Blockchain & Real Estate…The Perfect Marriage?
Would you be attracted to investing in large commercial real estate projects if you had the ability to control when you sell your investment?
This is the biggest hurdle many investors face when thinking about investing in real estate — it is illiquid.
Hence, when I learned that blockchain technology has the ability to revolutionize the way people invest in real estate — I was intrigued to make the trek to Austin, TX for The Blockchain Real Estate Summit.
Before we get started —
What is blockchain?
Blocks of data linked together.
A distributed ledger technology that only allows read and append actions. All entries are immutable.
The technology can be used not only for the ever-popular Bitcoin or other cryptocurrencies but in other ways that involve data recording and transactions.
What is the tokenization of real estate?
The process of creating a digital token that is a representation of a real estate asset of interest in a real estate project, profit-seeking venture or debt security.
The possibilities for tokenizing real estate are unlimited and provide the opportunity for investors anywhere in the world to have direct ownership in the tokenized real estate.
Now, here are my 7 key take ways from the summit:
- Companies both in the US and globally have created systems for tokenizing real estate to allow the token holder to purchase and retain all legal rights and protections offered with traditional real estate offerings. Some of the companies that you can check out are Akru.co, Equitycoin.org, Aspencoin.io, lofty.ai, and LibertyFund.io.
- Securities token offerings (STOs) are a digital representation of equity that enables investors to access equity ownership in real estate investments. Some issuers are democratizing the space by issuing offerings at lower dollar amounts. As low as $100 at lofty.ai and $1,000 at Akru.co.
- The liquidity in the STO space hinges on the availability of a healthy secondary market to sell the token as the holder desires. Many at the summit noted that this is a work in progress at the moment but believe that in the future there will be digital real estate cash.
- Investors ultimately still want to buy good quality real estate that is providing solid returns. Creating a security token offering does not improve the quality of the real estate investment.
- Many investors are buying the real estate first and then allocating a portion of the asset to be tokenized. When syndicating commercial real estate — many syndicators in the space are raising money traditionally first and then offering the option to tokenize the equity ownership afterward.
- The digital transfer agent is a critical piece in the process as they are the digital asset managers — they are responsible for updating the transaction records. They serve as the connector between the primary and secondary investing markets.
- Do your homework on the technology, the real estate, and offerings as not everything that shines is gold.
Overall, it was a great summit. I definitely learned more about the blockchain space and noted that there is still a lot of experimenting and working with the regulators.
I am intrigued and I will continue learning more — and I will update this as I learn more! I will be hosting on The Level Up REI podcast some episodes with digital token providers and blockchain platforms that are enabling the purchase of equity or interest in real estate investments via securities token offerings.
The first episode will be on Sept 17th at 2pm PST in The Level Up Passive Real Estate Network on Facebook with the founder of Akru.co. Want to ask questions directly to these esteemed guests — then join the facebook group link above to have the opportunity!
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About the Author
Lisa is the CEO of Lisahylton.com, a real estate company that helps entrepreneurs invest in tax-efficient real estate investments. At Lisahylton.com, Lisa and her team focus on buying apartments with investors and shares the profits. This strategy enables her investors to build wealth and passive income through investing in conservative, high-quality multifamily assets.
Lisa is the host of the Level Up REI podcast where she interviews real estate investors, entrepreneurs, and business owners to share their stories and experiences building businesses and investing in real estate. After a decade of working in the financial services industry, Lisa found investing passively in real estate syndications and was intrigued by the business opportunity to invest in real estate while also providing the opportunity to others to do the same along with her.
You can learn more about passively investing in high-quality multifamily assets that provide cash flow and strong returns at www.LisaHylton.com.