Tokenized real estate has grown in popularity over the past few years with plenty of players entering the space. Is the market oversaturated and can you really make money from it?
What Is Tokenized Property Ownership?
Tokenization is an updated version of traditional fractionalized property ownership. Tokenizing ownership means converting a physical asset such as real estate into several digital tokens; those who buy the tokens then own a portion of the equity in that asset.
Tokenization has the potential to provide market access to people currently priced out of real estate investing by making it more affordable.
Typically, when you invest in a tokenized property, you'll be rewarded daily or weekly with a portion of rental payments in proportion to your initial investment. This payment is usually made in stablecoins or the platform's native currency.
The Benefits of Tokenized Ownership
Affordable Investment
There are a few benefits to tokenized ownership, especially with real estate as an asset. The most blatant benefit would be that it doesn't require the investor to purchase the entire property; the investment amount is completely customizable.
Passive Income
One complaint of real estate investors is that when you purchase a property, you have to refurbish and manage the property too, find tenets, collect rent, and often investors just part ways with 30% of the property income and hire a property manager.
This is a huge chunk of cash, and tokenized ownership allows investors to gain the same upside without finding cost-efficient property managers or dealing with a physical property; the burden is passed to the platform. Passive income in real estate just became even more passive!
Easier Equity Release
There are also some platforms that'll allow you to tokenize your own property to raise capital. This would allow you to release equity, raise funds, purchase another property and grow your portfolio.
