RealT platform has opened the possibility to invest in the real estate via tokenization process on Ethereum blockchain
Blockchain technology is unstoppably reshaping all sectors of modern society.
In a recent post you could see how the tokenization of your work and time looks like and now you will learn how the tokenization of real estate works in practice.
The RealT platform recently started to offer investors from all over the world the opportunity to buy US real estate. The first tokenized real estate transaction was made in December 2019.
The property was sold to owners of 107 blockchain addresses from 33 different countries. Real estate offered through the ReaIT platform is tokenized on the Ethereum blockchain. Such ERC20 tokens represent ownership share in tokenized property and provide their owners with a real estate rental income. The rental income is paid to the token owners every day.
Founders of RealT
Buying tokenized real estate
In the Marketplace menu on the ReaIT.co homepage you can find a list of all the properties available for investment. Here you can also see real estate sold in the past as well as announcements of future sales.
At the time of writing, only one property was available for sale – an apartment in Detroit. By clicking “buy”, the system will instruct you to continue the purchase of property. You can purchase tokens either via PayPal or via several cryptocurrencies using Coinbase or Metamask wallets. Before making any purchases, you will need to identify yourself with your personal documents and photo as well as provide your Ethereum address to which you will receive your RealT tokens.
Currently offered property is an apartment building with a total purchase price of
$ 582,200 and the smallest ownership share you can buy represented by one token is
$ 145.56. It’s not possible to buy less than one token.
RealT platform also offers the purchase of tokens as gifts. When purchasing a selected token, you will be offered an option to mark the purchase as a gift. If you click on that option, the token will arrive at the email address you provide.
Tokenization through specialized company
After you make your purchase, the token will arrive at the ethereum address you provided, and you can transfer it like any other token. The RealT platform has an integrated exchange where you can sell your tokens. In addition to the mentioned exchange on RealT platform, you can also sell your tokens in the secondary market, for example on the popular decentralized exchange Uniswap.
The price of a token that represents ownership of the property will be adjusted once a year based on findings of an independent real estate professional.
Real estate is tokenized indirectly through a Delaware-based LLC. Procedure goes like this: Each property is owned by one special LLC and that LLC is one that is actually tokenized. In other words, co-ownership of the real estate is realized by co-ownership in the company – which is the final owner of the property. Co-ownership is achieved through the purchase of tokens.
Tokenized houses and apartments you buy are managed by a RealT management company.
The said company rents them, takes care of maintenance, administration and everything that is needed in property management. For its services, RealT takes a fee from the rent charged. For example, in case of mentioned Detroit apartment, that fee is $ 17.21 annually per token
For every $ 1,000 invested in this property, the maintenance fee will be $ 118 per year. All properties are rented out and earn monthly income. Token owners do not have to wait until the end of the month to receive their rent, the platform processes it on a daily basis. Every day a portion of a monthly rent will be sent to your ethereum address in Dai or other stablecoin of your choice. Stablecoins are cryptocurrencies linked to the dollar to avoid volatility, which is currently very high in cryptocurrency space.
Earnings from invested tokens arrive at your address daily.
If you choose Dai as a preferred payment method, you can further invest it through Compound or similar protocol and earn interest on it. You can read more about Compound in one of our previous posts. Another option is to store Dai in the Pooltogether platform and participate in the lottery in which you cannot lose. You can read more about the Pooltogether lottery here.
Further development of the RealT platform
The development team announced the expansion of their offer to real estate from other countries, but also to hotels, offices and other commercial premises. In addition to real estate, the plan is also tokenization and sale of arts, loans, real estate mortgages, etc. Another goal is integration into the DeFi (decentralized finance) sector – the fastest growing part of the crypto space. The ability to directly lock RealT tokens on the MakerDao platform will add to the attractiveness of the product itself and increase the value of RealT tokens.
In any case, it will be interesting to follow in which direction the platform will evolve.
The RealT platform attracted great interest from its launch. RealT brings us for the first time the opportunity of fractional investing in US real estate through tokens. This way you can become the owner of a part of the property that someone else cares about, and you get a passive income every day. The purchase is completed in just a few steps and once you become the owner of the token you can sell it quickly and easily on the RealT platform or in the open market. The pace of introducing new tokenized products and services to the RealT and similar platforms offers us with, until now, unthinkable ways of investment opportunities.