Frequently Asked Questions
What is RealT?
Ownership of these real estate properties is denominated by digital tokens on the Ethereum blockchain. Ownership in most real estate properties is determined by paper deeds. RealT replaces paper deeds with digital tokens; a new mechanism for asset ownership, based on the Ethereum blockchain.
The digitization of the a paper deed into a digital token offers unique advantages in real estate ownership, which are explored in other areas of the FAQ.
Who can invest with RealT? Am I able to invest?
All citizens of European and North and South American countries, and most of Asian countries, can sign up and invest with RealT.
The only countries that RealT does NOT work with are the following:
- Cote D’Ivoire (Ivory Coast)
- Democratic Republic of Congo
- North Korea
Right now, RealT is only available to accredited U.S. investors. You can check here if you meet U.S. accredited investor requirements. It is in RealT’s vision and roadmap to open up access to the RealT platform to all U.S. investors. Please bear with us while we work through the regulatory and compliance hurdles to enable this!
RealTokens are the purchasable asset; the digital representation of ownership in the LLC that owns the deed to the property. Each property on RealT has its own set of unique RealTokens associated with it.
What is a token? What is ‘tokenization’
Tokens on Ethereum can come to represent any and everything, as determined by the issuer of the token. This is how real world assets like real estate, dollars, or gold can come to be traded, invested, borrowed or lent on Ethereum.
Usually, ownership over assets is represented by a piece of paper. This piece of paper is a symbol of ownership of the asset in question.
- House or Building: a paper deed
- Car: a paper title
- Stock: a paper certificate
- Bond: a paper treasury note
- Cash: a paper dollar/euro/peso
Similarly, a ‘token’ is a digital symbol of ownership. On Ethereum, you own a token in the same way you own the deed to a house. The piece of paper isn’t necessarily the valuable thing; it just symbolizing ownership.
A token is a digital possession. Bitcoin was the first digital token. A token is a digital asset that only exists on the internet. Unlike most files, images or data on computers or the internet, tokens cannot be duplicated. When you send someone a token you cannot keep a copy yourself.
A ‘token’ is the term adopted by the blockchain, cryptocurrency and crypto-asset world. A ‘token’ is a symbol of ownership over something. What that thing ‘is’, is very flexible. Some tokens represent US Dollars, others tokens represent Gold. Cryptocurrrencies like Bitcoin and Ether are themselves tokens.
‘Tokenization’ refers to the process of defining ownership over something as ownership in a digital token on Ethereum. Companies like Circle have produced tokenized Dollars, Paxos has produced tokenized gold, and now RealT has produced tokenized real estate!
Tokenization refers to the process to which an ‘off-chain asset’ becomes represent ‘on-chain’. On-chain refers to being included in the Ethereum blockchain. This is involves process requiring legal structure and compliance, and depends on every jurisdiction and asset class.
How can RealT sell U.S. securities?
We offer RealTokens pursuant to two exemptions under the Act; one for sale to US Accredited Investors, as defined under Regulation D of the Act, and the other to non-US persons, under Regulation S of the Act. To be in compliance with provisions of the Act and its exemptions we are required to provide full, fair and accurate disclosure of all aspects, including risks and restrictions on transferability and resale, of your purchase and ownership of a RealToken so you are in a position to make an informed investment decision. Our detailed Private Placement Memorandum, Subscription Documentation and commitment to provide ongoing property operating results and market evaluation relative to each RealToken offering all support our commitment to satisfy US securities’ world renowned standards and your investment needs. View our documentation >
What does the purchase process look like? How long does it take?
The first step is to submit a picture of your ID, a selfie, and your preferred Ethereum address to your user-account.
2. Purchase real estate
This is the fun part! Browse the Marketplace and select your favorite property to purchase. Checkout and pay with your credit card or using Coinbase Commerce if you want to pay with cryptocurrencies !
3. Sign the Purchase Agreement
Once you have gone through steps 1 and 2, an email will be sent to your inbox from HelloSign with documents to sign. These documents are the legal documents that link the token to the property as well as provide further details as to the structure of the legal ownership of the property.
4. Receive the token(s)!
Once you have signed the Purchase Agreement, your tokens will be delivered to the Ethereum address that you added in step 1. Rental payments begin within 24 hours!
What can I do with my real estate Tokens?
Financial applications on Ethereum can offer basic financial services to those that are not able to access them in their local region. Many Ethereum applications offer savings accounts or investment tools for its users. Unlike traditional financial services like Banks, where you give up ownership over your assets and trust that the Bank will keep them safe, Ethereum applications allow you to retain complete ownership over your digital assets while you use them inside of financial applications.
For example, those that own and hold RealT properties in their Ethereum wallet can use the Uniswap application to buy or sell their property. You can read more about RealT properties inside of Uniswap here.
How do I receive the rental income?
Rent is paid in a stablecoin on Ethereum (USDC, DAI, etc.). A stablecoin has the same value as a currency like dollars. Using it allows for RealToken owners to receive their rental income in a stable currency that does not fluctuate.
What are the benefits of tokenized real estate?
With tokenization, real estate investments can be made affordable to nearly anyone. A single token for RealT properties costs between $50 – $150 per token, which are the lowest investment minimums the real estate industry is able to offer. Traditional pen+paper competitors to RealT have $5,000-10,000 investment minimums.
Real estate is also a notoriously illiquid industry. By turning real estate into digital tokens, real estate can be accessed by far larger numbers of potential buyers, both due to fractionalization of the tokens and the potential reach of internet-based markets. The larger market participants that digital tokens are able to reach increases the liquidity of real estate. Additionally, financial applications on Ethereum offer solutions to accessing liquidity for valuable tokenized assets.
Can I sell my tokens?
- To the RealT website
Uniswap is an application on the Ethereum blockchain that offers liquidity for the tokens you purchase. Uniswap offers the ability to instantly sell your assets, at the market rate. The price of the tokens on Uniswap fluctuate based on supply and demand, and total market liquidity in Uniswap exchanges may not be suitable for well-capitalized investors.
You can also sell your tokens on the RealT website. Using the ‘Sell Tokens’ button found on the homepage you can generate a sale request, with instructions that follow. Most token sales through the RealT website take 7-14 days to process. The tokens are sold for the fair-market-value of the property, as determined by the most recent property appraisal. All properties receive new appraisals once-per-year.
With Uniswap, you are guaranteed to instantly be able to sell your tokens, however the price you receive in the sale is determined by market forces at that time.
By selling on the website, you know the price you are selling the tokens for, but it is not an instantaneous process.
Does it work? Is it legal?
Was there an ICO?
What’s the difference between RealToken Inc. and RealToken LLC?
In order to conduct a business to offer real estate worldwide, RealT has created a separate entity, also Delaware registered, named Real Token LLC. It is a master or if you will, umbrella, company. It does not own any other LLC or other business entity, nor any property. Its primary value is to simplify and lessen the complicated and costly legal process incumbent in providing what is characterized by US authorities to be an investment security offering, which each property we offer is deemed to be. (So, for example, rather than having a nearly 100-page private placement memorandum for each offering, one master ppm is required and each following offering requires only a much shorter amendment.)
Finally, for each offering we create a Series LLC; each of which own a single asset (a property) and has its own token and unique address. Each stand solely and legally on its own, is not cross collateralized with, nor affected in any legal or operating manner to, any other series LLC. Each is owned by the investors who purchased its unique tokens and upon whom ultimate governance lies.
What happens if RealT were to go out of business?
What is a ‘wallet’? Why do I need one?
A ‘Public Key’ or ‘Public Address’ are also terms that are used to describe a ‘wallet’.
A wallet is composed of two parts: a ‘public address’ and a ‘private key’. A good metaphor for this is ‘a mailbox’ and ‘a mailbox key’. Anyone can drop anything in the mailbox, but only the owner of the private key can open it up and access it. The link between a ‘public’ and ‘private’ key is rooted in public-private key cryptography, and is what puts the ‘crypto’ in ‘cryptocurrency’.
In order to receive your purchased fractional shares of real estate, you will need an Ethereum wallet so that the assets can be delivered to you. There are many different wallets available, and each one manages your private key in different ways. Make sure you understand how each different solution manages private keys for you. A private key is very important! Any owner of the private key can access any of the funds that are stored it is associated wallet.
You can find out more information about Ethereum wallets on the Ethereum.org website.
How do I create a wallet with RealT?
RealT has integrated with Magic.Link, which is a service that enables us to safely and securely generate a wallet that is linked to your email address. Magic.Link generates an Ethereum wallet and stores its private key in an encrypted cloud. This way, no one, not even RealT, can access the private key that is associated with the Ethereum wallet that is now linked to your email address.
This is how you can retain secure custody of your own assets without having to rely on anyone else.
If you choose to store your assets this way, ensure that the email address you use is appropriately secure, as there are now digital assets attached to the email address.
Magic.Link has excellent documentation that explains more, and it is available here: docs.magic.link/faq
What happens if I lose access to my wallet?
This way, you will be able to export the private key so that it is not permanently linked to an email address.
You can read more here.
How are properties chosen for inventory?
Is the RealT platform only for residential property? Are there plans to include commercial property?
Who holds the deed to the house?
How do we ensure each LLC owns the deed on its property?
Who manages the properties?
We have chosen to outsource the Property Management for two reasons:
1. It frees up efforts to focus on RealT itself —- Property Management is a very time intensive activity
2. We intend to offer properties throughout the US and various countries as we grow.
However, we continuously monitor all aspects of the properties, from rent and rental rates , to physical conditions, renovations, code compliance, and even landscaping improvements when strategic.