Why does this matter to real estate?
The amount of red tape, fees, and wasted time this type of network could eliminate is staggering. How many of you have lost deals, had deals massively delayed, purchased something that didn’t have a clear title, etc.? (And if it hasn’t happened to you yet, just stay in real estate a little longer.)
Imagine being able to purchase a piece of property without needing a title company or title insurance, while feeling 100 percent confident you were buying exactly what you thought you were. Sounds pretty good to me!
3. Blockchain allows for smart contracts.
Yet another powerful tool blockchain allows us to harness is something called “smart contracts.” When data, a process, or workflow is entered on a blockchain, it becomes impossible to deviate from this agreed upon path.
Why does this matter to real estate?
The real estate industry uses contracts all the time. My journey into investing first involved becoming a licensed sales agent. Visualize with me a world where you could spell out the terms of your purchase, sale, lease, on a smart contract and feel completely confident these terms would not be deviated from.
It’s happened to me more than once that a buyer has not performed on a contract and then has tried to hold up the earnest money that was now rightfully mine for months with stupid arguments and legal games. This could be a thing of the past. Deposits would be held inside the smart contracts and paid out exactly as the contract states. No deviation.
4. This new technology could create transparency and immutable records of title.
Once we as investors purchase a piece of real estate, there isn’t much worry that someone will dispute our ownership stake.
For billions of others, unfortunately, this isn’t true. Can you imagine purchasing a piece of real estate, making years of payments on it, and then a government official coming in and saying you don’t have legal ownership? It sounded crazy to me the first time I heard about this, but 78% of the land in Ghana is unregistered! The property records that date back decades in the United States just don’t exist there.
Would you be willing to build a store, apartment complex, or restaurant if you knew that someone could come in out of the blue and say you didn’t own the land anymore? Experts estimate that there are literally trillions of dollars locked away and not used for development and infrastructure projects.
Why does this matter to real estate?
Perhaps this won’t affect your business tomorrow, but the overall economic impact of smart contracts to keep accurate land records in developing countries is huge.
We would see third world countries making leaps into the modern age! What has taken decades or hundreds of years in other countries could be accomplished in just a few years by harnessing the power of blockchain and smart contracts.
This is Only the Beginning
You could equate it to internet in the late 1990s. Nobody really knew what it was, how to use it, or what the long-term benefits would be. I think we all can agree on the critical role the internet now plays in our daily lives and businesses. We can also observe the career-defining effect it had on early adopters who took risks and began applying internet technology to different industries and businesses.
Here’s what I’d encourage you to do.
First, do NOT go liquidate your real estate portfolio and dump it into cryptocurrency. I know I didn’t have to say that because if you’re reading this you, aren’t manipulated by hype and FOMO. But realize and accept you will undoubtedly hear the stories of the few who got lucky, took massive risk, and made insane returns overnight. Money quickly earned is usually quickly lost, and you probably won’t hear the stories of those who lost everything. The ratio of failure to success in this and in real estate is probably less than 10:1 or worse.
Second, don’t stick your head in the sand and pretend everything will go on as usual. The cat is out of the bag; there’s no going back. It’s time to get to work. This is the next area of real estate you need to become familiar with. I know every time I’ve pushed myself into a new aspect of real estate investing, it’s been a hard, exciting, but ultimately very rewarding experience. From flipping to rentals, wholesaling to commercial, growth and change is never easy.
Third, unless you want to invest directly in companies developing blockchain applications for real estate, you do have some time; adoption of new technology takes years. However, the time to prepare, strategize, and plan is now.
You’ve been given a peak behind the curtain of the future. What you do with this information is up to you.
I’ll leave you with one of my favorite quotes from Dale Carnegie:
“…the best possible way to prepare for tomorrow is to concentrate with all your intelligence, all your enthusiasm, on doing today’s work superbly today. That is the only possible way you can prepare for the future.”