Have you ever felt about how amazing and comfortable your home is? Even if you are an enthusiastic introvert who travels the world, you will start missing your own once you step outside your home. That’s how a piece of land has an unbreakable emotional connection with us. With the addition of some bricks, tiles, and paint, ta-daa, that’s your dream home.
But finding the right agent, a place without legal issues, and getting the ownership transferred without a fuss is also a dream. Yes, even in this 21st century, the intricacy of buying and selling a real estate property remains the same.
Now, let us introduce “real estate tokenization” to you!
Blockchain technology can detangle the knots in the real estate industry. In this ever-growing landscape, properties can be tokenized into NFTs, allowing investors to unlock new opportunities like never before. So, it lowers the bar for low-income investors to make their real estate buying dreams come true. Now, let us take you through the process of how real estate tokenization works and how you can become a part of this digital real estate community.
Real estate tokenization – Defined!
Real estate tokenization has made investments more accessible and open to a vast investor community through fractional ownership. The real estate tokens can be split into multiple parts to fractionalize the property’s ownership with lower investment thresholds for a large pool of investors, particularly individuals.
Processes Involved in Real Estate Tokenization
Stage 1 – Structuring the Deal
Initially, various factors played a significant role, such as asset type, type of stakeholders, jurisdiction, and relevant regulations. Generally, issuers prefer to tokenize an existing deal to enable liquidity for existing investors before increasing funds for the latest products. Then, the owner of the asset will decide which specific properties or property has to be digitized.
Stage 2 – Digitization
During the digitization phase., traditionally stored information (i.e.) paper documents are uploaded to the blockchain. Then, security tokens are issued after encoding this data into smart contracts. While digitizing real estate includes making a legally binding arrangement around a property to secure the investment.
Stage 3 – Technology Stack Selection
Now, one has to make some crucial technological decisions in this phase, which as given as follows.
- Choosing a suitable blockchain
Choose which blockchain has to be used to store the token data and where the real estate token should be transmitted.
- Choosing a custody solution
Find a secure custody service provider to safeguard the real estate tokens.
- Including KYC&AML verifications
Integrate compulsory Know Your Customer (KYC) and Anti-Money Laundering (AML) verification before providing securities.
- Deciding if a marketplace is required
Choose where the securities must be issued, either from a primary or a secondary marketplace. One can also create their own marketplace to distribute their tokens to investors.
Stage 4 – Issuance & Branding
This phase concentrates on developing and distributing real estate tokens. Investors and customers can use different payment modes to buy these tokens, such as cryptocurrency, fiat, and stablecoin. However, they should have a secure digital wallet to hold the real estate tokens. For wallets, customers can use either their own wallets or a third-party wallet on desktop or mobile.
Finally, tokens can be sold in live sale or auction (timed or fixed).
Tokenization gives an easy and cost-efficient way to invest in real estate properties. But, several factors give a hard time for investors who prefer real estate tokenization, and let us discuss them in the next section.
What Limits The Mass Adoption Of Real Estate Tokenization?
In general, a tokenized asset is subject to regulatory frameworks, and this one is no exception. For example, securities come under securities law. Also, other existing hurdles that hinder the wide adoption of real estate tokenization are market unsurety and knowledge gap.
Overcoming these challenges is possible with real estate tokenization, as it improves liquidity in the illiquid real estate market. Additionally, it reduces transaction costs by cutting off the intermediaries throughout the cycle. To reduce the burden, investors should choose the right professional advisor in the industry to seek expert advice.
Now, you have got a grip on real estate tokenization technology. If you want to give it a shot, the Futurengage team is here to assist you!
Futurengage – The Technology Simplifier
“Futurengage is your friendly-neighborhood company with a bunch of NFT experts who are capable of creating and delivering your real estate marketplace in 30 days.”
With our white-label real estate tokenization service, you will get an inclusive platform for investors and realtors. You can expect the features given below from us.
- Token Distribution
You get the ability to generate digital tokens representing ownership rights of a real estate property.
- Smart Contacts
The backbone blockchain technology enables the creation and compilation of smart contracts, automating real estate transactions and other processes.
- Asset Management
You will get tools to manage and track tokenized real estate properties for information like ownership history, rental income, and distribution of dividends.
- Investor Onboarding
After completing AML/KYC verification, authenticated and eligible investors will enter the market and participate in real estate token offerings.
- Investor Dashboard
You will obtain a user-friendly interface, allowing you to access your holdings, transaction records, and the performance of your investments in real-time.
- Custom Branding
You will acquire the flexibility to customize your platform according to your unique brand’s needs. For example, you can choose the color themes, UI components, logos, alignment, and other front-end features representing your identity.
These features are like the tip of the iceberg. Book a free consultation call with our team to know more about our premier real estate tokenization services.
If you like to dip your toes into the digital real estate world, contact our executive team to discuss your idea. We will be the brick-and-mortar to construct your own identity in the NFT landscape. Are you ready to give it a trial?
