💲How does real estate tokenization work?

When purchasing tokenized properties, the property and its deed are associated with a token that cannot be replaced or changed, equivalent to a series of unique information stored on a blockchain. Blockchain, in turn, constitutes a database responsible for registering and certifying the ownership and exclusivity of digital assets, in a safer way.

When tokens are traded, the buyer becomes the owner of the property. Thus, similarly to what happens in real estate financing, the tokenization of real estate allows its acquirer to become the owner starting from any value. Afterwards, he can pay the installments according to his financial conditions and, even better, without debt.

In practice, the whole process begins with the acquisition of the land and, as a way of making it easier, it is divided into several parts and the investor can buy as many as he wants. In sequence, the land can be transformed into apartments built by developers. Upon delivery of the units, there is the possibility of selling the purchased part, also profiting from the real estate appreciation resulting from the development.

But how does it work practicaly?

For example, it is possible to imagine a property valued at R$2 million being fragmented into 10,000 tokens. In case you choose to buy one of them, for R$200 reais each and, after a certain time, the property is sold for R$4 million. In this transaction, your token is worth R$800.00. With this, we can understand that:

1. The token stores information about the property, such as dimensions, location and registration number;

2. The issuer must define the desired blockchain to register, determine whether the token is fractionable, in addition to any rules for transfer;

3. Registration can be done on a public blockchain or on a private network;

4. The legal validity of the token may vary from state to state, with undefined regulation, which does not happen with the Real Estate Fund.

Next up: The advantages of tokenization