Tokenized Real Estate

Five Big Problems In Real Estate Solved By Cryptocurrency

Real estate prices in the United States just keep getting higher and higher, which is great news for those who already own homes and not so great for the rest of us. Younger generations are putting off buying any kind of property for longer as the initial investment becomes farther out of reach, meaning that many of these younger Americans are finding their net values to be significantly lower than their parents’ when they were the same age.

This presents a number of problems for the long term health of the American economy, as home ownership rates for the younger generations tend to equate to greater future wealth and larger numbers of children per family. The longer we millennials put off buying property, the more likely we are to put off having kids or forego it completely.

So, what can be done to get the tech-loving generation to start closing the gap between themselves and their elders? For one new company, a novel solution has been their driving force: Digitize the real estate and begin democratizing the ownership of property, leading to a greater number of people sharing the profits with a lower entrance fee. is trailblazing what may very well become the new normal when it comes to real estate investment: using cryptocurrency to drive real estate investment. With an incredible variety of applications for the digital currencies beginning to emerge, the company believes it can solve a number of problems associated with traditional real estate

1. Significantly Decreases Barrier for Entry

A typical prospective homeowner can expect to put at least 10% down for a new home, meaning on average, new home owners in America need at least $27,000 saved up before they can even think about buying the house. Considering the average income is not much higher than that down payment, this is causing most in the millennial generation to consider home ownership to be far out of reach.

With RealT’s decentralized property ownership, however, that is no longer the case:

“The company acts as a wrapper for a property. That’s how we turn a single deed into 1,000 digital tokens. Each token represents a share of a company and that’s how we got the price of our token down to $63.75. This way, we reduce the costs of owning property and make it accessible on the internet,” said David Hoffman, chief operating officer at RealT.”

Shares of a house can be acquired for a thousandth of the price of the actual property, meaning you can buy up a number of different property pieces of varying values or buy more of the same property over time.

2. Liquidity

One of the primary issues many people face when deciding what to invest in is liquidity, or how tied up your cash is in a particular investment. Stocks can be bought and sold within minutes, meaning they are highly liquid, while investments like property and businesses must go through an arduous, months-long process of being put up for sale, cleared by appropriate authorities, inspected, etc. before the money for the sale actually gets back into your hands. If you need money quickly, this can present a highly challenging situation for you.

With tokenized real estate, your stake in the property is nearly as liquid as a typical piece of stock:

“What RealT does is reduce the requirements of owning a property to what anyone can pay in cash. You’re not burdened by a loan, you don’t have to worry about variable interest rates, it’s just a purely cash transaction with as minimal baggage as possible.”

Since everything is done digitally, RealT is also breaking records for property transfer as well.  From buying the token, to owning a fraction of a property, it could take less than three hours compared to the average 30-day exchange period, according to their website.”

The company simultaneously guarantees liquidity and a stable price for the property by utilizing a cryptocurrency security exchange, which uses a proprietary algorithm to ensure an appropriate number of tokens are available at all times to let users buy in and out as desired.

3. No-Effort Property Management

With most rental properties, you need at least some involvement in the management of the property – helping set tenant criteria, approvals of new tenants, and making sure your property management team is doing what it’s supposed to do. With RealT, the company performs every one of these functions for you:

“All their properties are currently rental properties and according to Hoffman, being the landlord is a pretty low-maintenance gig. RealT hires property management companies that are responsible for sourcing tenants, collecting rent and managing repairs. Property management companies are paid a 5% cash fee from rent collected. “If you own a token, there are no responsibilities or requirement to maintain the property, because we do that for you,” he added.”

This means you can buy up a few shares of a property, and forget about it until the rent starts rolling in. Speaking of rent…

4. Rent Income is Received Daily

Rent income is usually a monthly affair, with each tenant paying their ascribed rent on a set day every month. With tokenized real estate, however, this influx of cash comes daily:

“Another unique element of this investment opportunity is that token holders collect rent on a daily basis. When people buy their token, Hoffman said they receive their rent the very next day.”

In addition to that, the company is working on making applications that can track the amount of rent you’re receiving daily and collect it until you’re ready to transfer the money into your account:

“We will soon be able to keep track of everything and keep a running ledger of rent that’s being paid to you. Then you can view that online, the same way you do with web banking. When you are ready to collect, we take your banking information and pass that along to Wire, who can complete the transaction and deposit the rent in U.S. dollars.”

5. No Need To Tie Yourself Down

It’s not secret that many younger people today are terrified of commitment, and RealT is making sure that they aren’t making any big promises to the company that will tie their customers to them forever:

Finally, if you buy a token, Hoffman says, you can sell it back to the company at the click of a button. “People aren’t committed to owning a property for 10 years. In theory, they could own a piece of property for 10 minutes, or however long they want.”