Real estate is one of the oldest and the largest industry in the world. According to a Fortune report in 2016, the global real estate market was worth $217 trillion. This makes it the largest industry.
Primary & Secondary Securities
Over the modern history of real estate, developed in the last 200 years, there has been a considerable implementation of different laws and regulations. In the real estate industry, security tokens issuer must go through a lot of steps before issuing of securities:
- Third party evaluation.
- History performance.
- Principle track record.
- Declaration of debts.
After these are done, the issuer must then register a property as a security, generating a Private Place Memorandum, due diligence report, disclosure of all risks and then compliance with tax laws.
Without all this, property owners will not have investors for them to sell securities to.
Issues In Current Market
Even with all these laws and regulations, investing in property securities have always been much riskier than others. There is always a chance that the security seller is not the true owner. There could be manipulation of lien and debt data. The property itself could be overvalued in the securities. The owner could simply sell off all the securities, thereby leaving no principles to look after the property. The small investor power surety is also another point that drives the little investors away.
Jointer, The Market’s Solution
To ensure that the rights of investors and the money invested is secured from fraud and manipulation, Jointer is a platform that keeps a tab on the documentation and procedures, allowing only the properties that qualify to issue securities, to be listed on its website.
The end to end real estate investment platform creates ease for all parties. It simplifies the process, having no minimum investment level and does not require investors to have a knowledge of the property security. This opens up the possibility for investors to buy a fraction of property, letting small investors enter the market, who would otherwise need to buy securities from secondary markets at a higher cost.
Real estate owners are also at an advantage. They can complete their documentation and then apply on the Jointer platform. The decentralized platform’s team will scrutinize the paperwork and list, subject to satisfaction, allow the property owner to sell securities on the platform.
Since the platform is based on blockchain, the securities are digital in nature and are just like any other crypto token. The launch of the ICO is at zero cost, giving the owners more saving since there will be little to no cost of raising capital.
Jointer’s Process
The decentralized security issuance platform has a robust, yet a fairly simple process of bringing properties on board:
- Analysis: Using a neural net artificial intelligence, the platform runs a number of different scenarios for evaluating the property in question. This is followed by three professional underwriters and then a third party firm’s evaluation for appraisal, ROI, risks and value confirmation.
- Property Check: background and other title related checks are done in collaboration with the largest title company in the US, the First American Title Company.
- Registration: The property is then re-registered to a land trust, the final stage before securities are issued. Jointer then collaborates with investors to acquire the beneficiary rights and appoint a trustee to control the property.
- Security Offering: Security tokens are then offered on the platform for security investors.
- Profits: Since the tokens issued are securities, the platform is bound to issue from proceeds. The distribution is totally automated through smart contracts and no human interference is required.
Behind the Scene
Jointer takes a huge advantage of modern artificial intelligence by creating the world’s first machine learning algorithm for properties that can evaluate the commercial value of a property by just knowing the physical address. The AI can also provide an estimate of growth for the next ten years.
The team then relies on more than 500 professional underwriters, who evaluate the property. This is followed by the third level of check by internally by Jointer that looks into key aspects, such as ownership, condition of property, debt ratio, market trends, current asset value, potential risks, dividends etc. Jointer also ensures that the property owner is always in possession of a partial equity, ensuring that the owner has an incentive to look after the upkeep of the property.
Blockchain Power
Since the platform is based on the decentralized technology of blockchain, it offers some unique advantages over traditionally based securities:
- Economical: The cost of capital raised, operational expenses and maintenance is extremely low.
- Immutable Securities: Token issuance is not tampering able as long as the private key is not compromised.
- Smart Contracts: Through smart contracts, dividends are issued immediately without delay.
Jointer’s plan to merge property security with blockchain is set to revolutionize the commercial real estate industry.
Visit the Jointer website for the latest updates: http://www.jointer.co/
