Asset tokenization brings financial inclusion by opening up illiquid assets to a large pool of investors. Such a value proposition is particularly useful in the real estate industry. Still, through tokenization, most functions performed by middlemen can be automated through the use of smart contracts, minimizing time and money. In this article, we will discuss what tokenization of real estate is, the types of real estate tokenization, how tokenization works, and the benefits of tokenization to investors and issuers.
What is real estate/property tokenization?
Real estate or property tokenization is the process of representing a fractional ownership interest of an underlying asset in a security token. Tokenization enables property owners to fundraise more efficiently by issuing tokens through security issuance platforms, like Tokenizer, Securitize, Polymath, Swarm, and others.
Security tokens represent a particular portion of shares of the underlying property, and they can be traded on secondary markets. The investors become partial owners of the underlying assets, giving them exclusive access to real estate investments, with transparency and liquidity.
Types of real estate tokenization
The tokenization of real estate can be classified into four main classes based on the type of assets. In the case of a commercial asset or property, it is called commercial real estate tokenization, and if it is a residential asset, it is called residential real estate tokenization.
These are the four main types of tokenization:
· Commercial real estate tokenization
· Residential real estate tokenization
· Single real-estate tokenization
· Trophy real-estate tokenization
How to tokenize real estate/property
Three necessary steps must be followed to tokenize a real estate or property:
To tokenize a property, house, or commercial place, you should look for a regulated blockchain platform with the rights to store ownership onto security tokens.
After that, ensure that the platform also offers the function to the owner to transfer those rights to investors and transfer the complete ownership to someone else in a legal manner.
Real estate tokenization exchange method. Like other securities, the owner should be able to exchange the token for a certain value so that every asset can have its proper value represented in tokens.
The benefits of real estate tokenization to investors
First, the tokenization of real estate eliminates intermediaries. This makes the process of investing in real estate more accessible and cost-effective for investors as well as property owners to raise funds.
Investors can liquidate tokens immediately after buying and at a meager fee.
Tokenization lowers entry barriers to real estate investment. Through fractional ownership, you can be an investor in a property in New York with even $10.
Real estate tokens are backed by physical assets; hence, they carry less risk than cryptocurrencies and ICOs.
Tokenizer Blockchain Banking Platform
Tokenizer is a blockchain investment banking system that champions accessible, transparent, and safe financial services. We believe that everyone deserves equal access to investment and fundraising opportunities. That is why we are democratizing access to capital for investors and fundraisers by making investing and fundraising efficient, safe, and accessible to everyone.
Are you in need of raising funds or investing in security tokens? Apply to raise funds through Tokenizer by filling this application form. If you want to invest in security tokens, sign up for a Tokenizer Investment Account today, and if you want to liquidate and trade-in Asset-Backed Tokens, we have a decentralized exchange designed for you! You can also contact us to order a metallic crypto card at $149 only.