Real estate investment guru Grant Cardone has tentatively endorsed the hot new trend of tokenized real estate — but he has his reservations.
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Cardone, nicknamed Uncle G, sees how tokenized real estate could expand the market for everyday investors – something he’s long fought for after starting his real estate empire from scratch and feeling like “the little guy”.
But like many of us, Onkel G is not familiar with tokenized real estate, nor with navigating the complex world of digital assets and blockchain.
“I wish someone could show me how to put my properties on the blockchain. If they could, I would,” he said in a Twitter Spaces discussion led by social media marketing firm Wolf Financial.
What is tokenized real estate?
Real estate tokenization converts the value of real estate into digital tokens stored on a blockchain.
Each token may represent, among other things, ownership of a property, or part of it, and a right to a share of the profits and losses generated by that property.
This method allows fractional ownership of real estate, allowing a broader group of investors to invest directly in real estate of all types, including commercial, residential or trophy properties. It’s similar to the crowdfunding process championed by Cardone, allowing everyday investors to pool their money to buy properties (or a stake in properties) as a group.
“People don’t want to own a house anymore,” said Cardone, who argued that baby boomers would rather retire and go on vacations, while younger generations “don’t want home ownership even if they could.”
However, it is not that simple
Tokenized real estate has some key benefits, Cardone wrote in a blog post last year: blockchain technology enables “lightning-fast transactions at lower costs,” the investments have higher liquidity than traditional real estate, and the process is also very secure.
But Uncle G has one major caveat about trading real estate as a digital asset — “everyone… forgets about a little group called the SEC.”
In general, the SEC considers real estate tokens to be “securities,” meaning they are subject to disclosure and registration requirements, unlike pure real estate investments.
Cardone, known for his 10x (go big or go home) philosophy, expressed concern about whether current regulatory structures would allow him to make “big deals” on the blockchain.
“Show me how to get a $100 million deal on the blockchain,” he said. “I’ll buy the deal, put it on the blockchain, and then get clearance from the SEC so I don’t go to jail.”
These regulatory structures exist, according to John Belitsky, co-founder of Balcony DAO, a Web3 investment bank that offers crypto financing solutions for real-world assets, including real estate.
Tokenized real estate is “what every private equity firm in the world sees as the future of real estate,” argued Belitsky on Wolf Financial’s Twitter Spaces.
If you’re not ready to start investing in digital assets, here are two other ways you can start building your real estate portfolio.
Continue reading: Hold on to your money’: Jeff Bezos issued a financial warning and says you should reconsider buying a ‘new car, fridge or whatever’ – Here are 3 better recession-proof buys
Invest in REITs
Investing in a Real Estate Investment Trust (REIT) is a way to profit from the real estate market—without having to buy a home or worry about screening tenants, repairing damages, or chasing late payments.
REITs are publicly traded companies that own high-yield properties such as apartment buildings, shopping malls and office towers. They collect rent from tenants and pass that rent on to shareholders in the form of regular dividend payments.
To qualify as a REIT, in addition to other requirements, a company must return at least 90% of its taxable income to shareholders in dividends each year. In return, they pay little to no income tax at the corporate level.
Essentially, REITs are giant landlords. Some have serious blue chip tenantsincluding the US government while others House e-commerce giant like Amazon and Walmart.
Of course, not all REITs are created equal. Many have been hit during the pandemic, but they’re generally described as total return investments that offer high dividends and the potential for moderate, long-term capital appreciation.
Because REITs are publicly traded, you can buy or sell shares at any time, and your investment can be as small or as large as you like — unlike buying a home, which typically requires a large down payment and then a mortgage.
Use online investment platforms
Building a brick and mortar real estate portfolio takes a lot of money, time, and sweat capital, but it’s possible to grow your portfolio without all the red tape.
With the help of new online platformsyou can gain access to institutional-grade commercial real estate investment without finding deals yourself.
You can Browse curated deals or join funds Invest in diversified real estate portfolios that maximize your returns while keeping your fees low.
Most platforms are backed by a team of experts who can help you build a portfolio that best suits your needs.
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This article is informational only and should not be construed as advice. It is provided without any guarantee.
Source : finance.yahoo.com