The world today has been brimming with advancements in technology we had never expected a few years ago. While blockchains’ growth to the helm was not unexpected, the short span they took to reach was. The domain has earned prominence in many real-world disciplines, including real estate. Fractional NFT real estate has grown in stature in recent times due to what it brings to the table for all parties concerned. There are many exciting parts to using NFTs for real estate, about which our experts will give an overview as we progress.
“It’s time to ride on the “virt-real” estate wave!”
Fractional NFT Real Estate: What It Really Means
While speaking of fractional NFT real estate, your thoughts could lean towards crypto tokens backing real estate assets. But we are not talking about those here, as they come under tokenized real estate, which is worthy of discussing in another blog. Coming back to fractionalized real estate, the process thrives on fractionalized NFTs (called F-NFTs, in short).
Here, a real estate asset or its primary document is divided into numerous portions depending on the property’s size and value. Details related to these portions are then inculcated into NFTs through relevant blockchain standards (For instance, ERC-721 and ERC-1155 for the Ethereum network).
So, What Do These F-NFTs Do?
The fractionalized NFTs backing portions of the asset are then sold through an NFT fundraiser. The capital raised through the campaign can be used by the owner for their needs while retaining the property. They can even rent the asset as a whole or in parts to others, whose yield will be shared with all the NFT holders.
Since these tokens are non-fungible, their value in the secondary market can vary which depends on multiple factors. Location is one of those, as an NFT backing a portion in the front is likely costlier than one further back. The kind of business functioning on the part is another crucial factor determining the F-NFT’s price.
Notable Elements Present While Using F-NFTs
- DAOs – Decentralized Autonomous Organizations for real estate properties can be helpful in making business decisions for smooth functioning. Co-creating and co-owning can be achieved seamlessly through a referendum-based consensus protocol run through smart contracts.
- Asset Ownership – Ownership of assets in fractional NFT real estate is denoted by NFTs and crypto-fungible tokens (in the case of tokenized assets). These offer the owner the power to own, gain profits from the rent collected (if let for rent by the asset’s original owner), and other provisions as drawn in the smart contract.
- Asset Management – Managing assets for property owners becomes easier using fractionalization as it allows collective decisions to be made, hence easing the burden off owners of large-scale properties.
“The best investment on Earth is earth.” – Louis Glickman, Real Estate Investor.
Advantages of Using Fractional Property NFTs
- Fractionalized real estate NFTs abolish the intermediaries, lengthy documentation, and overhead costs in such transactions since everything happens via smart contract protocols.
- NFTs representing portions of real estate assets can be sold through auction as different parts of an asset can have differed minimum pricing values that could interest different potential investors.
- Fractional ownership NFTs for real estate properties can open doors for retail investors by eliminating high entry barriers that were the case earlier, making real estate investments almost inaccessible to the general public
Types of Real Estate Properties Using F-NFTs
Commercial real estate assets have been popular as fractional NFT real estate NFTs due to the presence of business occupants and (generally) high returns on investment (ROI). These NFTs have made it easier for small-time investors to get into the large-scale real estate domain without hassles or eligibility concerns.
Residential real estate properties can also be registered as F-NFTs, although they are less promising as profit generators. They can be used as safe investments, and fractional NFTs enable investors to own a chunk of real estate deeds in a high-demand region of a metropolitan city or country where property prices are at the maximum end.
How can Blockchain App Factory Assist You in the Fractionalization of Real Estate into NFTs?
If you are looking to make use of the fractionalized real estate as a property owner, then you are in the right place at the right time. At Blockchain App Factory, we work hard to bring novel applications through our innovative development campaigns. Our real estate-related fractional NFT campaigns for clients have been highly successful, bringing fortunes for all parties involved. There’re more reasons to add, including:
- Proficient Blockchain Developers
- Creative Consultants
- Seasoned End-to-End Development Teams
- Access to Advanced Technological Stacks
- Multi-chain Compatibility
- Tailor-made Solutions
- 24 x 7 x 365 Technical and Non-technical Support
- On-time Delivery
- Economical Prices
To start converting your real estate asset into F-NFTs, discuss with our professionals to create a working plan by filling out the form below.