We have been building Real Estate technology for more than a year now and it’s shocking how slow the industry is in adapting technology.
Despite Real Estate being the most owned Asset Class at more than $200 Trillion worldwide, there hasn’t been whole lot of innovation in the industry — from REITs in sixties to MLSs in eighties to Classifieds in nineties, changes in the industry have been few and incremental. Fortunately, Blockchain technology (with or without cryptocurrencies) is going to deeply and radically transform Real Estate along with few other industries. At Fracsn, we are determined to drive that transformation in Real Estate industry across the world — by building a highly scalable Fractional Ownership platform and Blockchain is the only way to do it.
Fractional Ownership Removes Barrier to Entry
Fractional Ownership allows investors to own Real Estate with very low investment. The invested amount could be as low as $100, £100 or ₹5,000. As soon as we remove the constraint that one person (or family) has to own a complete property, theoretically, there is no limit to how low of an investment you can allow.
Physical Location is No Longer a Barrier
With Fractionalized Ownership powered by Blockchain, investing in a property is as easy as hitting a BUY button on Amazon. Two reasons why investors do not have to stick to a local area that they are familiar with are (1) amount a single person invests in one particular property is so low that the investor would not have to spend a whole lot of time and money to check the property physically (2) with Blockchain, ownership transfers do not have to be done physically — digital identity (KYC / eKYC), encryption and authentication should help transfer ownership online.
Real Estate is highly regulated at multiple levels from Local to State to Federal Governments. While owning fractions of properties across borders is possible, it is always better to comply with regulations or buy fractional ownership through a platform that automates compliance (which is what fracsn intends to do).
Reduced Transaction Costs through Disintermediation
In a traditional Real Estate investment, Investors pay Real Estate Agents 2% to 5% because (a) they are investing substantial portion of their net worth and (b) they are probably not familiar the location in which they are investing. With Fractional Ownership on Blockchain, the investment is low and your co-investors or advisers already did that due diligence for you.
Reduced Transaction Time
Again, since buying a property is as easy as clicking a BUY button — transaction time is minimal. Whole cycle from consideration to reach and completing the transaction can be completed in days if not in hours.
Improved Liquidity through Deep Marketplaces
Over time, fractional ownership can be traded on specialized marketplaces and once those marketplaces reach critical mass, liquidity of Fractional Real Estate will be orders of magnitude higher than traditional Real Estate. Don’t get me wrong — I am not suggesting that Fractional Real Estate will be as liquid as exchange traded high volume equities but I am suggesting that liquidity will be multiple times higher than traditional Real Estate.
Fiat & Crypto: Why not let the market decide?
Some platforms around the world chose to do Fractional Ownership using cryptocurrencies primarily on Ethereum Blockchain with Bitcoins, Ethers and proprietary Coins. We, at Fracsn, are not opposed to cryptocurrencies but it bothers us that some of these platforms just transfer fractional ownership (a) to anyone without verifying real identity (KYC) and (b) without complying with Anti-Money-Laundering (AML) laws.
Land and thus any Real Estate is regulated at multiple levels of Government — it’s just a bad idea to bypass those regulations just because cryptocurrencies empower you to do so. Fracsn will always be compliant.
Second, based on our experience talking to hundreds of Real Estate Investors, volatility is NOT welcome in Real Estate Asset Class. Cryptocurrencies have proven to be a lot volatile and we do not think that is temporary — since there is no Central Bank to regulate and intervene to prevent fluctuations, we do not see how cryptocurrencies can ever become stable.
For these two reasons — (1) to comply with law of the land and (2) to prevent subjecting Fractional Ownership to volatility — we chose to go with Fiat Currency. We’d love to support crypto where there is demand — but still with compliance such as KYC/AML.
Transformation is Here!
A transformative technology has arrived for Real Estate and we are making the transformation happen. Possibilities for this $200T Asset Class are endless!