How Can I Earn Money On GermanReal.Estate?

Key Takeaways

  • With traditional real estate investing, you have only 2 ways to make an investment return (rising property value & passive income)
  • When investing on GermanReal.Estate, you have up to 3 ways to make an investment return (incl. our investor referral program)
  • When participating in our investor referral program, both you and your friend will earn a reward based on his investment

Option 1 To Earn On GermanReal.Estate: Rising Security Token Value

The investment returns you can achieve with traditional real estate investing are quite obvious: The difference between the buying price of your property vs. the selling price, as well as passive rental income. Investors that invest in real estate security tokens on our GermanReal.Estate marketplace have been asking if the types of return are the same, or if they have also other ways to make a return.

Generally speaking, investors can benefit from 3 different types of return when investing on GermanReal.Estate. The first and most obvious way is to invest in real estate security tokens that are most of the time valued at 1€ on our primary market. Over time and with increasing demand from investors these security tokens might rise from 1,00€ to 1,10€ in value, maybe even 2,00€, or whichever value is possible (not possible with real estate crowdfunding).

Why would anyone pay more than 1€ for a real estate security token with a nominal value of only 1€? Because of increased property value (if the property is in the right location) and increased demand from investors means increased value for any investment. As of writing this article, the Deutsche Post stock price is at 36€ of market value while the nominal value is still at 1€. Due to demand from investors, the Deutsche Post share price outgrew the nominal value (unlike German REITs).

The same logic can be applied to our real estate security tokens once our secondary market is going online (expected in 2023). As soon as investors can trade our security tokens on our secondary market, it is their job to determine the fair market value of any given real estate security token (like on any regular stock exchange). Even though the nominal value of this specific security token will still be at 1€, despite the market value.

Option 2 To Earn On GermanReal.Estate: Passive Income

The second option to make an investment return when investing in our real estate security tokens is the internet’s favorite way to make a return: Passive income. As security tokens are one of the most flexible financial products existing, there can also be a wide range of different types of passive income.

Rental income: With existing buildings, investors might receive a share of the net rental income. Depending on the number of security tokens, investors will receive a percentage. If an investor has 1% of any given real estate security token, he would be entitled to 1% of the net rental income from the underlying property. Taxed a lot better at just 25% with security tokens rather than 45% (including tax-free earnings of 1.000€ in 2023).

Fixed interest rate: As there are no tenants with newly built property developments, no rental income can be shared with investors. That is why property developments pay mostly a fixed interest (e.g. Mönchengladbach: Welcome Home). Issuers of the security token can decide on the amount of interest paid as well as how often the interest is paid to investors (monthly, quarterly, twice a year, or annually).

Profit share from property sale: If the underlying property of the real estate security token is being sold, investors can benefit from the resale value. When the issuer (e.g. FiveRocks Development SE) bought a property or constructed a property for 100.000€ and sells it for 200.000€, investors can participate from the 100.000€ profit from selling the property. Attention: Property values can also go down. A rising property value is not guaranteed.

Profit share from SPV: Properties listed on the GermanReal.Estate marketplace are mostly held by special purpose vehicles (SPV) or special purpose entities that also issue the real estate security token. When that SPV makes a profit, a certain percentage of that profit can be paid out to investors. The community portfolio token we are working on will reward investors with a profit share.

Please be aware that not all real estate security tokens that are listed on the GermanReal.Estate marketplace will pay all 4 different types of passive income mentioned above. As each and every security token is different, the passive income opportunities of every security token will also be different (e.g. different amount of fixed interest paid to investors).

Option 3 To Earn On GermanReal.Estate: Investor Referral Program

The third and last option to make an investment return on GermanReal.Estate is an option that does not exist in traditional real estate investing. We work very hard in order to provide the best possible investing product for our investors. If you enjoy investing in our blockchain-based security tokens, you can tell your friends about us by sharing your investor referral link.

If one of your friends registers as an investor on GermanReal.Estate, he will be rewarded with a bonus that is based on his initial investment amount (currently valid percentage can be found here). You as the person who referred a new investor to us will also be rewarded with the same bonus as your friend. As of writing this article there is no limit to the amount of friends you can refer or the amount of bonus that can be paid out to you and your friend.

In this FAQ post, you learned about the 3 ways of making a return when investing in real estate security tokens from GermanReal.Estate. We wish every one of our investors happy investing and fun when utilizing the different ways to improve their very own financial future with security tokens.