As technology evolves, the real estate market is under pressure to evolve. Emerging technologies and practices of buying and selling rental properties have already revolutionized many facets of buying investment properties. For some, these new processes are just the beginning. One of the emerging technologies that many real estate investors are keeping a close eye on is cryptocurrency.
While it is still in exceptionally early stages, a growing number of real estate transactions will be completed using cryptocurrency every month. As utilizing cryptocurrency to purchase or sell property is becoming more common, it is essential to understand what it is and how it may affect rental real estate investors like you.
Cryptocurrency Defined
Cryptocurrencies, like Bitcoin and Ethereum, are digital currencies. These currencies vary from other kinds 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 concept behind cryptocurrency is to improve a transaction’s efficiency and safety and decrease the risk of fraud. Since all cryptocurrency transactions are open to the public, there is enhanced transparency. And, because the data in the blockchain isn’t predisposed to corruption, information can be verified quicker and more safely than through with previous methods.
Automating Real Estate Transactions
There’s no doubt that the potential of cryptocurrency has also already captured the imagination of many real estate investors. And, many can see how that cryptocurrency could change over practically every stage of a real estate transaction. Anyone could easily verify the status of deeds, access the full history of a property, and more when using blockchain. Banks, real estate agents, buyers, and sellers would all have access to the same verified information.
Transmitting data between all parties in a transaction would be faster and safer, and transfers of funds would happen instantly. All of this could drastically reduce the amount of time between a preliminary sales agreement and finalizing the transfer of title.
The Power of Three
The real advantages of by means of cryptocurrency to invest in real estate come into focus when combined 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 involved parties 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 information would be 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 Lubbock rental market, there are instances where properties have already changed hands via digital currency. One striking instance 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.
Would you like more expert advice about buying investment rental properties? Contact us online or by phone at 806-853-6546.
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