How Can I Buy an NFT as a Share of a Real Estate Property?

May 25, 2023

A few years ago, if I told you that you could buy property in an online universe, you would have thought it was preposterous. However, NFT real estate is changing the real estate industry. Ever since Facebook rebranded itself as Meta, the world of sci-fi intertwined with our reality. In fact, Paris Hilton, reality TV star, and Hotel heiress has developed a virtual island confined in Roblox. Big brands, such as Gucci and Adidas are embracing metaverse, adding fuel to the fire around NFT. Metaverse property rates have skyrocketed, shifting the perception on how we view digital real estate. In this article, we will address your common queries surrounding real estate NFT.

What is the Metaverse?

Neil Stephenson, coined the term Metaverse in his 1992 sci-fi novel Snow crash. Today, this term is utilised to describe the concept of an evolving 3-D virtual world that combines different aspects of real and online lives. In this platform, users can attend events, interact with each other and even play games. You can think of the metaverse as a new iteration/version of the internet. As a digital economy, you are granted both identity and ownership in elements of the blockchain technology.

What is NFT real estate?

NFT is short for Non-fungible Tokens, which are cryptographic tokens utilised to represent a unique digital asset. The common usage of NFTs is to tokenise physical and digital assets such as collectables, arts or tickets. The meta data inside each NFT verifies proof of authenticity as well as ownership, and is supported by blockchain technology. This means that at one point of time, a specific NFT can only have one official owner and the ownership cannot be forged or modified.

NFT real estate is a plot of land in a virtual world that is programmable and where users can explore or experiment with their 3-D avatars. Users can buy NFT in the metaverse, that are linked to particular parcels of land, representing their unique ownership on such properties. The purpose of the property or what the owner chooses to do with the property depends upon the nature of the project. For example, users can develop plots of land, participate in social functions or attend events in Decentraland.

How does real estate NFT work?

The functionality of real estate NFTs is similar to any other NFT, where they can be purchased using a cryptocurrency of the seller’s choosing. Later, the same entity can be sold for a profit to a prospective buyer. The behaviour of NFTs is similar to the behaviour of stocks, where investments depend on multiple factors such as market trends, customer preferences and availability.

Moreover, investments behave like stocks where profits are paid like any other kind of share-based investment. This can be explained better with the help of an example. Imagine that you have 20 tokens of real estate NFT, that invests in apartment buildings. At the end of the earning cycle, you would be sent a check that represents 20% of the net profit.

Additionally, you have the right to severability, implying that you can sell these real estate NFT any time you like. Although, some crowdfunding platforms have regulations where buyers have to hold real estate investments for certain period of time before they can sell it.

Digital real estate versus physical real estate

Digital real estate exists on virtual platforms, such as sandbox, where users can interact or construct whatever they want. A good example is Minecraft, a well-known platform that offers users the digital experience of owning, building and looking after constructions. Similar to real-life estate, virtual estate are designated persons within the space that a platform holds. This means that there is a limit on how many parcels/plots are available, depending upon the capacity of each individual platform, thereby creating scarcity in the same way that it exists in the physical world. For example, there are only 90601 individual plots/parcels in Decentraland.

Advantages and disadvantages of real estate NFT

Advantages of real estate NFTs are like any other NFTs, where they promise security, easy traceability and records of ownership. Secondly, they allow purchase and sale, thereby becoming an emerging candidate in the investment world. Unfortunately, the biggest disadvantage is like anything in the crypto world, there is no guarantee about real estate NFTs.

How can I buy an NFT as a share of a real estate property?

There are many marketplaces that allow you to buy a share of real estate property. We recommend that you research NFTs to buy, NFT marketplaces and NFT wallets to use. After selecting the market place, open an account and verify the account if needed. Create an NFT wallet like MetaMask and deposit money into the market place. HomeCubes is an emerging marketplace that offers competitive pricing for real estate NFTs.