NFTs and Real Estate: An Intersection of Revolution

NFTs have taken the world by storm, making their way into many large-scale industries and unicorns. The real estate world is no exception. While there is a lot of room for work to be done, interesting speculations and experiments have been, and are currently being, performed at large.

NFTs can bring a lot of advantages to investors and property owners alike. These will include the removal of a middleman and giving both parties more breathing space (and profit) in how they deal with the transactions related to the properties. Another benefit would be creating opportunities for those who were unable to invest in real estate due to the high initial investment by fractionalizing the total asset — more on that later.

However, where there are pros, it is also important to keep in mind the risks associated with attaching NFTs to real estate. Problems pertaining to legal rights, the extent of autonomy of the investor over the property and many others are potential risk factors that need to be safeguarded and worked upon before wide utilization of NFTs can take place in the real estate market.

In any case, the advantages are far more and weightier and hence, it is worth the risk to explore the possibilities of employing this technology on a wider scale in the real estate market. Some major benefits include fractionalized investing, facilitation of property ownership transfer, and borrowing against NFTs which we shall discuss in more detail.

Fractionalized Investing

This is a very interesting benefit that has been made possible due to NFTs that was unheard of before. Fractionalized investing refers to the idea of splitting the cost of property between multiple investors, hence lowering the capital that needs to be invested by each investor. This is done through fractionalized NFTs which are minted and buyers can then keep earning income off of them in the form of rent or when the real estate value appreciates.

Facilitation Property Ownership Transfer

The property papers are changed in the form of an NFT that can then be sold to an interested buyer. This benefits both parties immensely as it removes the substantial amount of waiting time that is generally required when property ownership is transferred. Not only that, but it also eliminates the need for a middle man hence generating higher profits for both parties.

Other avenues of digital transfer of property have been explored in the past but these have been quickly shot down due to high fraud and hacking issues. With blockchain, asset transfer has been made very secure, efficient, and fast due to the entire transparency of the process. Due to the high potential of NFT usage in this area, there are laws that are being formed regarding this aspect so that both investors and property owners can satisfactorily conduct transactions using NFTs.

Borrowing Against NFTs

One thing that comes to mind when talking about real estate is mortgage and banks. Traditional banks take control of the property through the mortgage and can often create huge disruptions in the buying process. With NFTs however, buyers can easily leverage their investments without any fear.

Decentralized Finance (Defi) and NFT are being combined to provide solutions that make the mortgage process easier. You can list your NFT as collateral against which users will place offers and once that has been accepted, you will receive fungible token assets transferred into the smart contract.

Conclusion

All in all, there is a universe of potential that remains to be explored at the intersection of NFT and real estate. Although it may take some time to be adopted and used widely, due to the large and complicated legal and capital concerns, there is no doubt that once it does take off, there will be no looking back at the traditional methods. We are looking at a complete revolution of the real estate industry operations in a matter of years at the hands of NFTs!

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