As technology evolves, the real estate market is under pressure to evolve. New technologies and ways of buying and selling rental properties have got revolutionized many phases of acquiring investment properties. For some, these new practices are just the beginning. One of the emerging technologies that many real estate investors are keeping a close eye on is cryptocurrency.
Even though still in the very early stages, an increasing number of real estate transactions are finished by means of cryptocurrency every month. As using cryptocurrency to buy or sell property becomes more frequent, it is essential to see what it is and how it may affect rental real estate investors like you.
Cryptocurrencies, like Bitcoin and Ethereum, are digital currencies. These currencies differ from other types of currency in that they do not rely on a central bank or administrator – they can be transferred directly from one user to another. These transfers take place on a cryptocurrency network that verifies each transaction through incorruptible network nodes and are then recorded in a digital public ledger called a blockchain.
The idea behind cryptocurrency is to improve a transaction’s efficiency and safety and reduce the risk of fraud. Since all cryptocurrency transactions are open to the public, there is enhanced transparency. And, since the data in the blockchain isn’t susceptible to corruption, information can be verified faster and more safely than through previous methods.
Automating Real Estate Transactions
There’s no doubt that the potential of cryptocurrency has already captured the imagination of many real estate investors. And, many can see how that cryptocurrency could change nearly every stage of a real estate transaction. Anyone could simply validate the type of actions, gain access to the full history of a property, and more when using blockchain. Banks, real estate agents, buyers, and sellers would all access the same verified information.
Transmitting data between all parties in a transaction would be quicker and safer, and transfers of funds would occur immediately. All of this could considerably reduce the amount of time between a preliminary sales agreement and finalizing the transfer of title.
The Power of Three
The real advantages of utilizing cryptocurrency to invest in real estate will enter into focus when coupled with the affordances of smart contracts and blockchain. Smart contracts are digital agreements programmed to carry out transfers once certain conditions are met automatically. So, using a smart contract and cryptocurrency, all the parties involved could receive the fund due to them the moment a property is sold. Attorneys, appraisers, real estate brokers, and so on would all be paid through an instant transfer of funds. Every transaction would be automatically recorded in the blockchain, creating a transaction history that is both publicly accessible and stored indefinitely.
Title deeds, surveys, ownership information, and other info would be made available in real-time to all parties, allowing instant validation. It’s not hard to see how carrying out real estate transactions this way will eventually change almost everything about real estate investing.
The Future is Now
While buying and selling investment properties using cryptocurrency is still not that common in the Newark rental market, there are instances where properties have already changed hands via digital currency. One notable example is the recent sale of a penthouse in Miami Beach, which sold for $28 million in cryptocurrency. The deal took less than ten days to close, which is virtually unheard of via traditional methods, even for a cash buyer.
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