Will NFTs in Real Estate Be a Thing in 2022?
Since the summer, NFTs, blockchain and the metaverse just seem to be everywhere. The search for all of these things is increasing, and more and more people are looking for new uses for this not entirely new group of technology. And while we’ve done a lot of research into how virtual real estate moves and shakes with the help of NFTs, we haven’t really looked at NFTs and physical real estate as extensively.
Will NFTs be a property and real estate investment thing in 2022? Absolutely, without a doubt, yes, but maybe not in the way you think.
Selling individual properties with NFTs
NFTs can be difficult to understand because they aren’t physical and the people who write about them often don’t explain them really well. You can think of an NFT as a digital act recorded on a storage system designed to keep it very, very secure. Like a document, an individual NFT relates to an individual thing, even if it is one of a series or part of a whole. But it doesn’t have to be a virtual thing; it can also be real. You can create an NFT that gives the owner of the NFT full rights to your grandmother’s wedding ring, or one that gives exclusive access to the dog park on Wednesdays from 1:00 p.m. to 3:00 p.m.
When it comes to real estate, it gets a bit dodgy, believe it or not. Real estate law hasn’t fully caught up with the new technology that is NFTs, so we still have physical deeds and clerks and all that. Lots of people heard about an apartment in Kiev, Ukraine that was being “sold as an NFT.” The quotes are there because it was … and it wasn’t.
What actually happened, however, was that ownership of a small business was recorded as an NFT and then sold using that technology. It just so happened that the company had one – and only one – asset. Yes, it was this apartment. So the company and its assets were sold using the NFT to circumvent the technical fact that it is currently impractical to sell an entire property using NFTs.
Proportional property sales as NFTs
Well, I don’t expect anyone to be able to buy an entire property with an NFT for quite a while. Real estate law moves slowly and changes take a long time. However, tokenized ownership of real estate projects is absolutely one thing that happens here and there. And it’s absolutely awesome.
Sure, you can already buy shares in development companies or in REITs, but the option of buying shares in individual projects directly is often very expensive for everyone and only allows deeply capitalized, long-term investors to enter projects with large margins. Actual partial ownership over something like joint tenancy or joint tenancy requires a lot of paperwork and time, and every time an owner changes everything has to be redone.
But let’s say you could sell a company that owns a particular property or project as NFTs. Each NFT represents a percentage of ownership regardless of what it was called at the time the NFT was created (a process known as “imprinting”). For example, your NFT in Real Estate Project Alpha gives you a 5% buy-in with all that is included as stipulated in your contract.
To close your stock, simply hold the money needed to buy it (often as stable cryptocurrency to make the end-of-admission process easier) in a digital wallet, click the “Buy” button, digitally sign the papers , and become the owner in minutes. Your property is recorded on the blockchain for that NFT, and you and the other owners have a permanent record of your purchase without going through the traditional closing process.
The same thing happens in reverse if you decide to sell your stock (according to the rules set out in your contract). A couple of clicks to victory, everything is recorded in the same NFT (remember, it’s basically a virtual act) and you are depleted of that investment. This can give people faster, easier, and cheaper exits, regardless of the reason for the sale.
NFTs are absolutely going to be a thing in 2022
We cannot go on as we have before. Paperwork is so 1950. So much is happening in the real estate market every day that automation is required to keep the pace up and frankly, using NFTs to generate shares in real estate projects was the obviously ingenious solution. a time consuming process. However, as with any investment, you need to understand what you are investing in and what technology will be used for recording.
There will definitely be NFTs in 2022. NFTs were supposed to be one thing in real estate, we just didn’t know it. So the next time you see a great real estate project that you’d like to be a part of, don’t be afraid to buy an NFT that will earn you a share of ownership when everything else looks solid. It’s really just a digital version of the deeds that we already use on a daily basis.