Posted By 
By Emma Williams
Special to the Financial Independence Hub
An insight into the modern methods of real estate that is much more accessible and inclusive!
We have now shifted from steel locks to smart locks in our homes, but for a long time, the conventional real estate systems continued functioning with similar patterns. One of which is real estate investments.
Real estate investment involves the purchasing and sale of a real estate asset for rental profits or market returns. Historically, this investment has yielded better and continuous returns for investors. However, a major roadblock to this remained its accessibility and high barriers in terms of capital and liquidity. For a long time, this segment was exclusive to a specific niche.
However, with modern instruments and advanced innovations at hand, real estate investment has the potential to widen its range. Through these new models, the potential of real estate investment has entirely been transformed.
Let’s take a look at the future of real estate investment with such modern innovative tools.
Investing With REITs
Real Estate Investment Trusts (REITs) are one of the techniques that has made property investments accessible to a certain extent. With REITs, individuals invest in companies that further deal with real estate investments. In return, shareholders receive dividends in proportion to their investment share in the company.
With REITs, instead of directly investing in real estate an individual would invest in a company that has invested, in part, in real estate. The company then offers dividends through its rental income to its stakeholders. Any investor can hold shares and indirectly become an investor in a real estate asset. This eliminates the need for high capital needed in a traditional system.
Real Estate Crowdfunding
Crowdfunding is a method to raise funds for different businesses, like real estate, in order to provide an easier way to access. Prior to crowdfunding, there lacked an efficient way to directly make an investment in real estate property with minimal amount. With crowdfunding, any investor can become a stakeholder and gain a portion of profits from real estate returns.
Through online platforms, individuals across the globe can invest in small amounts. The pooled money is then invested in a real estate asset. Each stakeholder receives a share in the property according to the money invested. Through crowdfunding, companies or individuals can invest in prime properties of real estate that seem otherwise inaccessible.
Crowdfunding activities take place online. Hence, this gives investors a method to raise funds on a global and international platform.
Tokenized Real Estate
Tokenized real estate is similar to crowdfunding with one added advantage. It uses advanced technology like blockchain to make the entire process much more transparent and accessible.
Digital tokens, also known as security tokens, essentially represent the digital counterpart of a physical real estate asset. These tokens are further raised and managed on a blockchain network.
Ownership and transaction of each security token are recorded on a decentralized blockchain ledger. Investors can directly buy, sell, or trade these tokens on an online global platform. This means that any individual can become a part of any real estate property across the globe with an investment amount as low as $100. This enables any real estate property to become an investment opportunity for retail as well as an institutional investor.
Furthermore, tokenization also enables new models of fractional ownership in any real estate asset. It frees up instant liquidity as one can sell security tokens on an international market. Moreover, smart contracts operated through blockchain automate a number of processes in the system. For instance, rental income earned with tokenized real estate would automatically be distributed to multiple investors in proportion to the security tokens they hold by a smart contract.
Advanced techniques, be it crowdfunding or tokenization, have now made it possible for any individual to become a part of real estate. They have made the process simpler, transparent, frictionless, and accessible.
Emma Williams is a content manager at a tokenized assets platform, Cocoricos. She enjoys diving into new aspects of life, learning as much as possible. Emma believes that technology innovations are the future of business and spends a lot of time monitoring the latest news of a tech world and researching the technology impact on investing and financial markets.”
