What is Real estate tokenization?
Real estate Tokenization is the process of digitizing the value and the ownership of property into multiple fractional tokens that can be distributed among investors across the globe. This gives the holder of the tokens the right to own a portion of the property legally and the creator of the token, increased liquidity of funds.
The advantages of Tokenizing a real estate asset is to increase investment opportunities by bringing in a large pool of investors around the world, who would want to invest in real estate in other countries.
Using a Real Estate tokenizer you can tokenize any Commercial properties and Residential properties. Cities like Dubai are miles ahead and have already tokenized some of their properties so interested investors can invest in them.
Why is Real estate Tokenization the next big thing?
Real estate from time and time again to this day are one of the major sources of wealth for many entities be it individuals or corporations, It is globally, one of the largest owned asset class. By investing in real estate properties, People have made a fortune or have lost a lot of their money by making a few bad decisions. Globally, the real estate market is $217tn in size, yet it remains as one of the most unregulated, opaque.
Though various attempts have been made to regulate, manage and liquidate, this area, every individual or institution that owns real estate would have faced nontransparent transaction costs, differential pricing and taxes, illegal enchroachment, misinformation about the property, property rights opaqueness, and a set of troubles that are a subset of these major issues.
A Tokenized real estate brings transparency and improves liquidity in the previously known notoriously irregular market. Real estate assets that are tokenized can help weed out opaque property listing sites & middlemen who may add differential pricing and increase the cost of ownership that may seem undesirable to a lot of potential buyers. Since these tokenized assets are easily tradeable once listed on an Asset trading exchange, Real estate tokenization improves the chances of making the property lucrative for both long-term and short-term investors, who are keen on trading these just like they would with commodities.For a builder, Tokenization of real estate is a boon, as they can raise funds quickly to construct the building or complete the pending construction if they have already started.
A tokenized real estate is a security token that would pass the Howey’s test as these are backed by an asset. To protect the investments of the stakeholders, an escrow would be set up and linked to the smart contract with a set of milestones, everytime a milestone is reached, the payment is released. This way fraudulent builders don’t enter the Asset tokenization platform. Also, the platform that tokenizes the property and the exchange that lists it would require legal compliance paperwork before the token is listed for sale.
How does Real estate tokenization work?
To make the property tradeable it needs to be tokenized. After all the legal compliance check is completed, the real estate tokenization is carried out. Post which that it has to be listed on a reputed asset trading exchange.
Compliance and undertaking
Before creating the tokens, a thorough compliance check on whether the property exists (if it is partially or fully built) / the necessary permits have been received to start the construction. A thorough background check about the builder is also carried out. Once the check is completed, the next step follows.
The construction company with the help of a law agency needs to have all the paper-work related to the tokenization ready before the real estate tokenization process.
Real Estate Tokenization
To tokenize the real estate, a real estate tokenization platform or a real estate token Development Company is used, where all the necessary formalities are filled out and then the tokens are created with the smart contract and transferred to the construction company that wants their real estate to be tokenized.
Once the tokens are created, a reputed escrow agency is set up to handle the future transactions, track the milestones to release the payments in a timely manner to safeguard the investments of the investors and to ensure a smooth payment process between the builder and the investors.
Listing on a Tokenized Real estate Exchange
Before listing the real estate tokens, the exchange carries out a check for all the necessary compliance and the details about the escrow. Once the exchange approves the real estate token, it is listed for trading. Finally, the trading begins.
What are the features of the Real Estate Tokenization platform?
Real estate tokenization platform offers the ability to create, market and distribute your tokens to interested investors. The smart and thoughtful features that have been built into it allows you to conduct a Security Token offering or an Initial Token offering easily. Some of the features
Accept payments using Stripe, Paypal, Bank Transfer, Bitcoins, and Altcoins.
Manually verify and send tokens easily to those who have paid for the tokens right from the dashboard. All the data with the proof is received from the user and displayed here for you to verify easily.
Custom Token price change event:
Set the price to automatically change at a pre-defined time. The new price will take effect till the next price change event. You have the option to notify your users before the date too.
Send email campaigns and SMS campaigns to people who have purchased your tokens, to those who haven’t or both. Notify users of new events, Show them the progress of your STO related events.
Send now or Schedule it later. Leaving somewhere? Just save and Pick up where you left from the drafts.
Track Campaign performance:
Right from your dashboard, you can track the individual campaign’s performance easily, see if a user has received, opened, unsubscribed from the campaign.Campaign Bounce has been handled as well.. If a user unsubscribes, they won’t receive campaigns any further, this reduces your spam rate.
Company’s Income / Expense Tracking:
Built-in Income and expense tracker allows you to create income-expense reports right from the dashboard and display it to your investors to garner trust.
Dividend Payment Configurator:
Configure dividend payment cycles, half yearly or every quarter. Set the ex-dividend date, cum-dividend trading period and the percentage you will be paying your users. The system automatically calculates the amount you will have to pay and displays it in your admin panel at every interval set.
Making your Initial Token Offering (ITO) truly compliant with government regulations, now you can notify your users of the dividends you have paid them. All from your dashboard.
You can now display a mandated GDPR message to the user on the site. Set it on the dashboard.