Hello all experienced LLs on this forum - need some advice from you.
I am thinking of tokenizing my property via blockchain and selling the tokens in the secondary market to other investors - with the objective of ( hopefully) making more gains that what I would make via outright sale.
Has anyone else come across this concept and if so, any feedback, pointers and relevant contacts will be greatly appreciated
If you want to take a huge risk , go ahead with it
What about lettings?
Hi David - the lettings continue. The net profit from lettings is distributed to the token holders as ’ dividend’. If the property is sold, the capital gains also get distributed. In the meanwhile, the token holders can buy/ sell tokens in the secondary market at a price fixed by supply/ demand equation, similar to how one would buy shares at an exchange. This gives an opportunity to the owner ( the majority tokenholder) to dilute their holdings - think if it as an IPO of the property on the blockchain where tokens represent the shares.
Who manages the lettings and distribution of profits? Can the token-holders vote to replace them? This sounds similar to the offer of fractional ownership that some hotel chains were offering as a way of raising finance to build new hotels. From memory, the shares lost value as the management was expensive and incompetent and couldnt be replaced.
Hi David - yes the token holders can vote to replace the lettings agency though whether they will find a replacement remains to be seen. The property is wrapped in a special purpose vehicle, so it will be up to the authorized director of the SPV to find a letting agent & run the property in the best interest of the token holders. The director will have to be suitably accredited in the UK. Once the property is sold, the SPV is wound down.
I am just wondering if any of the other landlords have been approached with this proposition. I still need to do my due diligence on the Fintech that approached me but wanted an advise on whether it is a good idea in the first place
Sounds quite spivvy. Yes, I am fully qualified to offer this opinion.