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The Impact of Blockchain on Real Estate

Featured, Real Estate

Above all sources of wealth, real estate is the most popular wealth-building method. The housing sector continues to be a profitable investment option for the wealthy, despite a myriad of other wealth-building options. In fact, the real estate market has created more millionaires than any other market in existence.

Housing market investment and blockchain

Consequently, the housing market is a prime candidate for blockchain disruption to create wealth for more people globally. At the moment, the available traditional real estate investment models impose immense barriers to entry. In addition to the onerous burden, the current housing market investment model makes investing nearly unfeasible for most potential investors.

For instance, investors who wish to invest in or own a property in a foreign country, not only have to deal with the significant capital required but are also forced to incorporate a local entity as an investing partner. As a result, foreign investors have driven away from investing in various jurisdictions. Equally important, the investor has to fulfill statutory requirements, such as tax, various accounting and registration obligations, among other requirements. As you can imagine, to comply with all these requirements, investors end up incurring significant costs.

On the contrary, investors can opt to invest in Real Estate Investment Trusts (REITs). A REIT, as an alternative investment vehicle, offers investors a long-term diversified investment portfolio, with a number of benefits. Revenue comes from rental income and interest earned from sale proceeds. Income in the REIT is a dividend to the stakeholders since most REITs are accessible to the public.

However, REITs too have their own drawbacks. REITs are not jurisdictional independent, so they have to comply with complex legislative terms. For these reasons, the housing market and blockchain industry have to come together to mitigate these risks and overcome investing challenges.

What is real estate on the blockchain?

The housing market just like many other industries is discovering the sheer amount of positive utility of blockchain technology. Blockchain has gained immense traction for disrupting whole industries in its wake. Some real estate blockchain projects will launch soon, or are already underway, combining the two industries to revolutionize the traditional approach to real estate investing.

In particular, there are proposals for real estate blockchain platforms to facilitate borderless investment in the housing market on the blockchain. Also, home sale transactions on the blockchain will facilitate buying and selling property on the blockchain. The cost reduction, real-time settlements and an increase in transparency of blockchain technology is the driver for such a future.

Real estate investments on blockchain will work on the same mechanism as a traditional REIT but will offer added benefits. These blockchain companies can offer token holders the opportunity to benefit from the Fund Management Income. Also, REIT crypto-asset investors will benefit from stable monthly dividends by investing in real estate assets using cryptocurrencies. Moreover, asset portfolio real estate blockchain investment vehicles come from global real estate hotspots, eliminating jurisdiction restriction.

So who is willing to invest in real estate on the blockchain? Housing market investors looking to exit REITs to take advantage of the liquid market in the crypto domain.

Last modified: October 17, 2019

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