Blockchain technology made its humble debut as the underpinning of Bitcoin’s cyber currency. Now it’s a technology that commands the attention of CIOs from almost every major industry.
Deloitte’s financial team reports that blockchain technology has the potential to be a game changer for the real estate industry as well. Many real estate companies are adopting exciting new blockchain technologies such as smart contracts, and peer-to-peer mortgage lending which is helping them to save significantly on overhead costs.
Smart Contracts Drive Efficiency in Leasing and Loan Contract Administration
It is complicated to manage leasing agreements with multiple landlords, tenants and property managers. Not to mention the numerous payment and service transactions that need to be tracked and monitored. Blockchain-based smart contracts make this easier by automatically triggering and reconciling rent payments to property owners or managers. They can also be configured to initiate deposits on a lease or execute stated lease agreements such as returning a security deposit minus any damage charges at the end of the contract.
Smart contracts can also simplify loan processes, which are all too often expensive and time-consuming. They do this by using blockchain technology to allow all legal parties access to the contract simultaneously. Also, ledgers are available for all parties on an open network creating both transparency and efficiencies. This is especially helpful when working with intermediary banks on cross-border transactions.
Blockchain Paves the Way for Peer-to-Peer Mortgage Lending
Blockchain peer-to-peer mortgage lending is an excellent option for borrowers and investors alike. For borrowers, the interest rates are generally lower for applicants with high incomes and proper credit than traditional bank mortgages. Besides, the online application process is quick and straightforward with mortgage applications able to be completed within an hour.
For investors investing in the blockchain, peer-to-peer mortgage platforms are relatively safe and lucrative. The platform allows lenders to invest small amounts into a large number of mortgages. This diversification mitigates risks associated with borrowers paying off their mortgage early or defaulting on their loan. It is a lucrative investment as well. Peer-to-peer mortgage lending opportunities offer nearly double the returns (8–10%) of traditional real estate investment trusts (REITs).
Capitalizing on these Cutting-edge Blockchain Technologies
Companies like Viva who are investing in blockchain technologies are saving significantly on traditional overhead costs by being more efficient and transparent. But how can the average person take advantage of these savings?
Investing in peer-to-peer mortgages is an excellent option for investors looking for stable returns and are willing to take some risk. They have safety features like diversification, and they can command much higher yields than traditional real estate investments.