Real estate tokens: investments with many unknowns

Real estate tokens: investments with many unknowns

"Invest in real estate with contributions from 100 euros. Immediate liquidity, just one click." Thanks to such reports and high-revenue offerings, tokens have become fashionable real estate investments. Eric Sanchez, CEO of Reental, the largest real estate company in Spain, explained this week at the Sima real estate exhibition in Madrid that "everything will be tokenized in 5 years." The firm, founded last year, has attracted 5 million euros from 5,500 investors during 25 deals. One of them was the sale of an apartment in Seville for 69,000 euros in 4 minutes.

Tokenization of property means splitting its value into small amounts and registering contacts through blockchain technology. According to its organizers, it provides greater traceability, facilitates transmission, and eliminates intermediaries. Some of them allow you to contribute only in cryptocurrencies, such as Bitcoin, Ethereum, or USDT, which are also used to pay to investors.

However, the legislation of Spain and most countries requires that all transactions be notarized and registered in the land registry. Therefore, tokens are not related to real estate but are a loan agreement that an investor enters into with a real estate purchase platform. Sanchez notes that Reental tokens are loan contracts with participation provided to Reental Token, SL. The former has a maturity date, while the company receiving the funds is not required to repay the participation accounts. "Tokens are tied to each property that is purchased with this loan. This is your guarantee, and the money is returned after the sale of the property," says Sanchez.

Another of the leading platforms in the sector, HauxT has several token issues in which an investor takes a fixed-rate loan from HC Proptech Spain, SL. The latter guarantees an interest rate, explains its CEO and co-founder Raul Alarcon. The company is also considering issuing tokens, which are shares of the company that can be created for each transaction. And it is this company that buys real estate. "Thus, the investor will be the indirect owner of the property, and the return of his investment will be associated with the purpose of the property."

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