When it comes to tokenizing property, people often limit their imagination to raising capital for the property construction or fractionalizing ownership of existing real estate, while, in fact, there are numerous other exciting business models. One of such is the renovation of distressed properties. This model suggests identifying objects in bad conditions, raising money to buy them, holding a renovation to bring them into working condition, and selling afterwards. Investors get a one-time profit at the moment of the deal, which is usually a year or two after the initial investment was made. Such a business model is known to be implemented by ReitBZ, an investment project for distressed Brazilian real estate.
Suppose the motivation of coming up with creative tokenization models is still unclear to you. In that case, the answer is the longed-for freedom in changing the financial parameters of your offering, such as the risk-return profile or the return model, and the subsequent chance to increase your investment attractiveness. Real estate by itself is a very safe asset class that, on the other hand, doesn't offer high returns. Usually, it's 3 to 6%, which is lower than the stock market. By engaging in such new models, you can increase the potential risk and profitability of the investment or change how investors receive income from a steady stream of dividends to a one-time big profit. In such a way, it's possible to attract other types of investors for whom the risk-return profile of classical real estate investments is not appealing.
If this topic is of interest to you, see the speech
of Stobox co-founder Borys Pikalov at the Digital Asset Investment Conference about three disruptive models in real estate.