NFTs or non-fungible tokens are beginning to enter a variety of different industries. Real estate is no exception. You can already invest in real estate NFTs a little bit. Moreover, this is a sector that’s poised for growth. However, that doesn’t necessarily mean you should be investing in real estate NFTs. Should you? It depends.
What Are NFTs?
To truly gain a grasp on this, you need to do a decent bit of research. However, just to get you started, here’s what you need to know:
- NFTs are tokens that represent a physical or virtual object. Motley Fool puts it simply in the real estate sector by comparing the NFT to a deed. The deed is not the house but proof of who owns the house.
- NFTs are linked to blockchain technology. The important thing here is that this makes it very secure and unlikely to get hacked despite being a digital “deed” or token.
- NFTs are bought and sold using cryptocurrency.
What Are Real Estate NFTs?
Real estate NFTs are a new and emerging thing that will likely change over time. However, we’ve seen a few examples of them already. The ones that have been successful are tied to some very specific legalities. The person who purchased the real estate NFT was specifically told that the seller would do all of the behind-the-scenes work to properly transfer titles, etc.
As you probably know, buying a property isn’t simple. You don’t push one button and it’s done. Instead, there are a lot of steps. There is a lot of paperwork. Lots of legal stuff need to happen. If those things don’t happen in the real world, with the real property, then the NFT is essentially worthless. It basically says that you own things but because the real estate legal world isn’t caught up with the NFT digital world, it doesn’t matter.
Should You Invest in Real Estate NFTs?
Right now, you’re taking risks investing in this sector. You need to fully understand cryptocurrency, NFTs, and real estate in order to do this type of investing successfully. If you lack total understanding in any of these three areas, then you’re at risk of some terrible deals.
For example, if you don’t understand the way that cryptocurrency values change constantly, then you won’t have clarity about your investment. Likewise, if you don’t comprehend what an NFT is, then this adds murkiness to the investment waters. And finally, if you aren’t absolutely certain that you’re truly getting the real estate in all the legally correct ways, then the NFT could mean nothing.
NFT Sector Is Growing
That said, this is definitely an area of investment to keep an eye on. The market is growing and changing. Right now, real estate NFTs are kind of just a novelty thing. However, they’re almost certainly going to become a more common part of the market. If you get in on the ground floor, then this could be really great for you.
So, if you’re truly interested in this topic, then you might want to start laying the groundwork. You may not want to invest yet, but you could start learning about it. Start investing in other NFTs, such as digital art NFTs, at lower price points. This will help you really learn how they work. Keep an eye on the real estate market. You’ll know in your gut when the right time to jump in is for you.
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Kathryn Vercillo is a professional writer who loves to live a balanced life. She appreciates a good work-life balance. She enjoys balance in her relationships and has worked hard to learn how to balance her finances to allow for a balanced life overall. Although she’s only blonde some of the time, she’s always striving for total balance. She’s excited to share what she’s learned with you and to discover more together along the way.