As technology evolves, the real estate market is under pressure to evolve. New technologies and ways of buying and selling rental properties have already revolutionized many aspects of purchasing investment properties. For some, these new processes are just the beginning. One of the emerging technologies that many real estate investors are being closely followed is cryptocurrency.
Although still in the very early stages, an increase in the number of real estate transactions are done using cryptocurrency every month. As using cryptocurrency to buy or sell property becomes more common, it is vital to know what it is and how it may affect rental real estate investors like you.
Cryptocurrencies, like Bitcoin and Ethereum, are digital currencies. These currencies fluctuate with other types of currency in that they don’t rely on a central bank or administrator – they can be transferred directly from one user to another. These transfers happen 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 idea behind cryptocurrency is to expand a transaction’s efficiency and safety and lessen the risk of fraud. Since all cryptocurrency transactions are open to the public, there is enhanced transparency. And, since the data in the blockchain isn’t susceptible to corruption, information can be verified faster and more safely than through with previous methods.
Automating Real Estate Transactions
There’s no question that the potential of cryptocurrency has now captured the imagination of many real estate investors. And, many can see how that cryptocurrency could alter nearly every stage of a real estate transaction. Someone could easily check on the status of deeds, access the comprehensive 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 directly. 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 using 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 conduct transfers once certain conditions are met automatically. So, using a smart contract and cryptocurrency, all the parties involved 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 have been automatically recorded in the blockchain, generating a transaction history that is both publicly accessible and stored indefinitely.
Title deeds, surveys, ownership information, and other information would be accessible in real-time to all parties, allowing instant validation. It is not difficult to see how carrying out real estate transactions this way will ultimately 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 Quincy rental market, there are instances where properties have already changed hands via digital currency. One noteworthy example 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 essentially unheard of via traditional methods, even for a cash buyer.
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