Real Estate Tokenization: The Future of Property Investing, with WeTokenized

The process of tokenizing a real estate asset with WeTokenize is a multi-faceted procedure that involves several key steps:

Property Assessment and Due Diligence: Before a property can be considered for tokenization on the WeTokenize platform, it undergoes a rigorous and comprehensive assessment process. This due diligence is crucial to ensure that the asset is suitable for tokenization and provides our investors with transparent and reliable information about the underlying property.

• • Valuation: Accurately determining the property’s fair market value is the foundation of the tokenization process. This involves professional appraisals, comparative market analysis, and income projections to establish a fair and realistic valuation, which will be used to determine the token price and ensure a fair offering to investors.
  • Legal Review: A comprehensive legal review is conducted to verify clear ownership, identify any encumbrances (mortgages, liens, easements, etc.), and ensure compliance with all applicable laws and regulations. This step is critical to mitigate legal risks for both WeTokenize and our investors.
  • Title Search and Insurance: A thorough title search is performed to confirm clear ownership and identify any potential title defects that could cloud the title or lead to future disputes. Title insurance is typically obtained to protect WeTokenized investors from any financial losses that might arise from title issues.
  • Property Inspection: A professional inspection of the property is conducted to assess its physical condition, identify any necessary repairs or maintenance, and estimate potential future expenses. This provides investors with valuable insights into the property’s current state and potential maintenance costs.
  • Environmental Assessment: In some cases, particularly for industrial properties or land development projects, an environmental assessment may be required to identify any potential environmental risks or liabilities associated with the property. This ensures compliance with environmental regulations and protects WeTokenized investors from potential environmental liabilities.

Smart Contract Creation: Once the property has successfully passed the due diligence phase, a secure smart contract is created on a leading blockchain platform. WeTokenized carefully selects platforms like Ethereum, Solana, Tezos, or Polygon based on their security, scalability, and cost-effectiveness. The smart contract is a self-executing digital agreement that defines the terms of the tokenized offering.

• • Ownership Rights: The smart contract meticulously defines the ownership rights associated with each token, including voting rights on property management decisions, rights to dividends or rental income, and any restrictions on the transferability of tokens. This ensures transparency and clarity for all WeTokenize investors.
  • Financial Distributions: The contract outlines how rental income, profits from a sale, or other financial distributions will be allocated to token holders. This often involves automated payments directly to investors’ digital wallets, eliminating intermediaries and streamlining the distribution process.
  • Governance and Voting: The smart contract can include mechanisms for token holders to participate in property management decisions, such as voting on major repairs, renovations, or the selection of property managers. This empowers WeTokenize investors and gives them a voice in the management of the asset.
  • Compliance and Regulations: The contract can be programmed to ensure compliance with relevant securities laws, tax regulations, and other legal requirements. This is particularly important for security tokens, which are subject to stricter regulatory oversight Token Issuance: After the smart contract is deployed and audited for security, digital tokens representing fractional ownership of the property are issued on the blockchain. These tokens can be fungible (identical and interchangeable) or non-fungible (unique and representing specific ownership rights, such as a particular unit in a building). The type of token used depends on the structure of the offering and the rights associated with each fraction of ownership.
    
    • Security Tokens: In many cases, these tokens are classified as security tokens, as they represent an investment contract and are subject to securities regulations. This requires compliance with KYC/AML requirements and may involve restrictions on who can invest and how the tokens can be traded.
    • Utility Tokens: In some cases, utility tokens may be used to grant access to specific services or benefits related to the property, such as booking privileges, discounts on amenities, or priority access to events.

Investor Participation: Investors can purchase these tokens through the WeTokenize platform. WeTokenize handles Know Your Customer (KYC) and Anti-Money Laundering (AML) compliance to ensure regulatory adherence and facilitate a secure investment process.

• • • • Investor Onboarding: The WeTokenize platform facilitates the investor onboarding process, including identity verification, accreditation checks (if necessary), and secure payment processing. This ensures that only eligible investors can participate in the offering.
      • Investor Dashboard: WeTokenize investors have access to an online dashboard where they can manage their tokenized assets, view property information, track performance, access relevant documents, and communicate with WeTokenize or the property manager.

Trading and Liquidity: Once the tokens are issued, they can be traded on secondary markets, providing WeTokenize investors with increased liquidity and the ability to buy and sell their shares as needed. This secondary market functionality is a crucial advantage of tokenization, as it allows investors to easily enter and exit their positions, unlike traditional real estate investments, which can be challenging to liquidate quickly.

• • • • • Secondary Market Platforms: These platforms provide a venue for token holders to buy and sell their tokens, creating a more liquid market for fractionalized real estate ownership. They may operate as order book exchanges or use other trading mechanisms, such as automated market makers.
        • Liquidity Providers: WeTokenize may partner with liquidity providers to ensure sufficient trading volume and price stability in the secondary market. This is particularly important in the early stages of a tokenized offering when trading volume may be low.