One of the problems Stobox clients report is that sometimes real estate they want to tokenize is owned by them as by a physical person, and transferring it to the balance sheet of a company in some jurisdictions is quite an expensive endeavour which may cost from 15 to 30 thousand euros. Often this addition to the overall cost of tokenization makes it not feasible.
Passing on the cost to potential investors may solve this problem. In this case, the first thing to do would be to raise money; purchasing the property using proceeds from the token offering would be the next step.
There are two issues to discuss here: investor protection and financial attractiveness. As for investor protection, you have to ensure that the property will be there to be bought when the offering is finished. To do so, you must sign a reservation document prohibiting the sale of ownership of the land to someone other than the tokenized SPV for a set period of time. This ensures that you can eventually purchase the property.
Passing on the cost of transfer to investors reduces the financial attractiveness of the offering. For example, if the property is valued at €300 000, but you are raising €330 000 because you need additional money to transfer the property, investors who have invested €330 000 would own a company that has only €300 000 in assets.
If the property delivers a satisfactory return, the investment is still justified, but the return would be reduced. For instance, if the actual property appreciates by 20% to €360 000 euros, the investment appreciates only from €330 000 to €360 000, which is only a 9% return. However, for more significant properties and larger appreciation, the impact of this tail of 15 to 30 thousand euros will be lower. If the basic value of the property is 3 million euros and it appreciates by 20%, investors receive 18,8%.