Putting your house on blockchain: The 4-step-guide
If you haven’t already, then now is the time to ask yourself: Can I put my house on blockchain and sell parts of it while I live my life?
Before we dig in, let me be clear: This might not be the brightest idea for most of you.
First of all, cash comes with a price: You’re no longer the absolute owner of your house, so you better be aware that by selling parts of your home, you will now be paying rent to the other owners (and yourself) in addition to the mortgage, tax or whatever you have to pay to own the house.
The case is different for professional landlords looking for business partners, capital, or spreading their portfolios. In this case, tokenization of property might be the most significant technological breakthrough in years.
Since you are here, you probably know the fundamentals of crypto and real-world asset tokenization. If not, please join our [newsletter] or text @brickrealestate1 on Twitter. We’re here to build a community that is a safe, educating, and welcoming environment for everyone.
The 4-step guide to tokenizing a property on blockchain:
Step 1: Picking the asset
Determine the specific property or properties to tokenize and consider jurisdiction, types of shareholders, and the relevant regulations.
Now is the time to be specific. What property, in which legal area, and how much of the property will be sold?
Step 2: Legal Structure
Determine the legal structure. Various options are available, and the owner can choose to tokenize the equity of a Special Purpose Vehicle (SPV), a debenture, or another form of participation right such as revenue or profit.
This is the part where you need juridical advice or be on a tokenization platform that makes sure you act right according to your best interest, the law, and tax authorities.
Step 3: Appropriate Technology
Choosing Blockchain protocol, Token configuration, KYC/AML questionnaire. Setup token custody solution with a custody provider and choose the right blockchain network for token creation.
You have now moved way ahead of keeping your ETH or BTC in a hardware wallet. This is serious business, and you should consider which blockchain protocol makes the most sense for your project (Gas fees, security, flexibility etc.), and you have to make sure that you don’t partner up with North Korean money laundering activities.
Step 4: Token Creation & Distribution
Creating a distribution plan and payment methods for potential investors to purchase the token. You can see the amount of funds you have raised in real-time on your dashboard.
This is the fun part: Most administration is taken care of. Now it’s all about marketing your asset and watching the forces of the market do their job.
Soooo What’s next?
If you’ve got down here, you might think real estate on the blockchain is cool.
We are currently designing the UI for our platform RE.X, a platform for real estate investments on blockchain in collaboration with Balancer Liquidity Pools.
So stay tuned, and make sure that you will be the first on our platform!
