To understand what real estate tokenization is, let's first look at its definition and the three main types of tokens that are created as part of the process. Real estate has existed since the beginning of civilization, and it’s one of the oldest forms of investment that exists to this day. If you have been thinking about buying or investing in real estate lately, you may have heard about tokenization and wondered how it works and how it can impact your real estate portfolio going forward.
What Is Real Estate Tokenization?
If you follow crypto markets, you might have heard of real estate tokenization in passing. But what exactly does it mean to turn a building into a digital asset? Simply put, tokens represent an interest in the property; they can be used to raise capital for investment or sell ownership of the property outright.
How It Can Benefit Traditional Real Estate Investors
With a real estate token, traditional investors can obtain access to alternative assets they wouldn’t have otherwise been able to invest in. It also makes it easier for them to buy smaller parcels of real estate which may have previously been beyond their reach. These tokens are highly liquid which means that when demand rises, investors can sell their tokens much faster than they could in more traditional investment vehicles.
Are There Any Downsides To Real Estate Tokens?
Like any business model, real estate tokenization has its advantages but also its drawbacks. One of these relates to how coins are managed after they’re issued. If you purchase tokens and want to take your money out of a project, you may need to wait as long as 18 months before you can redeem them for cash or another property. You’ll likely need to hold on that long to give developers enough time for project completion and planning for sale or rent.
Where And How To Invest In Real Estate Tokens
Tokenizing real estate doesn’t have to be complicated. While there are certainly some hurdles, you can take a straightforward approach that fits your skill set and budget. Here are three places you can invest in real estate tokens: Peer-to-peer marketplaces, Cryptocurrency exchanges, Community investment funds (i.e., ICOs).
As a property management company in Chicago, we at GC Realty & Development, LLC, are investors ourselves. Each employee of GCR&D are Chicago property managers and landlords themselves, and understand how to manage properties from the owner’s perspective. Get in touch with one of our experts to answer any questions and maximize your rental property profits.
Make sure to check out the FREE resources that Straight Up Chicago Investor Podcast offers:
Looking for a Property Manager? Schedule a call today or visit our website for more information.
Get your FREE copy of: Top 10 Mistakes Investors Make When Working With Lenders
Extra Hacks & Tricks from Expert Investors? Join Our Facebook Group!
Missed something? Subscribe to our Youtube Channel!
LISTEN to our Podcast on iTunes | Spotify | Stitcher | TuneIn Radio
Need A Responsive Property Manager? We’ve got you covered!
MARK AINLEY is an investor, managing broker, and property manager with nearly two decades of experience in real estate. He has been a speaker at numerous events across the country including investing summits in Dallas, Atlanta, San Francisco, and Chicago. Mark loves to give feedback to beginners, out-of-state investors, or less experienced entrepreneurs on what steps to avoid in growing a business.
His extensive experience allows him to share his knowledge on many topics like property management, scaling a business, rehabbing and flipping, out-of-state investing, asset stabilization, market analysis, and more. He has rehabbed and stabilized over 480 properties and currently manages over 1000 investment properties throughout the Chicagoland area. Mark is the co-founder of GCR&D, a full-service real estate brokerage, property management, and real estate investment firm in the Chicago Market. Through his brokerage, he consults with both local and out of-state investors on the acquisition, stabilization, and management of their rental property portfolio. GCR&D recently made the “top 5000 fastest growing companies in the United States”list by influential Inc.
He was featured on CNBC’s TV show The Deed, featuring one of his rehabs. He has also been featured on podcasts like Bigger Pockets, The Real Estate Mogul Podcast, Joe Fairless, REI Diamonds, and Real Estate Money School. In 2017 he was featured on the cover of Top Agent - Property Management Edition.
https://www.biggerpockets.com/blog/contributors/markainley
