When people think of investing in real estate, it’s the traditional approach that comes to mind. You own a piece of land or a building that you are renting or leasing. Here, we are going to look at a new type of investing in the real estate market that owes its existence to the technology of the 21st century. It is a concept to show you that there are different methods in which you can be part of the real estate market.
As I have advocated, real estate investing is a good alternative to the stock market or at least a substantial component you should have in a diversified portfolio. After all, playing the stock market is very similar to gambling. However, unlike gambling, the house is on the investor’s side. Therefore, when stocks rise, the consumer and the company executives holding shares win. This opens Pandora’s box to a whole host of questions regarding a conflict of interest, insider trading, and trust. So, if the stock market is such a great deal, why are more Americans not retiring rich?
It could be the belief that all you need to do is find the right stock and hold on. Good luck finding it. Or it could be the cliché that you can’t time the market, or that insiders have too many advantages over the rest of us and we don’t have a chance. The bottom line is that people think the market is never wrong. That’s a bit absurd. What if the market acts off a false rumor? Do you want to lose all your money on gossip? A good example of that is the current rumors questioning if the country has a recession in its immediate future. How do you maneuver your stocks to guard against such an occurrence, if it even happens?
While real estate is traditionally a steadier form of investment that bypasses some of the concerns of the stock market, all investments have risks. There are some innovations in real estate investing that make it accessible to more people but might add a different aspect to it. It is called tokenization.
By now, you must have heard of the rise and fall of Bitcoin. You might even be wondering why this applies to real estate. Bitcoin is a type of digital currency in which a record of transactions is maintained. This digital transaction is the groundbreaking innovation of blockchain technology, which will cause drastic changes in almost every aspect of the financial world during any transition. I’m not so sure if it’s predictable, fully beneficial, or a new cash machine for the feds once they regulate it in their favor. So, what is tokenization? It’s a catchall term that applies to every aspect of the blockchain industry and referred herein relative to tokenized securities.
Leaseum Partners recently announced a tokenized real estate fund using blockchain technology. This fund will issue shares as regulatory compliant security tokens listed on the exchange. That’s interesting, to say the least. What effect will this have on the securities and real estate market? For sure, it will throw Wall Street a new learning curve, or you may want to consider using tokenization and keep it as simple as possible to enhance your real estate portfolio when it reaches the everyday street.
There are questions as to what we might expect when we tokenize the world in the next generation with options like Bitcoin. For sure, it’s a deep dive and requires in-depth analysis, but it’s something that will affect our personal investments. Tokens on a blockchain might eventually become the preferred mechanism for future money, shares in a company, or even a piece of real estate. There might be different types of tokens for various purposes. Payment tokens like Bitcoin could also be a payment gateway over the Internet. Finally, we might see a shift to asset-backed tokens representing real-world or digital assets, which can be comprised of real estate, personal property, and equity in businesses. The world is rapidly changing around us to include how we invest and pay for things.
The benefits may far outweigh the effects because of popularity, democratic wealth creation by making things available to everyone, enhanced security, cost-effectiveness, and speed and global reach. Indicating this transition are major credit card giants like Visa and Mastercard, which have already adopted tokenization. Stay tuned!
This is one of a series of articles based on my book, Modern Wealth Building Formula – How to Master Real Estate Investing. I have a passion for helping others secure their future. As the professionals say, “The best time to start is now!” Please follow me as I continue to give you insight and strategies for achieving your retirement dreams. We can do this together!