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Traditional Investment vs the Blockchain Alternative

Traditional Real Estate Investment

Traditional real estate investment presents a high barrier of entry, both financially and and legally. In order to purchase a rental property, a prospective investor will often need to take out a mortgage - cutting into the property's bottom line. Additionally, investors must deal with the hassles like managing tenants, maintaining the property, paying taxes, and ensuring legal compliance.

Fractional Models: REITs and Tokenization

In order to resolve the issue of real estate inaccessibility, fractional models of real estate investment such as REITs were created. REITs allow investors to buy shares of real estate companies who own, operate, or lease income-generating real estate. The income is then paid out as dividends, providing a stable source of cash flow for investors. Tokenization is the blockchain's alternative to REITs, offering several advantages including:
  • The ability to invest in a single property rather than a fund
  • Voting and governance rights over the property
  • More frequent dividend payouts
  • Less overhead and fewer management fees
  • Lower minimum investment
  • Investments are represented by tokens which can easily be bought and sold in a matter of seconds