{"id":1523,"date":"2021-07-10T10:00:03","date_gmt":"2021-07-10T14:00:03","guid":{"rendered":"https:\/\/www.deeds.com\/articles\/?p=1523"},"modified":"2024-04-25T23:19:59","modified_gmt":"2024-04-26T03:19:59","slug":"from-crowdfunding-to-tokenization-the-evolution-of-shares-in-real-estate","status":"publish","type":"post","link":"https:\/\/www.deeds.com\/articles\/from-crowdfunding-to-tokenization-the-evolution-of-shares-in-real-estate\/","title":{"rendered":"From Crowdfunding to Tokenization: The Evolution of Shares in Real Estate"},"content":{"rendered":"\n
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July, 2021<\/strong> \u2014 Real\nestate has long functioned as a store of equity value that owners can exchange for\nmoney, loans and lines of credit. Yet the typical real estate transaction is associated\nwith a cumbersome, bureaucratic, and fee-heavy process that every homeowner is\ngreatly relieved to finish.  <\/p>\n\n\n\n

There are other ways to invest in real estate that do not\ntake the same level of personal involvement and work as direct purchases of real\nestate do. In other words, investments in buildings and land can be more\nliquid. In addition to investing in and financing one\u2019s own property, it\u2019s\npossible to invest in real estate exchange-traded funds (ETFs) and real estate\ninvestment trusts (REITs) through stock brokerage accounts, including\nindividual retirement accounts.<\/p>\n\n\n\n\n\n\n\n

With the internet, new investment ideas have emerged. <\/strong><\/h2>\n\n\n\n

In recent years the Securities and Exchange Commission (SEC) has developed a crowdfunding exemption<\/a> under\u00a0Title III\u00a0of the\u00a0JOBS Act of 2012, allowing ordinary retail investors\u00a0to fund projects and startups together. This expanded angel investment opportunities beyond the wealthiest 5%<\/a>.<\/p>\n\n\n\n

Crowdfunding can support private real estate transactions. Participating investors pay a fee to the platform, and kick in anywhere from $500 (on some platforms, even less) to perhaps $10,000.\u00a0Investors own shares and receive rental income or profits from property sales. Fundrise<\/a> is one of the better-known firms among small investors. Investors at Fundrise pay into \u201ceREITs\u201d and \u201ceFunds\u201d to match their personal goals. <\/p>\n\n\n\n

Alternatively, investors can use a model like\u00a0Peer Street<\/a> to invest in secured debt. Other innovations include services like HomeTap<\/a> and\u00a0Point<\/a> \u2014 online platforms for homeowners to sell their personal home equity. Such innovations show the potential for more fluidity in the real estate market, by which risk, profit, and debt can be distributed among groups of investors.<\/p>\n\n\n\n

\ufeffTokenization is the next step change in real estate investing.\n<\/strong><\/p>\n\n\n\n

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Tokenization converts stored value \u2014 including real estate\nvalue \u2014 into digitized assets, subject to a secure, globally accepted protocol.\nFractional shares become securities, and are issued as tokens. <\/p>\n\n\n\n

Transactions using tokens are swiftly verified and indelibly\nstored on the blockchain. Any investor, at any moment, can look over a token\u2019s\nhistory, value, and transaction aspects. Actions take place seven days a week,\nround the clock, on a transparent ledger designed for recording activities that\naffect a property\u2019s value and ownership.<\/p>\n\n\n\n

What\u2019s the big difference between crowdfunding and tokenizing shares? <\/strong><\/h2>\n\n\n\n

With tokenized assets, intermediary experts and institutions\naren\u2019t needed. The process lets shares of real estate work as fungible assets,\ntransferable from peer to peer. <\/p>\n\n\n\n

At this time, this is happening in the arena of startup firms:<\/p>\n\n\n\n