Real estate was once the answer to the question of earning passive income and investing. But in this digital age, does real estate still hold up to its old reputation?
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Real estate has seen its own ups and downs. Much like every commodity, values can either rollercoaster or remain steady. With COVID-19 forcing the world to hit the reset button on everything, it has opened up a whole new door for commercial real estate — the digital world.
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The challenge in real estate is what it always has been: how to get the buy in. It may be doubly hard now when we are taking real estate and making it digital, but that is also a key advantage. Being digital opens your business up to more people. And if you use blockchain technology, with its transparent ledgers, it fosters even more trust between you and your potential investors and clients. Digital transactions may also have an environmental bonus, helping companies achieve net-zero emissions by cutting down on our carbon footprints.
So, to build a new digital real estate empire you would need a few things. First is answering the why, as in why invest in it?
Diversify your portfolio
When investment gurus say don’t invest it all in one company, they mean it. Investing in digital real estate can diversify your portfolio, thereby cutting down on some risks you may face when investing in just one or two companies. Also, adding real estate to your investment portfolio has the potential to add to your returns as your property values appreciate.
Tangible assets presented digitally
Commercial real estate is a tangible asset. You’re just offering them on a newer platform that reaches more people. That is the beauty of technology, you can reach clients who are not in the same place but are interested in investing or outright buying properties without them having to actually be in the same state.
Earning potential
Real estate still has that earning potential. Passive income from renting your space out, or income from selling — there is always a way to earn money when it comes to real estate. It all depends on how you want to manage and grow your properties.
Now that you have the why out of the way, you can focus on the how.
Blockchain technology
Blockchain doesn’t just mean cryptocurrency. This technology is slowly being used by the commercial real estate industry. Industry leaders have discovered that blockchain technology with its smart contracts can play an important role in commercial real estate. It has the potential to transform real estate financial services — leasing, sale, financing and transactions management.
Smart contracts in blockchain allow you and your clients to enter into a contract sans the middle man, with instructions rooted into the transaction, so that payments can only be accepted and validated once those instructions are met. This makes for fewer payment disputes between parties and offers better transparency too.
Blockchain is a decentralized digital ledger of transactions. This means transparency in every transaction which fosters trust between the business and its clients.
How that works
First, a transaction is requested. This request is then broadcasted to the nodes (a network of computers which the blockchain is on). The nodes then process the request through algorithms and verify it.
Once verified, the ledger is updated with the new block (request) and that block is added to the blockchain. Once added, this block or data cannot be deleted or changed in any way.
Education
Whether you are new to real estate or an old pro, learning the ins and outs of real estate is an important part of real estate investing. This will allow you to pick out which properties to invest in, which services to avail of, and which states have the best ROI for your budget.
You need to know what is within your budget, and what type of risks you are willing to take when it comes to investing. The potential for passive income is great in real estate. That potential can be maximized when you know what to look for, where to look for it, and when to strike.
Find the right platform
You need to find the right marketplace platform that will work for you and your needs as an investor or seller. Find one that uses secure blockchain technology and offers a good ROI for your investment.
The bottom line is investing in real estate digitally can be easy, but it still needs work. Building a digital real estate empire can be achieved with the right tools and using the right platform. Do your research, and find out how much you are willing to invest and the realistic returns you want from your investments. Due diligence is important as well, in all transactions you enter into. More importantly, anything too good to be true, might actually be too good to be true.
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