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In this article, I want to explain how we will make our real estate products available to investors through tokenization.
As we've discussed in other articles, tokenization is simply the digitization of the value of an asset, represented in the form of a token. This token essentially embodies some of the characteristics of owning a share in a company. In our case, it grants economic rights over the tokenized asset. Moreover, this token is easy to store and transfer, allowing for great flexibility (you can sell it to anyone globally within seconds without paperwork), and all transactions involving it are immutable and traceable since they are recorded on a public blockchain.
What challenges do we face when tokenizing real estate?
First, what are we going to tokenize? The property itself, a company that owns the property, a debt? At Reental, we will tokenize a participative loan associated with each property. Through this participative loan, we ensure that a token holder becomes a beneficiary of the economic profit generated by the operation of the property. In this way, the distributed dividends go entirely to the token holders, and their value solely depends on the performance of the property management, the income generated by its rental, and any potential sales.
In practical terms, a token holder can achieve passive income by investing in a property from the comfort of their home. Obtaining this passive income is within your reach, just two clicks away from your computer or mobile device.
Why don't we tokenize the property directly?
The natural choice would be to directly tokenize a property. However, currently in Spain, the Property Registry does not allow for property ownership to be recorded on a blockchain or for ownership changes to occur dynamically and automatically without bureaucracy. The property registry remains a centralized entity where property owners are obligated to go through.
Our alternative legally allows investors to obtain the same benefits, while the ecosystem and regulations evolve toward enabling direct property tokenization (which we have no doubt will happen due to the strong push from some property registrars in this direction).
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