Lke an owner participates in real estate investments

Generate returns without owning real estate — how does that work?

Anyone who wants to benefit from the return on real estate has so far been able to make an investment in the following way:

- Buying a home

- Buying a condominium or apartment building

- Purchase of commercial properties or land for commercial use

- Purchase of shares in real estate funds

When a return is generated, it flows back to the owner in the form of rent or dividends. However, it is reduced by additional purchase costs, administrative costs and maintenance. The direct purchase of real estate therefore requires a great deal of equity and in-depth expertise. In addition, speculation taxes restrict the ability to profitably realize a short-term increase in the value of a property. Investors are then unable to always react to changing market conditions or lucrative buying opportunities.

When trading with real estate funds, fees such as deposit fees or transaction costs are regularly due when the shares change hands. In addition, real estate funds combine a wide range of properties under one roof without the investor having any right of participation in the selection of properties. One way to address this dilemma is to invest in tokenized securities of a single property.

Tokenization of securities and tangible assets

The tokenization of securities using blockchain technology is based on a similar principle as a cryptocurrency. So-called asset-backed tokens are offered for real estate and other tangible assets. In accordance with the respective investment amounts, the owners of the tokens regularly receive distributions of potential income and benefit from the performance of the underlying asset. In order to then exit an investment, tokenized securities can be traded directly peer-to-peer between provider and buyer. Ideally, the bringing together of prospective buyers and sellers is supported by the technical infrastructure of a secondary market.

Flexibility in the foreground

Renting or buying real estate — what is currently worthwhile? And which is better suited to the respective life situation? This question is particularly important for Generation Y and Z. Flexibility and independence are paramount. Large investments in real estate and their administrative expenses often no longer fit into the mobile lifestyle of the younger generation.

Nowadays, career changes and professional advancement often involve a change of location. A year abroad or an exciting project in another federal state can be implemented and organized more easily if you are not tied to real estate ownership. Financial resources are also often still limited, especially for career starters and young professionals.

Investments in tokenized real estate, among other things, therefore offer maximum flexibility. The advantage of this is that you can start investing even with small sums of money. Digital shares can be resold in private trading at any time and without restrictions or fees.

Structuring option for property owners

Tokenization opens up interesting structuring opportunities for asset owners. Issuers can tokenize their assets in the form of a Software-as-a-service solution provide financing from many individual investors. As a result, independence from credit institutions and their loan offers can be achieved. In return, investors receive bonds without having to worry about managing and maintaining tangible assets. Through the possible small denomination of investments, retail investors can build up a solid basis for building up their wealth step by step.