Real estate investing is changing, and fast. What once took lawyers, banks, and a pile of paperwork can now happen through your phone — thanks to tokenization. But how does it actually work? In this article, we’ll walk you through the full journey of how a building becomes a digital token, and how you — or anyone — can invest in a piece of it. Whether you’re new to blockchain or just curious about the future of real estate, this guide is for you.

Choosing the Right Property

Before anything happens on the blockchain, there’s a real building. It could be an office in New York, a rental in Berlin, or a vacation villa in Bali. The property owner (often called the “sponsor”) picks a building that’s valuable, stable, and likely to bring in income.

Next, lawyers check if the property is clear of legal problems. Is the title clean? Are the taxes paid? Is the building code compliant? Only when everything checks out, the process moves to the next step. KPMG explores this step in its real estate tokenization report.

Creating the Legal Structure

You can’t just tokenize any property directly — it has to be done through a legal entity. Usually, the owner sets up a company (like an LLC or SPV) that owns the building. Then, they issue digital tokens that represent shares in this company.

EY provides useful guidance on how such assets are structured and regulated. Each token gives the investor a small piece of the building’s value — and sometimes a portion of its rental income. These are security tokens, which means they’re regulated, just like stocks or bonds.

Minting the Tokens

Now comes the blockchain part. Using platforms like Ethereum or Polygon, the company creates a smart contract that defines how many tokens there are, what they represent, and who owns them. This process is called “minting.”

Once minted, the tokens are ready to be sold or distributed to investors. But first — regulations. This smart contract process is explained in more detail by ConsenSys.

Selling to Investors

The tokens are offered in what’s called a Security Token Offering (STO). Investors go through a sign-up process where they submit documents, pass KYC (Know Your Customer) checks, and agree to the terms.

After that, they can buy tokens — sometimes with fiat money, sometimes with crypto. In many cases, minimum investments start as low as $50 or $100.

Earning Income (and Trading)

Once a building is tokenized and investors hold the tokens, they’re entitled to their share of the rental income. This income can be paid directly to their wallets using stablecoins like USDC.

Even better? Token holders can often sell their tokens on secondary marketplaces. This makes the investment much more liquid than traditional real estate, where selling a property can take months. RealT is one example of a platform offering income-generating property tokens.

Real-Life Example: The St. Regis Aspen

One of the first major real estate tokenization projects happened in 2018. The owners of the luxury St. Regis hotel in Aspen, Colorado decided to offer 18.9% of the hotel as digital tokens. Forbes covered the project in detail. Investors around the world could buy in, starting at just $10,000. The offering raised over $18 million and became a landmark case in tokenized real estate.

Why This Matters

Tokenization makes real estate more accessible. It lets people invest in buildings they’d never be able to afford on their own. It also opens the market to global investors, reduces fees, and brings more transparency thanks to blockchain.

But it’s not perfect yet. Regulations vary by country. Liquidity depends on having active buyers and sellers. And the tech, while powerful, still needs good security and legal support.

Still, as platforms improve and more investors get on board, tokenization is likely to become a normal part of how we invest in real estate.

Final Thoughts

Tokenization isn’t about replacing traditional real estate — it’s about upgrading it. By combining real-world property with digital technology, we’re unlocking new ways to invest, grow wealth, and build a more open market.

If you’re curious to explore more, check out our full blog for deep dives, market trends, and upcoming tokenized listings.

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Tokenizer is a global platform for real estate tokenization, making investment accessible, transparent, and digital.