Investing in the Age of the New Financial Internet SECURITY TOKENS COULD BE THE NEXT WAVE IN REAL ESTATE FUNDING.
acksonville, Florida, spent 2018 quietly living up to its nickname, “The Bold New City of the South,” and is poised as a significant real estate investment destination in 2019. by Carole VanSickle Ellis | Featured experts: Jason Danley, Peak Capital Partners; Rich Fettke, Real Wealth Network; JustinWest, Marcus & Millichap; and Balazs Szekely, RentCafé J Market Spotlight: Jacksonville, Florida A SOUTHERN MARKET POISED FOR GROWTH IN 2019.
by Aubrey Chernick
it has not been really viable to raise money around the world because of the administrative challenges associated with KYC (know your customer) and AML (anti-money laundering). With between 20 and 30 countries presently aspiring to sup- port security tokens, however, that could change. 2. TIMELINESS Investors almost always want to close deals faster, and this technology is already reducing settlement times in stock trading. Using security tokens could reducing the timeline in real estate, like other investments, and could also create greater flexibility. 3. LIQUIDITY Liquidating a long-term real estate deal can result in big losses if an investor wants out early. Security tokens could provide a route to easier liquidation – by selling off the to- kens – that would not result in such a “haircut” for investors. Although security tokens are new and these three benefits some- what aspirational, deals are already being done in this new space. Further, it may be that some aspects of the new Opportunity Zones (Qualified Opportunity Funds) that represent a tax mitigation strat- egy for US investors, might also benefit from Security Tokens. Watching these mega-trends evolve across the financial industry will keep real estate investors ahead of the game. •
here has been so much going on in the world of internet technology and finance over the past few years, it is easy to get confused and left behind. First, there was the cryptocurren- cy craze (mainly bitcoin, but a few others as well) that powered online payments. That made way in 2017 for a series of initial coin offerings (ICOs), which were a raise to raise money for a variety of startups, many in the tech area. ICOs resulted in about $13 billion being raised around the world, most avoided regulations, many were scams, and as a result by 2018, the term “ICO” was experi- encing brand damage! The third wave, which is taking shape now,
“Jacksonville is absolutely a growth market for a number of reasons. A trend we’ve seen over the last 12 to 24 months is investors who are interested in Orlando and central Florida are starting to be very interested in the north sector of Florida, up into Jacksonville. With prices in primary markets like Miami and Tampa at peak, investors can still go into Jacksonville and get the same asset or even larger for a greater return on their money.”
revolves around security tokens, which are an investment vehicle that is compliant with SEC regu- lations and has a lot of positive rami- fications for real estate fundraising. Right now,
“We believe Jacksonville is one of the best real estate markets in the country, with 24.1 percent population growth since 2000, projected future job growth of 39.1 percent over the next decade, median home prices about 23 percent
WHAT IS A SECURITY TOKEN?
A digital representation of an asset, share, equity, debt, or revenue stream that conforms to security regulations. Security token can be used to finance startups, real estate, and to provide fractional ownership in selected assets such as fine art.
JUSTIN WEST vice president and regional manager at Marcus and Millichap Orlando
less than the national average, and rental rates on a typical $100,000 home about 20.31 percent more than the national average.”
the industry is exploring how these tokens might function in the real estate industry. I have identified three ways security tokens could benefit real estate investors: 1. CROSS-BORDER TRADING Wish you could raise money internationally? Historically,
At present, Jacksonville also offers renters some pretty signif- icant advantages. RentCafé’s October report on rental accessi- bility indicated the city is presently 10th among large U.S. cities for accessible housing stock.
RICH FETTKE co-CEO of Real Wealth Network
> Continued on :: PG 97
The city has also experienced steady geographic expansion along with steady population growth, thanks in large part to a strong healthcare system (20 hospitals and a burgeoning bioscience com- munity), low cost-of-living, and a business-friendly environment.
Aubrey Chernick is Founder and CEO of Security Token Academy, the leading organization in covering and facilitating the security token industry. Learn more at securitytokenacademy.com or reach him at firstname.lastname@example.org.
Carole VanSickle Ellis is the editor of Think Realty Magazine. She can be reached at email@example.com.
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