Investing in traditional real estate has long been considered a reliable means of generating wealth and financial stability. However, it is not without its challenges and drawbacks, especially for individuals seeking to enter the market.
For instance, let's consider the case of Satoshi, an aspiring investor. Satoshi has always dreamed of diversifying his portfolio by investing in real estate, but he faces numerous hurdles. The high entry costs, such as down payments and mortgage financing, make it difficult for him to acquire his first property.
Additionally, the lack of liquidity and the lengthy process of buying and selling real estate restrict his ability to seize timely investment opportunities. These common problems faced by individuals like Satoshi highlight the need for alternatives that can overcome the limitations of traditional real estate and empower a wider range of investors.
Real estate investing can be a very beneficial method for wealth accumulation and monetary expansion. First of all, historically, real estate has shown long-term appreciation, providing the opportunity for large capital gains over time.
Additionally, real estate investments produce a consistent flow of revenue from rental properties, acting as a dependable source of cash flow. In order to buy properties and increase returns on investment, finance is often used in the real estate industry.
<aside> 💡 Furthermore, real estate can serve as a hedge against inflation, as rental income and property values often rise with increasing prices.
As can be seen in the graph above, the US real estate market has outperformed inflation rates, making it a solid investment.
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As was already said, traditional real estate has a number of issues, including a high capital requirement, illiquidity, management and maintenance responsibilities, a lack of diversification, a complex legal and regulatory environment, and an extensive list of additional shortcomings.
🏠 Here comes Parcl, a novel approach to real estate investing.
image credits : Parcl-medium
Parcl is a decentralised AMM (Automated Market-Making) protocol built on the Solana blockchain and designed for real estate synthetics. Users of the platform can trade based on changes in the prices of city-specific real estate indices, which reflect actual property values.
The Parcl Protocol allows users to long or short digital representations of real estate that reflect the market value of real estate assets in particular places, compared to actually owning the physical property.
Cities on Parcl have a cumulative annualised volatility of about 7% per year, making Parcl an excellent approach to gain on-chain exposure to an otherwise stable asset class.
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Parcl protocol is a noncustodial automated market maker ("AMM") created for everlasting synthetic assets that cannot otherwise maintain liquid trading markets. As an illustration, marketplaces where players have access to analytically calculated values like average real estate prices or macroeconomic metrics.
The first real world asset (RWA) index to represent a city's residential real estate market is Parcl indexes. Parcl has made it easy for you to obtain exposure to real estate in high-demand markets like New York, Miami, and Los Angeles by trading the price movement of major cities.
Through the use of a cutting-edge architecture, Parcl v2 provides solvency, zero credit risk, capital efficiency, and price execution at oracle pricing.