Real Estate Evolution with STs
By Francisco Franco
The evolution of real estate transactions is progressing so rapidly that many have not been able to recognize or keep up with the pace of this innovation. This is partly due to the great change brought about by blockchain technology and security tokens (STs), which have commenced a new wave of modernization in all financial markets. This worldwide technology has enabled cross-border interactions as a result of transactions that are now more efficient, decentralized, and accomplished at a lower cost. This gives more advantage to international investors all over the world. Now global investors are able to participate in the U.S. real estate market without the need of high investments or entire property purchases.
Juan Alvarez, principal broker at BlokHaus Real Estate + Investments, has a strong financial background and a vision for new technological trends. He’s developed a company that not only relies on traditional real estate, but also offers investors the opportunity of getting involved in blockchain technology and make money in the process. This company has developed a cutting-edge platform for worldwide investors to get access to US real estate through an asset tokenization model. The model offers returns and asset valuation according to secondary markets.
Today’s world is about opening doors and generating vigorous connections which is exactly what BlokHaus offers; through a digitalized investment platform, fractions of a property can now be acquired through security tokens (STs). BlokHaus assigns an asset to a Special Purpose Vehicle (SPV) which the issuer can elect to fractionalize into shares of the property assigned to that SPV. It can then be traded on secondary markets through an alternative trading system (ATS). Once the asset is assigned to the SPV, a token offering takes place and a limited number of security tokens are liberated to the market. These tokens are small fractions that sum up to be the total of the property, just like shares of a company, but in this case, tokens represent fractions of the asset. At this point, people from all over the world are able to invest in digitized assets by buying STs. Through these tokens, investors are not only earning from asset appreciation, but will also receive a monthly income from the property’s rent. On the other hand, the issuers (property owners) have a quick liquidity solution throughout the crowdfunding strategy. This allows people from all over the world to buy fractions of the property until it is completely sold out.
When using the term Crypto some people lose interest due to the lack of trust that investments represent; they are typically volatile and unpredictable. However, security tokens are another story. In our case they represent a fraction of a property or a collection of properties, meaning their value is directly linked to a real-world asset itself, making security tokens stable and safe. Moreover, security tokens, as they represent digital securities, are regulated by the SEC, meaning they are fully compliant. Definitely a powerful tool that merges two strong industries, being real estate and the revolutionary technology involving digital assets.
The key of the business model is having tangible assets supporting security token value and providing an efficient, effective, automated design based on transparency. Add global democratization of real estate investments, passive incomes, and asset appreciation to this equation. What else could we ask for? The key is to engage, learn, evolve, and adapt to what new technology provides.
Finally, there is no longer a need to purchase an entire unit or to invest such large amounts of money to be part of the US real estate market. Also, democratization will occur by providing people throughout the world the opportunity to invest in this market as cross-border and decentralized strategies allow to do so. Therefore, local and international investors will have a wider range of opportunities while issuers will be provided a liquidity solution for their properties.