How to Start a Real Estate Crowdfunding Platform
Investment platforms broaden the range and number of investors using crowdfunding techniques. The accent is on the fact that portfolio diversification increases the probability of passive profit growth - it is easier to invest in several assets in token format, getting profit from each, than in one with the risk of bankruptcy. The developers pay attention to accreditation of investors, assessment of their risk appetite based on the probability of recession, the ability to discern prospectivity in a pivot, and launching the listing of securities and protection of investors' rights. Approximately half of the platforms also work with non-accredited investors.
Increased blockchain functionality simplifies crowdfunding processes, as the recording of transactions and operations by multiple nodes via smart contract protocols prevents the possibility of data leakage and phishing. In the list of platforms and funds, savvy contributors choose those REITs that are attentive to the liquidity of commercial real estate assets so that assets will multiply. The broad contribution threshold ranges from $10-200,000. At times, there are limits on the maximum contribution amount ranging from 5%-10% or more.
In order to simplify the evaluation of the results of tactical stages according to KPIs (which are at least a hundred indicators, most of which relate to production), the BSC methodology includes a smart contract in code format. Its goal is the ability to create, distribute and sell tokens, translate them and, in the case of non-replaceable tokens, burn them. Competent and smart code writing is the No. 1 task in the backend, as incorrectly formed conditions automatically execute actions when a specific result is achieved.
Let's say there is a task to create a token and send it to a popular startup for pre-sale, specifying payment cryptocurrencies with different volatility. For this purpose, we chose SOL, BNB, ETC, USDT and TON as payment means, but did not specify at what level of rate drop or rise to sell. And if the fall for a month reached 30-50% of the value, the co-owners will suffer losses. Accuracy of addresses for transferring the agreed part of profit to the hot wallets of verified micro-investors, changing the token rate in manual mode and accumulating the revenue fund at a specific address - all these are the components of a correct smart contract.
REIG-based syndicates are characterized by the presence of a managing part responsible for development processes with payback and another part acting as financial donors and passive beneficiaries. Equity ownership of commercial real estate (for rent, for tourism) is preferable to sole ownership, as it allows you to diversify the income portfolio. Thus, with an investment of only $500 or $1000 investor can become a co-owner of 10-30 objects, each of which will bring from 10% to 30% per year.
However, if a part of real estate investment was made in cryptocurrencies (both in demand and those that have a gradual growth trend), the micro-investor will get even more profit when the quotes rise. Of course, here we should start from the cryptocurrency's exchange rate. For example, AVAX reached the level of $146.29, but fell to $20.8, and the trend for the quarter indicates a twofold decrease. The situation is similar for ALGO, which dropped to $0.12 from $1.8. Sometimes a tokenized asset can work - as seen in ULTA, from $320 to $370, after Warren Buffett bought a bundle of assets.
| Year | Real estate tokenization assets in the U.S., $ billion as forecast by Prophecy | Real estate tokenization assets in the U.S., $ billion |
| 2024 | 3,8 | 3,8 |
| 2025 | 3,91 | 4,60 |
| 2026 | 4,02 | 5,56 |
| 2027 | 4,14 | 6,73 |
| 2028 | 4,26 | 8,15 |
| 2029 | 4,38 | 9,86 |
| 2030 | 4,51 | 11,93 |
| 2031 | 4,64 | 14,43 |
| 2032 | 4,78 | 17,46 |
| 2033 | 4,91 | 21,13 |
| 2034 | 5,06 | 25,56 |
| 2035 | 5,20 | 30,93 |
| 2036 | 5,36 | 37,43 |
| 2037 | 5,51 | 45,29 |
| 2038 | 5,67 | 54,80 |
| 2039 | 5,83 | 66,31 |
| 2040 | 6,00 | 80,23 |
If we take into account that the purchase of any housing or apartment, let alone a large object, has always presented certain difficulties due to the need to re-register ownership, tokenization removes these problems. A blockchain (chosen on the basis of a proven cryptocurrency), made on the basis of a smart contract, will record any process - buying, selling, repurchasing, renting. There will be no need to involve specialists who will confirm the correctness of the master plan of the object, its real value, authenticate the identities of both parties to the transaction and produce confirming ownership documents.
At the same time with North America it is expected that the tokenization processes of real estate in Europe and developed Asia-Pacific countries will increase. Less in demand will be properties in most part of Africa. Special attention has already been drawn to collectible real estate (trophy real estate) - real estate that has no analogues in the world, with high cultural and historical value and exclusivity, from the Deluxe segment. Its volume is no more than 2% of the number of elite objects on the planet, and the price is constantly growing, as it does not depend on the area and cubic meters.
The requirements of each platform are different: Blocksquare charges a commission of 1.5% of BST tokens from each transaction, estimating the cost of tokenization of one object at €5900. Up to 100 thousand tokens can be issued for each asset: for example, a $2 million building can be split into tokens with a price tag of $20 each. For the objects of trophy real estate, the value of which exceeds a billion, the token price will start from the minimum mark of $10 thousand. It is possible to tokenize a part of the real estate (10-20-30%) - in order to get more profit in the next 5-10 years.
PROPY works with Ethereum PRO tokens. The platform offers different types of real estate (residential, commercial, farms, for students, etc.), there are virtual tours and photos, the price is denoted in fiat and cryptocurrencies PRO, BTC, ETC, USDT, there are NFT-objects. BitGo insures properties up to $250 million, offers custodial and non-custodial wallets at once. DigitalX Asset (DXAM) is one of the companies whose tasks include digital tokenization of different objects, including real estate. The commission service costs 16.5% for management and execution, but VAT is added to this amount. Structuring is based on private real estate in Australia, and fees increase with increasing profitability and capital growth. The clients are Australians wishing to become homeowners on a fractional basis.
Ecosystems of crowdfunding platforms are increasingly expanding: soon there will come a moment when in order to buy a share or a micro-part of real estate in another country or region, it will be enough to choose a property, make an offer to the owner, transfer cryptocurrency or fiat, receive Security tokens, thus registering ownership.
French platform Vave is not distinguished by the abundance of objects (less than a hundred), most of them are declared as confidential. So far, buildings from France are on display, but in the future they promise to open positions in the United States, Britain, Dominican Republic and Japan with Latvia. Minimum investment price is $11, with some properties having maximum contribution limits. Remuneration is usual, in the range of 10-11% per annum.
On London House Exchange platform during the token sale, % payments are suspended, as the fund is being accumulated and risks of “bubble inflating” are prevented. The share price ranges from £7 to £130, averaging £40-50, with a dividend yield of 2.62-4.78% per annum. The list of bids and offers shows only the top 5 properties from each category, the chart shows the price rise and fall dynamics.
The concept of Merehead team, which developed this project, was to select liquid houses and buildings - so that investors would get an annual profit of 6-15%, which is significantly higher than other platforms. For this purpose, a strategy of isolation was thought out - a collection of tokens and, in fact, NFT was created for each lot (the whole tourist object). The reason is to prevent covering losses from some objects at the expense of others. Therefore, such diversification based on the blockchain principle under several types of cryptocurrencies (ETC, BTC, SOL tokens) can bring profit much more than the investor expects.
Considering the probability of OREO or the presence of frequent situations when in a certain micro-region housing is foreclosed on and auctioned is a signal that such a building is not worth tokenizing. Security tokens, which are property tokens (similar to stocks and securities), are written into a smart contract. Owners of real estate tokens, who have passed KYC verification, get the right to dividends, payments, after listing can sell and buy them on stock exchanges, although usually long-term hold due to permanent annual profit in the range of 10-15%.
The fact that startups with colorful and informative names are eagerly supported is noteworthy. In this list there is the future housing and a creative retreat, a hotel near a church and a salt cave, a floating sauna and a queen's cottage, tree houses and an outdoor classroom (like Sukhomlinsky's school). Rock-climbing walls, coworking and parkour gyms, disc-golf courses and skating and skiing all year round show that people miss physical activity and relaxation after it, so they willingly become contributors to such facilities.
Practically there are no startups in the “real estate” category. We managed to find one project, where the financing of the real estate agent planner in PDF format has collected $15.9 thousand (159%) instead of the announced 10 thousand. Approximately the same amount was collected 9 years ago and the project Tiny Houses for houses in Ohio with an area of 60-120 square meters. m. But the total figure of $3.4 billion from almost 4 million people looks impressive. But the total figure of $3.4 billion from almost 4 million people looks impressive. Considering the fact that the top three in the Architecture segment raised $1.5 million, we can assume that a thousand targeted projects generated a minimum of $100-150 million in collections.
Tokenization of real estate is like the “blue ocean” of business: startups that will offer secure and clear contracts, with income security within specified limits, and share insurance, will win tomorrow. Real estate owners, who are searching for a rich investor with capital in millions of USD at 15-20%, can immediately attract thousands of investors with minimum investment amounts ranging from $10-100 and will be in profit.
The most important thing is to consider carefully the business strategy, assess and analyze the market, develop Security and, if necessary, Utility tokens, forecast volatility and introduce automated blockchain-based processing. Of course, you can't do without PEST and STEP analysis, and the application of Porter's five forces and comparison with macroeconomics will show how promising a particular project is. Contact the Merehead team with these questions to tokenize real estate or create your own crowdfunding platform.
