Inside The Kore #29 - KoreSummit Real Estate

The 29th issue of Inside The Kore is out!

Have a good read.

KoreSummit | Real Estate + JOBS Act + Tokenization = Liquidity

There has been substantial growth in the Real Estate market, with more people seeking to invest in this asset class, but high capital requirements have been a?significant barrier to entry for many.

That is where tokenization and blockchain technology that supports it comes in, to securely break up such investments into more affordable chunks.

The first KoreSummit of the year will talk about this specific topic.

Save your seat!

Why Use RegCF for Real Estate?

Companies in the real estate industry have a variety of financing options available for their projects, but one that is often overlooked is the use of Regulation Crowdfunding (Reg CF). Equity crowdfunding is becoming an increasingly popular tool among companies due to its potential to provide access to potentially high-yielding investments and the ability to offer new ways for investors to diversify their portfolios.?

What is Reg CF for Real Estate?

Reg CF is a type of equity crowdfunding that allows companies to raise capital from everyday individuals, not just accredited investors. Unlike traditional real estate investments, the price tag for Reg CF investments is much smaller, making it more appealing to a wide range of investors.?Companies can sell securities?such as stocks or debt instruments in exchange for investor funds. For real estate, this can be done in various ways such as selling shares in a real estate investment trust (REIT), selling property-specific investments, or launching a syndication.

Benefits of Reg CF for Real Estate

Using regulation CF for real estate offers a wide range of benefits to both investors and issuers that may not be readily available with other forms of capital raising. These benefits include:

It Can Provide Access to High-Yielding Investment Opportunities:?Real estate investments can offer higher returns than traditional stocks and bonds, with an average annual return of 12.9% according to a study by the Cambridge Centre for Alternative Finance in 2017. By using Reg CF, investors can tap into this high-potential market and issuers can access the capital to fund their real estate projects.

It Offers a More Diverse Investment Portfolio:?Real estate equity crowdfunding allows investors to invest in specific projects or properties, rather than having to invest in an entire REIT or development company. This provides more control and transparency for the investor as they can see exactly where their money is going.

It Can Offer Lower Investment Requirements:?When using Reg CF, the minimum investment is typically much lower than traditional real estate investments, meaning that anyone can invest as little or as much as they want in a given project. This makes it easier for companies to attract a larger pool of potential investors and increase their chances of successfully raising the necessary funds.

It Can Help Facilitate Market Research:?When using Reg CF, issuers must provide investors with all the information they need to make an informed decision, in-depth market research included. This can increase investor confidence in the project and potentially lead to higher returns for real estate agents.

Reg CF is an effective tool in the real estate space, allowing companies to access capital quickly and easily from a wide range of potential investors. As the popularity of crowdfunding continues to grow, it is becoming increasingly important for companies in the real estate space to understand how Reg CF works and how it can be used in conjunction with other financing methods to maximize their fundraising efforts.

What is Tokenization in Real Estate?

Real estate tokenization?is a new way of dividing property ownership rights using blockchain technology and digital tokens. Tokenization enables fractional real estate ownership, allowing investors to own a property without having to buy the entire asset. It has opened up the possibility of owning real estate to many more people than ever before, especially those without the resources to buy an entire property. But what is involved in tokenizing real estate and what are the implications for investors, property owners, and other stakeholders?

What is Real Estate Tokenization?

According to Deloitte, a large amount of our future economy will be powered by tokenization, and the value of blockchain technology is projected to?rise about $3.1 trillion by 2030. Additionally, as of May 2022, the total value of tokenized real estate increased from $65 billion in June 2021 to $194 billion. For investors and realtors alike, the tokenization of real estate assets is a great way to enter the market and benefit from fractional ownership.

While many countries have made progress toward developing a legal framework for tokenized assets, not all jurisdictions have implemented regulations for this type of investment yet. It is also important to understand the potential impact of taxes and other fees on profits from tokenized property investments.

Distributed Ledger Technology

The use of distributed ledger technology (DLT) is key to making real estate tokenization possible. DLT is the underlying technology behind blockchain that allows for secure digital records to be stored and shared across a network of computers. In the case of real estate tokenization, DLT enables fractional ownership shares in an asset to be tracked and recorded securely on a decentralized database. This ensures that each investor’s ownership stake is accounted for and can be verified quickly and easily.

Smart Contracts

In addition to DLT, smart contracts are also used in real estate tokenization. A smart contract is a code-based agreement between two or more parties that records transactions on the blockchain and is automatically executed when certain conditions are met. Smart contracts can be used to facilitate the transfer of ownership shares in a property, as well as for automated payment processing and compliance with regulatory requirements.

Implications of Real Estate Tokenization

Real estate tokenization opens up the possibility of owning a share in a property to more people than ever before, including those who may not have the resources to buy an entire asset. It also reduces costs associated with buying and selling real estate by introducing new efficiencies in everything from compliance and record-keeping. Tokenization also increases liquidity and market transparency, allowing investors to quickly and easily buy and sell fractional ownership interests in a property.

Finally, tokenization provides an additional level of security by protecting investor rights through secure digital records stored on the blockchain. This ensures that investor interests are safeguarded, reducing the risk of fraud or manipulation.

Real estate tokenization has the potential to revolutionize the way we buy, sell, and invest in properties. By allowing fractional ownership shares in an asset to be recorded and tracked on the blockchain, tokenization provides investors with greater liquidity and security. It also opens up new opportunities for those who may not have had access to traditional real estate investments in the past. However, before investing in tokenized assets, it is important to understand the regulatory landscape and potential risks associated with these types of investments.

Will you join us for the KoreSummit?

Now that we talked about the importance of the Real Estate sector and its new possibilities, we want to invite you to the next edition of the KoreSummit, which will be focused on the future of the Real Estate sector: the relationship between Real Estate and the JOBS Act, and how tokenization can lead to liquidity!

Save your seat now!

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