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Elevate your financial planning with real estate tokenization

Imagine this: You have two clients with a monthly extra income they want to invest in, but both their financial goals are very different. Would you recommend the same strategy to both clients? How do you include real estate in financial planning?
This is a common challenge financial advisors face. Not only are you responsible for a good return on your investment recommendations, but also for a personalized, well-balanced financial planning that best suits your clients’ interests.
Just like when a doctor provides a different prescription for a patient with hypertension that one with diabetes, financial planning is no different. But instead of their health, you’ll need to analyze your clients’ wealth status and how much risk they are willing to accept.
In this article, we will learn how new technologies, like blockchain and tokenization, impact on financial planning, and why they are changing the real estate investing market for good.

Something old, something new. Keys to understand the benefits of real estate tokenization

Real estate is one of the oldest, most stable industries out there. But, compared with other assets, it usually represents a bit of a challenge, especially when you work with different types of investors profiles.

The downside of traditional real estate

It doesn’t matter how customized and well-designed a financial plan is, real estate as an investment is not everyone’s cup of tea. At least, traditional real estate investments:

  • Costs: For the past few decades, investing in real estate has not been a viable option for people without a certain level of pre-existing wealth. On top of that, ongoing property management, expenses, utilities, and taxes complicate prospects for newcomers.
  • Low liquidity: Real estate is arguably the most illiquid asset in the world. Buying a property, even as an investment, will probably tie a person for a couple of years, to say the least. And if they decide to sell, it requires a buyer with a high amount of money available at that specific moment.
  • Time: From researching a location to the actual buying and selling process, real estate requires an investment of time as well as money, even with an expert assisting you throughout the entire process.
    ### Tokenization, an integrated alternative
    Before we get straight into how to redefine your financial planning with real estate, let’s define tokenization to make sure we are all on the same page.
    Tokenization is the conversion of a real world asset into digital parts. Backed by blockchain technology, this process breaks down the ownership of the asset into tokens of equal value. As a result, tokens can be traded in a secure and transparent environment.
    This revolutionary investing model makes real estate accessible to all types of investors, big and small. Allowing you to provide better, more robust services by including real estate in your clients’ financial plannings and strategies.
    At the same time, tokenization brings unprecedented benefits.
  • Easy access: The ownership fragmentation of a property allows people to invest with minimum amounts of money, which potentially attracts a larger pool of investors.
  • Extreme security: Tokens are protected within the blockchain technology environment, meaning that the record of ownership is immutable.
  • Smart contracts: These are programs that have specific commands to be automatically executed under certain conditions. For example, issue the tokenization itself, pay profits, check KYC/AML situation.
  • Greater transparency: Every token has a traceable record and thanks to the smart contracts, every intermediary is cutted out, reducing the risk of human error.
  • High liquidity: Since tokens are smaller fragments of an asset, they can be traded with other interested parties, which secures a higher liquidity.
  • Lower costs: “Tokenized” transactions are more cost effective, mainly due to faster processing, increased efficiency, and secondary costs usually related to traditional real estate operations.
  • Reduced risk: Given that with tokenization people can buy a smaller share of a property, investors don’t need to expose your entire capital in one project. On the contrary, they can invest small amounts in as many projects they want, lowering the risk to the bare minimum.

Real Estate Tokenization in the Financial Planning

Most portfolio managers balance their financial planning between high-yield stocks, more steady stocks, fixed income, and a little of cash or some asset with high levels of liquidity. Real estate, on the other hand, has been relegated to a second place,
Nevertheless, tokenization came to solve the main drawbacks of traditional real estate. In crowdfunding platforms within the industry, there are countless large scale projects available to almost every person that wants to invest.
Here is where the expertise of a consultant will improve the financial planning for an investor. Out of all available fundraising developments, you can select the ones that suit each client best and diversify their portfolio.
Our platform allows you to keep track of every investment of your clients, in order to let you plan your own diagram of workflow. With security and transparency as its main core, tokenization changed the way we see almost every market. Sooner than later this is becoming the new norm in the real estate industry. Are you willing to miss it?

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