Jointer provides a secure platform that allows the public to minimize risks as a real estate lender and to obtain returns as an owner.
Digital diary: what are the main trends affecting the real estate sector?
Jude Regev: The real estate industry is shifting from generations of secrets and behind-the-scenes industry businesses that were available only to experienced and professional investors to a democratized industry available to leading street investors. The knowledge and time necessary for due diligence will be reduced or even in some cases unnecessary.
The high entry barriers that would typically exceed hundreds of thousands or even millions of dollars will be reduced to a minimum of $ 1, allowing more people to participate.
In addition, the time to close a transaction will be reduced by 60-90 days in an instant. Securities based on the secondary market will increase liquidity and allow property owners to unlock equity faster and eventually spend the sector on higher valuations. That said, all these benefits can bring new risks and challenges in the form of scams that will be created and trigger more stringent regulation.
DJ: How important is the blockchain for businesses?
Regev: Real estate investments are considered as independent activities and the value is determined upon request by buyers and credit institutions. The concentration can reduce the entry barrier to access real estate investments, allowing more buyers to participate by increasing liquidity for lenders.
DJ: how can blockchain help real estate?
Regev: Blockchain can digitize the real estate sector and create a vehicle that reflects the stock market. A blockchain-type real estate vehicle is open to all, transparent, diversified, offers liquidity, as well as instantaneous exchanges and efficient results. A real estate stock market can be more consistent and offers less risk than the stock market itself, offering better options to major road investors.
DJ: who are the main tokenization providers?
Regev: The main suppliers of the sector are Jointer, Polymath, Securitize, Harbor, Swarm and Securrency. All of these providers offer owners a solution to make ownership simpler and unlock their equity. But the big concern for homeowners when they choose a supplier is not just the cost, but above all the exposure to legal responsibility and the limitations that derive from it.
DJ: how will the tokenisation of real estate remodel the future of real estate investments?
Regev: All speak of liquidity as the main way of tokenisation will redesign the future of real estate investments. This is true, but it depends on the type of tokenization used by the owner.
A private tokenization is limited to accredited investors, involves a "blocked" or non-negotiable period and is limited to 100 investors, which produces strong barriers to entry and limited marketability between only accredited investors.
However, a public tokenization complying with the SEC of Reg S1 is more akin to a public company that can be traded between everyone, at any time and at least $ 1. This type of advantage can remodel the future of real estate investments, allowing it to function in similar to a company that offers stocks.
Jointer offers property owners a public tokenization solution and also acts as a market maker with a repurchase program. The repurchase program solves liquidity by making all the tokens instantly marketable and redeemable within the system.
DJ: Are there any risks associated with buying tokens from owners?
Regev: Ironically, exactly 100 years ago there was a man named George C. Parker, who is considered the most successful scammer in US history. George Parker is who has sold the Brooklyn Bridge twice a week for 30 years. The story of George C. Parker can be repeated today with the ease of investment. This is a serious risk for those investing in a fraction of a property through tokenization.
Naturally, real estate owners have a conflict of interest with buyers and can take advantage of deceiving them. Owners can cheat investors by offering tokens for properties they do not own, by issuing false property declarations and a trust-based dividend distribution. Furthermore, with limited knowledge of real estate, investors may not be aware of the risks associated with distressed or vacant properties.
On the owner's side of the property there is also a risk since the law limits the tokenization to 100 investors (in the case of LLC entities) leaving the owners vulnerable to legal liability while the final number of participants may increase with the marketability of third. Jointer believes that the future of real estate will be driven by a scalable tokenisation solution that provides the necessary liquidity and democratization, while minimizing lending risks for everyone.
DJ: How will the blockchain and the tokenised securities market impact commercial properties in 2019?
Regev: There are two types of tokenization: owners can choose between private and public options.
Private tokenization is an update from the traditional syndication format that is usually limited to 100 accredited investors. In 2019, we will see more traditional deliveries adopting the private tokenisation solution by leveraging increased liquidity and reducing process times.
Public tokenisation solutions aim to destroy the real estate credit and commercial investment industry by opening the door to the main road and to the public. These solutions aim to replace institutional lenders and large investors such as RIET. In 2019 we will start to see big players like banks and RIET exploring investments with technology companies to keep up with the evolution of the industry.