We combined the crowdfunding model with tokenization on the Ethereum blockchain into a simple 3 step process.

The Full Process

Investment Phase

Our team of experts curates and purchases various in-demand real estate properties and then registers them as a Decentralized Autonomous Organization (DAO). This allows the ownership of the properties to be tokenized. The property must be registered under an organization structure such as the DAO because properties can't directly be tokenized under SEC regulations. Tokens created for the DAO represent the underlying property. These tokens are minted to the ERC-777 standard and then purchasable through the Ethereum blockchain. The properties are uploaded onto our investment webpage with the total number and price of tokens, viewable and purchasable by customers.

Another alternative organization structure is the Special Purpose Vehicle (SPV) which is currently the most popular for tokenization of assets. However, the SPV is a central authority that does not provide management power to the token holders. This means that all of the asset management is handled by the entity that owns the SPV. But DAOs distribute management power to the token holders through a blockchain voting system—hence the designation, decentralized. Within the voting system works during the creation of the DAO, a certain quorum is set. Following this, any of the token holders can propose changes, in our case property management decisions, and if the specified quorum is reached by the other token holders on the blockchain, the change is carried out. As a result, the DAO empowers our investors with a voice in property management, innovating from our current competition.

Rental Returns

All of the property's micromanagement, including lease agreements and repairs, will be handled by PropShare. PropShare will rent out the property after it has been registered and tokenized. From the rental income, PropShare will deduct any property management costs. What is left will be the profit, from which PropShare will take a 5% cut to cover business operation costs. The remaining rental income will then be distributed to the token holders in the form of dividend payments. This distribution cycle continues with respect to the leasing agreement.

Secondary Trading

Token holders may sell their tokens on any Decentralized Exchange. These exchanges operate 24/7 and are open to investors globally. This leads to large investor demand and the ability to sell on demand making our tokens a highly liquid asset. Furthermore, these exchanges operate peer-to-peer meaning there are no intermediaries such as banks and brokers, resulting in much quicker and cheaper transactions.

Additionally, as mentioned before, the token holders can propose property management decisions. The token holders may decide to sell the property entirely and realize the asset's market value. If the quorum of investors verifies this decision, PropShare will sell the property and burn the tokens. The token holders will then receive a final payment of the monetary value of their tokens at the time of selling the property.