FAQ | RealT

Frequently Asked Questions

What is RealT?

RealT is a platform for investing in U.S. real estate. Our mission is to democratize access to real estate investment opportunities, curated by a team of real estate professionals.

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?

RealT is available for almost everyone to invest in real estate with!
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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:

  • Belarus
  • Burma
  • Cote D’Ivoire (Ivory Coast)
  • Cuba
  • Democratic Republic of Congo
  • Iran
  • Iraq
  • Liberia
  • North Korea
  • Sudan
  • Syria
  • Zimbabwe
U.S. Investors

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!

RealT, RealTokens?

RealT is the name of the company. ‘RealT’ is a hybrid of the word realty, real estate property and token.

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

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

‘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 ontop of 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.

What does the purchase process look like? How long does it take?

Purchasing tokenized real estate is an easy process! However, there are a few steps that must be taken first.

1. Submit your ID Verification

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 using Coinbase Commerce (or soon, Wyre)!

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?

In addition to owning digital assets, Ethereum enables financial activity via applications built into the platform. Users can use their digital assets inside of Ethereum applications. Trading & exchange, borrowing & lending, derivative and prediction markets are all possible activities on Ethereum that leverage digital assets.

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?

Rental payments are paid automatically to Ethereum wallets that hold the RealTokens. Rent payments go wherever RealTokens are located, so by holding the RealTokens inside your Ethereum wallet, you automatically will be receiving rent.

Rent is paid in Dai, a stablecoin on Ethereum. Dai is always worth $1.00. Using Dai allows for RealToken owners to receive their rental income in a stable currencies that does not fluctuate. 

Learn more about Dai.

What are the benefits of tokenized real estate?

RealT sells real estate property through the internet, allowing real estate to be purchased from nearly anywhere in the world. RealT properties are fractionalizable, so suitable investors can invest any amount that fits their needs. Additionally, RealT has reduced the time to purchase real estate from a minimum of 30 days and numerous steps with third parties, to just 30 minutes and on your phone or computer.

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?

Yes, you can sell your tokens in two different ways:

  • Uniswap
  • 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?

Yes, it works! And, yes, we are legally compliant.

Was there an ICO?

RealT has never done an ICO, or any sort of token-sale event other than the sale of RealTokens that represent the real estate assets available on the website. There is not one single token for RealT. The RealTokens referenced are the generic name used for all of the unique sets of tokens that correspond to their specific property.

What’s the difference between RealToken Inc. and RealToken LLC?

Real Token Inc., a Delaware-registered business entity, is the name of our company. We refer to it, and can said to be doing business, as RealT.

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?

RealToken Inc., our manager, is not one of the limited liability companies (LLC) which own the asset in which you are investing. Each LLC would continue to remain in existence as a separate legal entity for property holding, tax, accounting, liability and member ownership purposes. Regardless of what happens to RealToken Inc., the assets and the RealTokens of an LLC would remain independent and intact, and of course a new manager could always be appointed. The RealTokens would still represent and evidence ownership of the property contained in the LLC and, as such, could be transferred in the market, as needed, so long as applicable securities transfer rules are complied with.

What is a ‘wallet’? Why do I need one?

A ‘wallet’ is a core component of a blockchain/cryptocurrency system. RealT uses the Ethereum blockchain to manage the accounting over the fractional ownership of the properties on its platform. Because we run on Ethereum, our assets are stored in ‘Ethereum wallets’. 

A ‘Public Key’ or ‘Public Address’ are also terms that are used to describe a ‘wallet’. 

A wallet is comprised 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 respective wallet. 

You can find out more information about Ethereum wallets on the Ethereum.org website

How do I create a wallet with RealT?

While signing up with RealT, you can choose to either generate a wallet in the website, or submitting the public address of a wallet you already own. Both work!

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 chose 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. 

What happens if I lose access to my wallet?

According to the Magic.Link FAQ, they are working in a system that will allow users to export the private key that is encrypted in the cloud. This will only be an option available to whoever has access to the email address that the wallet is associated with. 

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?

Our team of highly experienced real estate investors carefully curate real estate opportunities in the US for RealT’s customers to invest in. Properties will range from large apartment buildings in popular areas to low-cost single-family homes, all with high rental rates. Each has been renovated, brought up to code, taxes and utilities paid up to date and rented to suitable tenants. View our inventory to get started!

Is the RealT platform only for residential property? Are there plans to include commercial property?

RealT has chosen residential family properties to start due to their attractiveness for international investors. However, RealT works equally well for all types of property! RealT is currently working on adding commercial properties, along with hotels and office complexes, in order to generate a more diverse set of offerings to our customers. Additionally, RealT has the opportunity to include other types of real estate and non-real estate assets. Loans, mortgages, and high-value art are all potential assets able to be tokenized through RealT.

Who holds the deed to the house?

RealT does not tokenize the physical asset. It is currently legally impossible to directly ascertain real estate ownership through tokenization. RealT tokenizes interests in a Limited Liability Company (LLC) that is the sole owner of the asset acquired. Each asset will be owned by one single LLC. Tokens represent ownership of a membership interest in the LLC and this tokenized ownership is enshrined in the subscription agreement and in the ownership records, making it irrevocable. The deed to each property is held by the LLC. Purchasing RealTokens for an LLC that owns one single deed of a property is simply purchasing your share of that deed.

How do we ensure each LLC owns the deed on its property?

The purchase and sale transaction and paperwork between seller and the LLC is conducted by attorneys upon whom we comfortably rely. Included in the paperwork is the transfer of deed and a filing in the appropriate jurisdiction is made. The paperwork is then filed with an independent escrow agent which holds the papers on behalf of the LLC. Strict laws exist in the US governing escrow arrangements which we are proud to abide by.

Who manages the properties?

RealT outsources Property Management to local professionals.  Of course, we still carefully monitor and care for each of the properties owned by the Token Holders. The property management companies that RealT uses are responsible for renting the property, collecting rental income, and maintaining or repairing the property. Costs associated with property management and maintenance are taken out of the rental income paid to RealToken holders. 

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.

Any plans to tokenize property assets in other countries?

We are very interested in tokenizing property assets in all countries where the system is supported, but we will only do so once we can absolutely confirm the irrevocable legal ownership of the property by RealToken holders.

What happens if the tenant does not pay rent?

RealToken holders are only paid when rent is collected. If rent is not collected from the tenant, then there is no rent to send out to token holders. However, in the event that a tenant does not pay rent, the property management company is also not paid for their services. The property management company is only paid for the months that there is a tenant in the property. If a tenant is delinquent on their rent, they will be evicted from the property and replaced with a more creditworthy tenant.

What is Wyre?

Wyre is a cryptocurrency-native payment provider. Wyre acts as a bridge between the world of cryptocurrency and the traditional payments world. These two worlds use different payment mechanisms for sending and receiving money. Wyre helps bridge these two worlds!

Wyre allows companies like RealT to accept credit and debit card payments on our website, and operate using cryptocurrency in the background.

Why am I being asked to buy USDC cryptocurrency when I try to buy Tokens?

Wyre works by charging your credit/debit card for a purchase of USDC, a USD ‘stablecoin’ or ‘crypto-dollar’. USDC is a currency that is 1:1 backed by USD. Wyre then sends RealT the USDC in the background, so that RealT can receive payment.

This way, RealT can accept credit/debit cards by using Wyre as a bridge.

Does Wyre charge fees?

Yes, but RealT is currently paying those fees for you! Wyre charges a 3.9% + $0.30 fee on transactions, along with a $0.20 network fee to pay miners. When you pay with Wyre, you will pay a final price equal to your RealT purchase price.

Are there limits to paying with Wyre?

Yes, but they increase dramatically after you verify your identity through Wyre.
Before ID verification, limits vary by your location:

  • Non-U.S.: $500 daily  |  $2000 weekly  |  $3000 yearly
  • U.S.: $250 daily  |  $1000 weekly  |  $1500 yearly

Wyre will prompt you to go through ID verification when you hit these limits. Once you have completed Wyre’s short ID verification process successfully, your daily limit will increase to $5000, subject to Wyre’s discretion.

If I pay by credit card, will I be charged for a cash advance?

This varies by card. You may be charged a cash advance fee by your card provider for paying via Wyre. Unfortunately, we cannot provide a comprehensive list of fees charged by card providers at this time.

What countries can pay with Wyre?

The Widget is currently available in these countries:

Australia (AU)
Austria (AT)
Belgium (BE)
Canada (CA)
Czech Republic (CZ)
Denmark (DK)
Estonia (EE)
Finland (FI)
**France (FR) – is temporarily unavailable
Germany (DE)
Greece (EL)
Hong Kong (HK)
Ireland (IE)
Italy (IT)
Latvia (LV)
Lithuania (LT)
Luxembourg (LU)
Mexico (MX)
The Netherlands (NL)
New Zealand (NZ)
Norway (NO)
Poland (PL)
Portugal (PT)
Slovakia (SK)
Slovenia (SI)
Spain (ES)
Sweden (SE)
Switzerland (CH)
United States (US)

What U.S. States can pay with Wyre?

The Wyre Widget is available in 43 U.S. states but is restricted from use in:

New York
New Hampshire
North Carolina
Connecticut
Hawaii
Vermont
Virginia