/sell it when you prefer.
- Sustainable: it’s powered by Avalanche — a high performance, sustainable and secure blockchain, founded by scientists from Cornell University.
- With a positive social impact: thanks to your investment, for some young families, it will be possible to become homeowners.
And keep in mind that this is just the beginning. The possibilities are endless.
So, are you ready to create the future of Real Estate together?