What Are the Benefits of Tokenized Real Estate?

Key Takeaways

  • The traditional process of buying real estate in Germany is very lengthy and costly (up to 15,64% in transaction fees).
  • Tokenization of properties streamlines the process tremendously & cuts out most, if not all middlemen.
  • Real estate security tokens allow investors to invest in properties in minutes (and not in weeks or months as previously).

Tokenized Real Estate Will Cut Out Most Middlemen

Investors have many different options when looking to invest in real estate in Germany. Tokenization of properties offers investors a couple of unique benefits that are none of the existing options to invest in real estate offer yet. To understand the revolutionary impact of real estate security tokens, let us remind ourselves of the traditional process of buying a property in Germany.
  1. Finding the right property in the right location for the right price (that fits the investors’ personal financial strategy)
  2. Securing the right mortgage with a bank that will result in a financing contract
  3. Negotiating the purchase price with the owner that will result in a (preliminary) purchase contract
  4. Notary meeting to sign the purchase contract & change the German land registry
  5. Buyer pays all bills for the notary (2%), purchase taxes to Finanzamt (3,5% – 6,5%), and real estate agent (3,57% – 7,14%)

The entire traditional property purchase process as shown above is taking weeks or months of work and costs anything from 5,5% – 15,64% in closing costs on top of the property value. That is anything from 5.500€ up to 15.640€ for every 100.000€ of property value that is being transferred from the seller to the buyer (not for REITs or real estate ETFs).

The fundamental idea of Bitcoin was to transfer money (across international borders) without a bank in the middle. Tokenizing real estate with security tokens is bringing the Bitcoin idea to a whole new level as it allows people to transfer ownership of properties without middlemen, therefore saving a lot of time and money while increasing returns for investors.

Investors can register on GermanReal.Estate and after the one-time identification process and setting up the wallet, they are immediately the “owner” of properties in Germany (indirectly through security tokens). The real-world owner of every property listed on the GermanReal.Estate marketplace is a special purpose vehicle – short SPV in English (GmbH in German).

Tokenized real estate securities will revolutionize the traditional German real estate market. Be part of this revolution and profit from the upcoming change!

How Real Estate Security Tokens Improve Investor Experience

Instead of transferring the ownership of a German property in the real world (which would involve the process and the fees mentioned above), real estate security tokens allow the transfer of the digital ownership of a property much faster & more cost-efficient. Thanks to the blockchain technology, real estate security tokens can be transferred fully automatically by smart contracts.

Example: A property worth 100.000€ (either a project development or an existing building) can be tokenized into 100.000€ real estate security tokens (like real estate crowdfunding but as real financial security). However many security tokens the investor wants to buy will be minted for him. Investing on the GermanReal.Estate marketplace starts usually at just 100€.

The key point that separates real estate security tokens from all other available forms to invest in real estate is the digital ownership thanks to the blockchain technology. No matter which investor owns how many security tokens, the real world owner of every property is a special purpose vehicle. Therefore, investors are saving the 5,5% – 15,64% transaction costs when real estate security tokens get transferred from one investor’s wallet to another investor’s wallet.

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