The Future of Real Estate
Will NFTs be the new digital deed? Will Real Estate become tokenized?
We have all heard of Blockchain technology and NFTs this past year, but what if NFTs could actually be digital deeds for real property? We all know that the government is far behind on technology and implementing it into the system, but blockchain technology, tokenization and NFTs could transform our system into the Web 3 Era. We’ll dive into how tokenization, NFTs, and crypto mortgages will change Real Estate Industry for the better.
TICs + Tokenizing Real Estate
As you may know from my other posts, TICs are a hot item here in Los Angeles. TICs (Tenants in Common) are a new type of home ownership that offers an opportunity to own a single APN number with a community of people. In the past, one person or entity could own a parcel with a single APN number, or plot of land. If a person could not afford the property on their own, they could try to group up with another person(s) and try to qualify for ONE loan together. This meant that a small group (usually two people) could try to get one loan together for the one, APN numbered property. The downfall is that all parties involved would have to agree together on selling, living, etc. as well as pay the mortgage together.
Now skip to TICs — this new style of ownership offers the opportunity for multiple people (typically strangers) to own one APN numbered parcel together as a community with fractional loans. Fractional loans are managed and paid for by each person/party separately. This means if one person/party defaults, only that one “unit” would go into foreclosure not the entire APN numbered parcel. This has opened a new opportunity for people to attain home ownership.
Now enter in tokenization! Tokenization is the same overall concept of partial ownership of one specific asset. Instead of only one person being able to own the Empire State Building, we could tokenize it and let anyone own a piece of the iconic building much like a stock in a business. TICs are an example of tokenization in a way. It is fractional ownership of one specific asset. TICs are not on the blockchain yet, but they would be the perfect way to transition into the blockchain industry for tokenization of property.
Read more about TICs here → TIC Blog
NFTs + Real Estate Transactions on the Blockchain
Today, real estate transactions are recorded with a transfer of ownership on a property deed. A property deed is a legal document that transfers the ownership of real estate from seller to buyer. The deed is recorded with the city and documented on the public records. If the property was sold ‘on the market’ the sale details will also be documented on the public records. As with most services controlled by the government, the process is a bit archaic but it is still being utilized everyday. Could you imaging if all records of transfers and recordings could be done within seconds through a ‘trustless’ system with an immutable ledger? Well it can, with blockchain technology.
Blockchain technology can record the transfer of assets with smart contracts that can be designed to work with real estate properties specifically. It is already happening here in America. Propy is a platform that offers the entire real estate transaction to be recorded, step by step on the blockchain allowing for more transparent escrows and seamless documentation that could be implemented into the public records if/when the government adopts this technology into their system. Not only does Propy allow for the entire escrow process to be documented on the blockchain, they also mint an NFT of ownership with the completion of the transaction. The NFT is like an online deed of the transaction, something that could be much more useful and seamless if it took over the old deed style we are stuck with today.
Although platforms like Propy are being used today, the government has not adopted all the systems to be in place at this time. Instead everything runs parallel to the archaic system that the government has in place. Hopefully one day soon, the government will upgrade the system to this much needed improvement.
Read more about Real Estate NFTs here → *Coming Soon* NFT Blog
Buying Real Estate with Crypto and Crypto-Mortgages
Real estate transactions on the blockchain are interesting, but can you purchase real estate using crypto assets? And more so, can a buyer get a crypto-mortgage for purchasing real estate? Buying real estate using crypto has been around for a few years, but it has been restrictive. Either the buyer would have to liquify the crypto into fiat during escrow or both parties would have to agree on the crypto of choice for crypto-to-crypto escrows. Not only that, but these were all ‘cash’ transactions — meaning no typical mortgage would be available to buyers. This is quickly changing.
One of the stars from ‘Selling Sunset’, Christine Quinn, is launching a platform for buying and selling real estate using crypto called RealOpen. They claim to accept several different types of crypto and handle to escrow of funds during the transaction.
Now, there are several companies that offer special crypto-backed mortgages or types of financing available to those who want purchase with leverage. SALT, a crypto lending company, has been around for a bit and has been a top choice in crypto leverage but it was not tailored for real estate transactions — specifically residential homes. Today, crypto mortgages for the typical home buyer are popping up as the crypto-residential-real-estate industry pushes forward for consumer adoption. Milo boasts of being the first crypto mortgage company that offers loans up to $5 million with several different options on payments (including fiat and crypto payments) as well as competitive interest rates.
Read more about Crypto Mortgages here → *Coming Soon* Crypto Mortgages Blog
It is a very exciting time for real estate and crypto enthusiasts alike. Of course, everything takes time to implement, and even longer for the government to adopt. That being said, today there are many options and tools to use that can benefit those who are looking to upgrade the real estate industry into the Web 3 Era.
Want to learn more about TICS?
Check It out here → TIC Brochure
Want to see the current Los Angeles TICs available for sale now?
L.A. TICs for Sale
Meet: Lauren Biedenharn
Trusted, Tech-Savvy Real Estate.
Lauren Biedenharn Is your perfect partner when finding your new home and lifestyle. With a background In the arts and technology, she has a unique touch In her service to find and achieve your next real estate milestone. She has been a pioneer In new types of ownership from TICs, to tokenized ownership and blockchain technology.
Lauren has created a platform for any first-time homebuyer to learn and prepare for their first purchase through their medium of choice. Lauren Is continuously posting new Information, fabulous house tours, and cutting edge technology virtually on social media, YouTube and In person with her clients and followers. Follow Lauren on her everyday adventures for Insider tips and fun!
Looking for TICs for sale in LA right now? → TICs for sale HERE!
If you have further questions about escalator clauses, TICs or anything real estate email Lauren.Biedenahrn@Compass.com for more info. #RealEstateRevolution
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