The current economic climate means that there is a growing number of renters versus homeowners. This is a great opportunity for large scale property owners because it means that they can be confident that there will always be demand for their portfolio. However, that increased demand comes with an additional maintenance burden, and scaling property management is a significant challenge.
Taking Contracts Digital
Blockchain has been the subject of a significant amount of hype in recent years, with some considering it to be the biggest change to the world of finance since the foundations of banking as we know it was laid in the 15th century. The blockchain is not just for banking and finance, however, it has a lot of promise for the world of real estate, too, because smart contracts offer the potential to solve one of the biggest issues in the world of property management. The time that it takes to sort out traditional contracts.
Transaction times are a significant hindrance to property management at the moment. Whether you are moving in tenants or selling a property, it takes time to go through the legal processes, and that time is friction which makes moves difficult. Blockchain adds liquidity to a difficult process, without sacrificing trust.
Decentralized Contract Management
Using blockchain to manage contracts allows you to make use of a decentralized network for those contracts. This means that there is no one person who controls the contracts, and they cannot be edited or manipulated by a single dishonest third party because of the need for that trust on the network. This allows for the sale of tokens for property and makes for a low friction high-security method of managing property contracts.
The idea of liquidity in the real estate market is scary for some, but the benefits of a digital, decentralized way of handling property contracts and assets are clear. The cost of contracts themselves will go down, and the technology offers the opportunity to collect more data in a more secure way. Imagine, for example, being able to track the reputation of tenants and landlords? Or for tenants to transfer leases between themselves without having to go through a longwinded legal process? Such options may not appeal to all property owners but the beauty of the blockchain is that the technology is flexible, which means that you can use it however is best for your business.
The blockchain is already being employed in some parts of the world to provide tokenized REIT for student properties. Investors can buy in for comparatively small amounts of money, and the easy-in, easy-out option here means that it is easier for the asset owners to drum up interest. Investing in real estate becomes cheap, fast and easy, and the returns are still there. The Hub, a block of student properties in South Carolina, USA, offers a 5% dividend to investors, and a buy-in of just $21,000, which makes it one of the more accessible options for those who are looking to get into the property. We can expect to see many more similar options in the future.