How does Reental's real estate tokenization work?
In this article, I want to explain to you how we are going to make our real estate products available to investors thanks to tokenization.
As we have discussed in other articles, tokenization is nothing but the digitization of a good's value and representing it as a token. In this way, a token collects some of the properties of a share in a company; in our case, it gives you an economic right to the tokenized asset. But in addition, this token is easily storable and transferable, which allows great operability with it (sell it in few seconds to anyone on a global scale without paperwork), and the transactions made with it are immutable and traceable as they are registered in a public blockchain.
What challenges do we face when tokenizing real estate?
First of all, what are we going to tokenize? The property itself, a company that owns the property, a debt?
At Reental we are going to tokenize a participatory loan associated with each property.
Through the participatory loan, we get an owner of the token (token holder) to be a beneficiary of the economic profit generated by the exploitation of the property. In this way, the dividends distributed will be in full for the token holders, and its amount will depend exclusively on the performance in the management of the property, the value generated by its rental, and its possible sale.
To sum up, for practical purposes, a token holder will obtain the profit generated by the rental and/or sale of the property in which he has invested from the comfort of his home.
Getting this passive income is at your fingertips, two clicks away from your pc or mobile.
Why don't we tokenize the property directly?
The most natural thing would be to directly tokenize a property, but currently, in Spain, the Property Registry does not allow the possibility of registering addresses in a blockchain as owners, as well as that the change of owners is dynamic and can be done automatically and without bureaucracy. The property registry remains a centralized entity where property owners are forced to go through it.
Our alternative allows investors in a 100% legal way to obtain the benefit as well, while the ecosystem and the regulations evolve towards this goal (which on the other hand, we do not doubt that it will get there due to the strong push of some property registrars in this address).
Thanks for reading and be welcome to the Reental community!