RealT is a tokenized real estate investment platform, enabling fractional ownership in real estate on Ethereum.
Traditionally speaking, real estate faces a few inefficiencies within the existing market. First, real estate is expensive.
The median U.S. home price is around $200,000 where the typical 30-year, 4.5% APR mortgage (at $200,000) costs $365,000 after interest. In order for prospective investors to receive a high ROI, the high cost of interest on mortgage-based real estate investments limits the return on investment.
As a result, real estate investments have evolved into becoming largely inaccessible by the average individual and only available to the wealthy.
The other option for prospective real estate investors is in REITs. However, a REIT offers no direct ownership of any property and minimal exposure to rental revenue.
The second inefficiency facing real estate markets is high transaction costs. The average sale of a U.S> home pays 6% to realtors. Settlement of the funds takes 30 days, minimum. Moreover, every exchange requires intensive documentation, disclosures, insurance policies, and deed transfers. All of these steps add to the high transaction costs and increase the frictions associated with selling a property.
The third major drawback with traditional real estate is the siloed marketplace. Selling a house requires the seller to find a buyer. Buyers typically must be in the same area or region of the property being sold, significantly reducing the number of potential buyers. Taking this a step further, international real estate investment is fairly difficult. Investors face capital controls by restrictive governments and the complexity and bureaucracy of international capital transfers in the existing system only adds frictions and costs for foreign investments.
All of these problems combined to make real estate an inefficient and illiquid market, primed for disruption.
RealT’s tokenization of real estate solves the illiquidity of the traditional markets with frictionless transactions, access to public markets, and fractionalization of properties. With that, one of the more novel aspects of owning RealT’s tokenized real estate is the ability to earn rent from the property on a daily basis.
Founded in 2019, RealT is made up of a team of seasoned real estate and blockchain industry executives. RealT has three main board members: Remy Jacobson, Jean-Marc Jacobson, and Gary Krat. Outside of the board members, RealT is led by COO and prominent Ethereum community member David Hoffman and CTO Astor Rivera.
Asset tokenization has the potential to revolutionize existing markets. The benefits of tokenization most clearly affect asset classes that are largely illiquid – making real estate the perfect market primed for tokenization.
RealT’s tokenized real estate properties increase translatability, access to public markets, and enable highly fractional investments. Transferring RealT tokens can occur seamlessly in a click of a button where the exchange costs is the price of gas (<$0.10) and instant, secure settlement. In addition, RealT drastically increases the market reach for real estate investment as it opens up the opportunity to own real estate to a large, global market participant pool.
Lastly, the ability to fractionalize properties into as many shares needed (where each share is divisible into billionths) enables minimum costs of ownership, more inclusive to a broader range of investor types, and enables new financial tools built using the token.
With the advent of smart contracts, RealTokens owners can receive rental payments from tenants on a daily basis. Instead of one lump sum paid out once every 30 days, RealTokens smart contracts manage the distribution of funds to owners, allowing them to collect rent on a daily basis in the form of Dai.
How Does it Work?
RealT is a system for tokenizing property ownership in the United States, retaining all legal rights and protections that are provided by traditional ownership of real estate.
RealT is a series LLC, a unique form of an LLC which allows for unlimited segregation of membership interests, assets, and operations into independent series. With that in mind, each series of the series LLC is treated as a separate entity. Because the purpose of the LLC Series is to own a single property, the LLC can be abstracted away, effectively taking ownership of RealT tokens ownersip of the underlying property.
Importantly, through the services of a property management company, each property can be maintained with minimal engagement from token holders despite having full legal rights over the property.
How to Get Involved?
To learn more about RealT or to participate in their tokenized real estate offerings, visit the website to get started. If you’re interested in staying up to date on the real estate investment platform, make sure to follow them on Twitter.
To join in on the discussion, you can join the Discord here.