There are few times in recent memory that have been as volatile for investors as the present. We’re coming out of a world-changing pandemic. Inflation (and its countermeasures) are constantly disrupting the markets. Every day, more investment professionals predict a recession in the near future.
With so much in doubt, it can be difficult to find investments that feel safe and still have the potential for growth. There are plenty of opportunities in the stock market, but its fickle nature during economic uncertainty can give you whiplash in no time. Bonds are safe, but they aren’t going to do much other than curb inflationary pressure.
If you have some cash and you’re looking for an investment to not just maintain but grow your wealth, you may want to consider digital real estate.
What Is Digital Real Estate?
Purchasing land and physical structures is already an age-old investing option. However, digital real estate provides a new, cutting-edge approach to the real estate industry that brings this traditional investment into the 21st century.
In essence, the digital real estate concept is simple. It consists of creating a real estate blockchain that digitizes and tokenizes the ownership rights of a property.
While it isn’t a perfect comparison, it’s very similar to creating a large pool of stocks to represent decentralized ownership in a company. When you digitize and tokenize real estate it, in effect, turns a property into a large pool of “shares” that investors can buy at very reasonable prices.
You can apply this concept to very large purchases, too. For instance, the fast growing digital real estate company RedSwan is tokenizing extremely large commercial real estate (CRE) purchases.
The Investment Benefits of Digital Real Estate
Understanding digital real estate is one thing. Seeing its value as a part of your portfolio is another. With that said, here are a few of the top reasons you should consider investing in digital real estate, especially when times are tough.
1. Digital Real Estate Is Grounded
Everyone and their mother is aware of cryptocurrency at this point. The darling of the investment world has experienced a meteoric rise over the last decade …along with some terrifyingly big dips and crashes.
The truth is, while it’s been a great investment for some, cryptocurrency is volatile. And that makes it a not-so-great option for the average investor.
Tethering it to something like the dollar — as is the case with stablecoin Tether — has helped introduce a level of stability in the past. But it isn’t a foolproof method.
Tying a digitized token to the real world through physical real estate can be much more effective. By investing in digital real estate, you’re tapping into the investing power of cryptocurrency without the same destabilizing factors.
2. Digital Real Estate Is Accessible
One of the biggest issues with real estate investment in the past has been accessibility. Even bidding on a primary residence requires tens of thousands of dollars upfront and often hundreds of thousands of dollars in the form of a mortgage or business loan.
Using real estate as an investment channel balloons those numbers even further. Commercial real estate, in particular, can cost tens of millions of dollars, especially for larger, more desirable properties. Putting down 20% of a $20 MM property is a very high barrier to entry. And yet, it’s often the CRE investments that can yield some of the best profits.
Tokenization dramatically reduces that barrier of entry. At times, it can cost as little as $1,000 to purchase a share of a CRE property.
3. Digital Real Estate Is Safe
Purchasing real estate is a complex activity. The residential process requires multiple brokers, lawyers, and accountants. CRE interactions only get more complex from there.
These layers of complexity can make it difficult for an investor to feel safe as they go about making a purchase. Digitizing the real estate process introduces a variety of safety elements that aren’t present when an investor must go about the purchase process on their own.
For instance, pooling resources via tokenization allows a large group of investors to back a single investment management team. Critical elements like transparency and coordination are still key factors that must be maintained. But the ability to let a single, unified, and experienced group deal with the bureaucratic red tape creates a unique layer of protection.
Add in the fact that tokenization makes liquidity easier than ever, and digital real estate becomes one of the safer investment options out there.
From safety to simplicity, stability to accessibility, there are many advantages that come with investing in digital real estate. Barriers to entry are much lower and high levels of liquidity make it an easy investment to exit at any point.
The investment world is already comfortable with the concept of tokenization and decentralized ownership structures in things like cryptocurrency and even, in a sense, stocks. However, applying the idea to larger real estate purchases opens up an entirely new world of investment opportunities for those who are willing to see it.
