Homeownership is becoming increasingly out of reach for younger generations. According to the Freddy Mac Generation Z Study 2022, one-third of Generation Z (18-25-year-olds) consider buying their own home financially unachievable. This figure has risen from 27% to 33% in three years. Analysts at Binaryx, a leading real estate tokenization platform, claim that the situation is even worse in European countries, and the negative dynamics are increasing.
The feeling of “I cannot afford that” creates a dangerous cycle: the less people believe in the accessibility of real estate, the lower they set their financial goals or turn to risky alternatives. A high entry threshold cuts off the average investor's exposure to the double-digit returns that wealthy investors in the luxury real estate market enjoy.
Now you could access the same 10–30% APR returns from elite properties historically only available to the richest and get these yields for a starting amount of just $50. Tokenization is capable of dismantling the barriers to prime real estate.
How Wealthy Dominate Real Estate?
Real estate favors those with large capital. The more money an investor has, the easier it is to enter the market, negotiate better deals, and secure higher returns with lower risk.
The 2008 financial crisis clearly illustrated this fact. Back then, large companies like Blackstone were massively buying up foreclosed homes while the middle class struggled to obtain loan deferments. Today, Blackstone is the largest corporate landlord in the world, controlling more than 300,000 residential properties across the U.S.—a portfolio valued at about $1 trillion.
The Institutional Advantage: Lower Risk, Higher Returns
Large-scale investors enjoy benefits that smaller investors simply can't match:
Portfolio diversification: A single property has a 40% chance to perform worse than the market over a decade, but a portfolio of 75 properties reduces that risk to less than 6%.
Bulk buying: Bulk buying pays off not only when it comes to shopping at the supermarket but also in the real estate market. Urban Institute research found that properties acquired in bulk were selling for about $6.52 per square meter, cheaper than comparable individual sales.
Transactional cost savings: Institutional investors get substantial discounts on everything from property management (typically 5-8% for sole proprietorships vs. 2-3% for large portfolios) to maintenance expenses.
Access to cheaper funding: While individual investors can only obtain mortgage loans on regular terms, institutional players can access loans through corporate bonds or specialized credit facilities, which are marginally more favorable.
Professional management: Large investors use complex analytics and skilled management teams to optimize occupancy and rental rates, frequently achieving 5-10% higher rents.
Market Influence: When a major player like Blackstone enters a local market, it impacts market pricing, creating a self-reinforcing advantage.
Together, these factors create a "rich-get-richer" cycle. The wealth gap grows not due to a lack of competence among small investors, but because of the market structure itself. But thanks to tokenization, small investors can now access the same benefits.
How Tokenization is Leveling Up Real Estate Small Investors?
There are ways to overcome high entry barriers to the real estate market and get closer to institutional levels of return. Traditionally, real estate investment trusts (REITs) have fulfilled this purpose but have numerous pitfalls. Despite good average historical profitability of 9-12%, multiple fees and management expenses significantly dilute returns. During downturns, REIT stocks exhibit volatility that often exceeds market-wide volatility. Additionally, investors do not receive the tax-optimized capital gains that real estate owners are entitled to; instead, they receive their profits as taxable dividends.
Real estate tokenization allows splitting property ownership into tokenized fractions that can be traded, much like stocks. Thus, any investor can start accumulating a portfolio of property fractions for as little as $50 per token.
How Does It Work?
First, a property is assigned to a legal entity (typically an LLC).
The ownership of this entity is then split into fractional shares, which are converted into tokens.
These tokens are recorded on a blockchain and can be freely traded or held for rental income and value appreciation.
This structure works for ready-to-rent properties, where investors receive rental income payments immediately, and for off-plan developments, where profits come after the finished unit is sold.
Legal Protection for Token Holders
Binaryx operates within the regulatory framework established by Wyoming law W.S. SF0038, which allows LLCs to be established as Decentralized Autonomous Organizations (DAOs) governed by tokens. Each property tokenized on Binaryx is held by a separate underlying DAO LLC, where token holders gain governance rights, enabling them to vote on key decisions such as:
Changing property management companies
Approving renovations or improvements
Determining rental strategies
Deciding when to sell a property
This structure guarantees that even if Binaryx Platform disappears, token holders would still retain their ownership rights.
BinaryX Case Study: Tropical Loft Villa in Bali
Investing in luxury real estate for short-term rentals in tourist locations consistently shows significantly higher returns than long-term rentals in European capitals. For example, Bali villas in popular tourist areas, such as Seminyak and Changgu, bring 10-15% APR, while renting an apartment in the center of Berlin yields only 2.5-4%.
Before, it was almost impossible for an ordinary investor to get such returns, but now the Binaryx Platform team intends to change that with tokenization. Binaryx is actively tokenizing the Bali real estate market, having already tokenized 12 properties. Here's a look at one of the most recent properties on the platform, the Tropical Loft villa in the Changgu area.
Investment Structuring: Here, there is a total investment value of Tropical Loft Villa at $225,750, including the price of the property itself and all associated costs. Market analysis has shown that the villa can generate about 11.65% annually in rental yield. After cutting out all operating and management costs, the projected monthly income for distribution to investors is $2,191.74.
Legal Setup: A special purpose entity, TROPICAL LOFT VILLA 2 DAO LLC in Wyoming, was created to hold the villa’s ownership.
Tokenization: The TROPICAL LOFT VILLA 2 DAO LLC was split into 4,515 tokens, each worth $50, created on the Polygon blockchain.
Fundraising: Investors could buy any number of tokens to get proportional ownership and revenue share. If fundraising goals weren’t met, funds were fully refunded to investors.
Rental Income Payouts: When the villa starts generating rental income, the smart contract automatically distributes payments to token holders' wallets. An investor with 40 tokens worth $2,000 will earn about $19.42 in passive income (0.88% of the property's total income) each month.
Exit Options: Any investor can sell their tokens on the secondary P2P market or vote with the other token holders to sell the entire object.
Tomorrow's Real Estate investment: Accessible, Diversified, and High-Yielding
Up until recently, managing a diversified real estate portfolio was the privilege of only wealthy and institutional investors. .Soon, the average investor with as little as $5,000 in capital will be able to efficiently allocate these funds among 100 tokens of various properties—from villas in Bali and apartments in Montenegro to commercial space in New York City.
A key advantage of tokenization lies in the token's yield rate being identical to that of the entire property. If a villa generates an 11.65% annualized return, the owner of 0.5% of the property's tokens gets the same 11.65% on their investment.
Despite the apparent benefits, the infrastructure for real estate tokenization is just beginning to take shape. Binaryx estimates that as of early 2025, the total value of tokenized real estate in the world does not exceed $1 billion—a tiny fraction of the $650 trillion global real estate market.
Binaryx's goal is to create a global ecosystem where investors with any budget can build truly global real estate portfolios without depending on the platform itself. Now, the company is actively working on expanding the geography of projects; it has already tokenized a mountain chalet in Montenegro and plans to enter the markets of Dubai and Spain.
