Have you ever considered invest in real estate But do you think it is an unattainable dream? With growing demand and rising prices, the real-estate market may seem inaccessible to many people. However, there are options that allow you to invest in real estate from small amounts, with the potential to generate attractive returns in the long term.
Investing is a relevant element to grow your money and achieve your financial goals. When you invest, your money works for you and generates returns, which can be in the form of dividends, interest or capital gains, since there are different types of investments. This time we will talk to you about a type of investment that is relatively recent, but that could be interesting to you, tokenized real estate.
According to MarketsandMarkets, the global market for real estate tokenization was valued at $2.3 billion in 2021 and is projected to reach $5.6 billion by the end of 2026, with a compound annual growth rate (CAGR) of 19% during the forecast period.
In this context, two years ago Eric Sánchez, former basketball player, founded a company in Spain called Rental, a real estate investment platform that works through the tokenization of properties, and which has around 40 projects launched and invested in that country, in addition to having quickly obtained investors from all over Latin America. His partner and Reental ambassador is also a former basketball player: Argentine Luis Scola, gold medalist at the 2004 Athens Olympic Games and bronze medalist at Beijing 2008.
We have investors from more than 55 countries, but we have focused on products from three countries, which are the United States, Mexico and Spain. This means that the company is international on both sides, on the investment side and on the product side. In Mexico we start with Tulum, then with San Miguel de Allende, and if everything goes well, we will open the option in La Paz, Baja California Sur,”
commented Eric Sánchez, CEO of Reental.
Reental invested $899,900 in Mexico in tokenized real estate
In the last six months, the tokenized real estate company has invested approximately $899,900 in Mexico, a figure that it plans to triple throughout this year. The investments have been distributed in three vacation properties, located in the states of Quintana Roo and Guanajuato; specifically, in the cities of Tulum and San Miguel de Allende. Precisely in this colonial city in central Mexico is where Reental has made its latest acquisition. The tokenized property in San Miguel de Allende has 42.5 m² of construction, distributed on a single floor, and includes a terrace and a pool. It has involved an investment of $186,500, financed through the issuance of 1,856 tokens of $100 each and will be used for rental for about 3.5 years, with an annualized return of 11.03% on the invested capital, said a statement from the platform. .
How did former basketball player, Eric Sánchez, decide to change his path to the world of tokenized real estate investments? In interview with HIGH LEVEL, the CEO of Reental said that he has another company called CheKin, a company that provides services to tourist accommodations. So, that’s where the story goes back, because Sánchez, already with said venture, had the experience and knowledge that the real estate sector could have multiple aspects and investment opportunities to achieve good returns.
There is a real estate market that gives very good income, where they allow practically anyone to participate. “That until then it was limited to small and medium-sized investors or savers, who also wanted to be exposed to that product, but circumstances stopped it,”
Sanchez assured.
What is Reental?
Reental merges the technological part with the real estate sector so that people can invest from 100 euros (about 1,820 Mexican pesos at the current exchange rate), with monthly dividends and ensuring liquidity, the platform assures.
It is a company that provides real estate investment options that works through the tokenization of properties, that is, dividing the cost of the investment (acquisition + renovation) of the property into tokens, the value of which is 100 euros each. In order to invest, it is only necessary to be registered on the platform, select an asset, and choose in which currency you wish to carry out the transaction, because it can be in digital or traditional currencies. From there, the investor will receive a monthly dividend that comes from the rental of the property, plus an additional capital gain upon its sale.
The CEO of Reental explained how its business model works. “There is the real estate product that everyone knows is where the income comes from, buying or renting, or buying and selling at the best price. Reental does exactly that, any fund is financed by small investors and the profit is distributed among them,” he said in the interview.
Eric Sánchez explained what you need to invest in tokenized real estate. You must follow a series of steps similar to how if you were shopping in an e-commerce. First, you must enter a tokenized real estate platform, such as Reental, they ask you to register and once you are registered, a range of real estate possibilities appears so that you can decide which one to invest in depending on your capital, objectives. and needs. Once you have your token, you can receive profits or benefits, until the moment you decide to sell said token at some point, obtaining your initial investment. Income returns are received at the end of each month.
Regarding profitability, the CEO of Reental stated that they always launch properties with an estimated annual profitability of between 10% and 13%, the 40 projects they currently have. However, when those properties that have already been closed, that is, those that were bought, rented and sold to a third party, have given a return of between 15% and 30% annually.
How much risk is involved in investing in tokenized real estate?
According to Eric Sánchez, “it is less risky than investing in real estate yourself, because there is a company that is dedicated to searching for those properties, it is in charge of searching the area, if there is a lot of demand for rentals in that region, which A market study has been carried out, they check that there is non-payment guarantee insurance in case of rent, that it does not have the expected capital gain, among other issues.
As we already saw, property tokenization is a process that consists of dividing a property into digital units, called tokens. This does not mean that the investor owns a portion of that property; However, tokens can be sold or bought on an exchange platform, which allows investors to participate in the real estate market without having to purchase an entire property.
There are multiple potential advantages to real estate tokenization such as greater liquidity, as real estate tokens are more liquid than physical real estate, meaning they can be bought, sold and traded more easily; in addition to accessibility, because this kind of market niche can cover different profiles of investors of all income levels.
However, real estate tokenization also carries some risks that you should consider, and some are inherent to the real estate market:
- Market risk: Property prices can fluctuate, you can gain or lose money you have invested, depending on how the market behaves.
- Liquidity risk: Selling tokenized properties can be complicated, making it difficult to recover your investment, at least for a while.
- Counterparty risk: Investors depend on the tokenizing company; If it goes bankrupt, they could lose their money.
- Regulatory risk: Property tokenization is new and regulations are evolving; Investors must ensure they comply with laws and ethics.
It is necessary to remember that all investments involve risks, some to a greater or lesser degree than others, so here we give you some recommendations that you should evaluate before making a decision that impacts your finances, regardless of the type of investment you decide to make:
- Invest only and exclusively an amount of money that you can afford to lose.
- Invest in a project that is backed by a solid company with a track record of success.
- Research the real estate market you are investing in.
- Understand the risks involved in real estate tokenization.
For Reental, Mexico, and in general, all of Latin America, represents an important market niche, mainly due to its cultural and linguistic proximity and the organic growth of its territory.
The prospects for the real estate sector and its potential tokenization in Latin America, and particularly in Mexico, are very attractive if we consider the different outlook reports, such as that of Fitch Ratings, which forecasts GDP growth in Latam of 2.4% in 2023; or that of Newmark Latin America, in which strong real estate activity is forecast in Mexican territory, both in the industrial sector – with the consolidation of the build to suit (BTS) model – and in the residential and office sectors, where new trends and needs, such as coliving or coworking, take on special prominence,”
Fernando Ors, president of Reental, said in a statement.
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Paola Pérez Sirvent Passionate about travel, photography and gastronomy. She collaborates in volunteer projects.