Buy real estate and live a life of passive income. That’s what all the influencers tend to state when recommending a way to invest your money into making more money. While not entirely wrong, the reality is such that not everyone can put down hundreds of thousands of dollars on a property or properties, nor is it advisable (or possible in a reality of high interest rates and cautious banks) to leverage yourself up to the hilt in order to heed such advice. But for those who are still interested in entering the real estate market and don’t have the sort of trust fund that can turn one million into two million, there happens to be an alternative in the form of tokenization. If that sounds somewhat familiar, it’s because it leverages the established technology of blockchain, allowing those with smaller amounts to invest and join the party, gaining a piece of the pie that has long been considered the holy grail of investments.
What Are Permissionless Tokens?
OK, so before we travel too far into the weeds, we need to take a step back to get a grasp of what we actually mean when discussing permissionless tokens. You may already be somewhat familiar with the concept of blockchain and tokens (Bitcoin and Ethereum being the most well-known), but when it comes to real estate, or any physical asset for that matter, it takes on a slightly different form. Tokenization is the process of converting ownership rights of a real estate asset into digital tokens on a blockchain. These tokens represent a share of the property’s value, rental income, or appreciation rights and can be traded on blockchain platforms. According to the team of industry experts over at https://realt.co, this can result in becoming the owner of a real piece of US real estate, with all transactions being carried out on the blockchain. Regarding the permissionless aspect, this essentially means that anyone with a compatible wallet and access to the internet can invest without requiring “permission” from the usual intermediaries like banks or third-party brokers. In other words, it opens up entirely new ways of doing business that match the fast-paced modern society in which we currently live.
The Role Of Blockchain In Fractional Real Estate Investment
When we’re discussing anything that includes the term “fractional,” what we really mean is that you can buy a fraction of something without having to put your life savings into buying one of it. This already exists in the world of stocks and shares, where many brokerages allow investors to buy a fraction of a share. This can be particularly useful when the value of a share is too high for the average investor to purchase whole amounts. This can also be the case with what are known as REITs (Real Estate Investment Trusts), where you buy shares (often available in fractional amounts) in a business whose primary business is owning and operating some form of real estate. The downside to this more traditional way of investing is that you are one step removed from the physical properties and are relying on the business to operate as a conventional company. Investing in the real estate market by way of tokenization allows you to get in on the game while knowing that you are an actual owner (albeit fractional) of a real-world property.
Benefits Of Investing In Fractional Real Estate
Numerous advantages come from putting your money to work this way, ranging from offering the average person a lower barrier to entry than other methods to gaining access to global markets without having to overcome the many hurdles that typically only allow the super wealthy to invest.
- Lower barrier to entry: The first and perhaps most alluring advantage of fractional investing is its low barrier to entry compared to more traditional routes. You can invest whatever amount you’re comfortable with or able to afford in some of the most luxurious properties that would otherwise be well out of most people’s reach.
- Increased liquidity: Because of the buzz and accessibility of tokens that use the blockchain, you are usually able to buy and sell at your preferred speed, without having to worry about liquidity. This means that you don’t have to worry whether it’s a buyer’s market or a downturn in the overall market.
- Global access: Because of the way that blockchain works, you can create an account with a reputable platform and invest in almost any property imaginable (outside of places like North Korea, obviously!)
Investing in property is generally considered a worthwhile investment, but not everybody has the wherewithal to proceed. Using fractional tokens as a vehicle to enter the market, it’s now possible to achieve your dreams of owning a piece of the property market.