Research

Tokenized Real Estate: You Are Buying the Wrapper, Not the Building

The token is the least important thing you buy. What you own is decided by a legal wrapper, and whether you get paid is decided by a property manager. Here is how the main models work, and what the record shows when they go wrong.

April 202510 min readResearch

Updated October 2026: RealT has since gone into voluntary liquidation. See "What happened next" below.

When you buy a tokenized property, the token is the least important thing you are buying. What you actually own is decided by a legal wrapper, usually a small company that holds the building. Whether you actually get paid is decided by a property manager. The blockchain records who holds the token. It does not collect the rent, fix the roof, or make anyone buy your token back.

So the useful question is never "is this on-chain?" It is: what is my token a claim on, who stands between the tenant's rent and my wallet, and can I sell this if I need to? This piece takes each question in turn, using platforms that have been running long enough to have a track record.

Three ways to wrap a building

Almost every tokenized property you will be offered fits one of three shapes. They look similar in an app. Legally, they are very different things.

Three columns comparing structures. One property, one company: your token is a share of an LLC that owns a single house, as with RealT and Lofty. One building, a minority stake: your token is non-voting stock in a company that owns one hotel, as with Aspen Coin, which sold 18.9 per cent of the St. Regis Aspen. Shared infrastructure: many independent marketplace operators issue tokens on one protocol, as with Blocksquare.
What your token is a claim on, in the three common structures. The app can look the same in all three; the legal claim is not.

One property, one company

This is the model most people picture. A platform sets up a separate limited liability company for each house. The company owns the house. Your token is a share of that company.

RealT, a Florida-based platform, used this structure through a large family of LLCs that mostly carry variations of the name RealToken. Each token represents a share in one LLC that owns one US property, many of them in Detroit. (Michigan Public)

Lofty does the same on the Algorand blockchain. Each single-family rental sits in its own Wyoming LLC, the minimum purchase is $50, and rent is paid out daily in dollars or USDC. Token holders vote on property decisions such as choosing a manager or approving a large repair, one vote per token. (CrowdfundedWealth, Algorand)

Lofty's retail tokens are not registered with the SEC, and the structure has not been tested by federal regulators either way. One state has acted: a 2022 consent order from California's Department of Financial Protection and Innovation bars Lofty from selling new tokens to California residents. The order covers sales made from April 2021 to March 2022 through Delaware LLCs called Lofty Holding LLCs, before the move to Wyoming. (California DFPI, CrowdfundedWealth)

The appeal is obvious. You can own a slice of a specific house you can look up on a map, for less than the price of dinner. The catch is less obvious: you are now a part-owner of a very small company, and a very small company has very little room for things to go wrong.

One building, a minority stake

The second shape tokenizes shares in a company that owns one large asset.

The first well-known example, Aspen Coin, went on sale in October 2018. Aspen Digital, a Maryland corporation set up as a single-asset REIT to own the St. Regis Aspen Resort in Colorado, sold $18 million of tokens at $1 each. Together they represented an 18.9 per cent non-voting equity stake. The offering used the Regulation D 506(c) exemption, so only accredited investors could buy, with a $10,000 minimum. Templum, a registered broker-dealer, ran the sale, and Computershare acted as custodian. (CrowdfundInsider, Aspen Times)

Read that again and notice what the token does not change. You owned a minority slice of a hotel company, with no vote, bought through a regulated intermediary under an ordinary securities exemption. The blockchain made the shares easier to record and move. It did not make the hotel any less of a hotel, or the stake any less of a minority one.

Shared infrastructure

The third shape separates the technology from the business. One company builds the tokenization machinery; many independent operators use it to run their own property marketplaces.

Blocksquare is the clearest example. It sells a real-estate tokenization protocol and a white-label marketplace that operators can set up in a few weeks. Blocksquare says those operators typically tokenize 10 to 30 per cent stakes in income-producing buildings, and that more than $200 million of real estate has now been tokenized on its infrastructure. It has also launched Oceanpoint, a platform for trading those property tokens. (Blocksquare, Oceanpoint)

The $200 million figure is Blocksquare's own claim, not an audited total. The more important point for a buyer is structural: in this model, the company whose name is on the technology is usually not the company you are trusting with the building. Your counterparty is the local operator. Their licensing, their property management and their disclosures are what you need to check, and they will vary from one marketplace to the next.

Follow the rent

Here is what has to happen for a token holder to be paid. A tenant pays rent. A property manager collects it, pays the bills and handles repairs. What is left goes to the LLC. The platform then distributes it to token holders.

Only the last step touches a blockchain. Every step before it is ordinary property management, and every one of them can stop.

A flow from tenant to property manager to the property company to the platform to you. Only the final step, the platform paying token holders, happens on a blockchain. Marked under the earlier steps: a vacancy or unpaid rent stops income at the tenant; poor maintenance can lead to violations and legal action at the manager; and a court can stop rent being collected at all, as happened to RealT in Detroit in July 2025.
Where the money comes from, and where it can stop. Everything left of the last step is ordinary property management, and the blockchain cannot fix any of it.

What the record shows: Detroit and RealT

In July 2025 the City of Detroit sued RealT and its related companies in what the city called the largest blight lawsuit in its history. The city said that none of the 408 rental homes named in the case had the certificate of compliance Detroit requires for rentals, and that inspectors had issued more than $500,000 in tickets. Reported conditions included sewage in basements, collapsing ceilings, and homes without working heat or plumbing. (Detroit News, BridgeDetroit)

Later that month a court order stopped rent collection on the affected properties until they met code. (ClickOnDetroit, City of Detroit)

What happened next

The case did not stay a code-enforcement dispute. In January 2026 a judge turned down the city's request for a receiver. Michigan Public reported in March 2026 that the business was crumbling. In April 2026 a court approved a settlement putting a special fiduciary in control of roughly 700 Detroit properties, with power to order repairs from escrowed rent, sell homes, or demolish unsafe ones. Rent distributions to token holders had already been suspended in February. On 2 July 2026, according to reports, RealT announced the voluntary liquidation of its US structures and the sale of its whole portfolio. (Michigan Public, RealOpen, Tokenized Living)

Reports put the money raised from token holders at about $140 million, and the escrow account at about $640,000. We have not seen court documents confirming either figure, and what holders eventually recover depends on what the homes sell for. If you hold RealT tokens, read the fiduciary's and the company's own notices, not summaries.

We are not in a position to judge the merits of the case, and RealT's side of it deserves to be read in full. But look at what the case was about. Not smart contracts, not custody, not the chain. Roofs, heating, inspections and certificates. The failure point was the property manager and the landlord's legal obligations: the exact parts of the stack the token does nothing to protect. When rent collection was stopped, no amount of on-chain transparency could restart it.

That is the most useful lesson in tokenized real estate so far. The risks that hurt holders are the old risks of being a landlord, now spread across thousands of people who may live on another continent and have never seen the house.

Most of the value never trades

The second promise of tokenization is liquidity: that you can sell your slice whenever you like. So far, the evidence says that mostly does not happen.

A 2026 study, Tokenized but Illiquid?, looked at trading in tokenized real-world assets between December 2025 and May 2026. Its central finding is that a large amount of outstanding value does not, by itself, mean a liquid market. Most tokens showed low trading volumes, long holding periods and few active participants. The most liquid category was gold-backed tokens such as PAXG and XAUT. Real estate and private credit were among the thinnest. (MDPI FinTech, arXiv preprint)

A horizontal scale of observed secondary-market liquidity in tokenized assets. At the more liquid end: gold-backed tokens such as PAXG and XAUT, with broader holder participation and more persistent trading. At the thin end: tokenized real estate and private credit, with low volumes, long holding periods and limited participation.
Observed liquidity across tokenized assets, December 2025 to May 2026. Source: Tokenized but Illiquid? Evidence from Real-World Asset Markets, MDPI FinTech (2026).

There are simple reasons for this. Property tokens mostly trade only on the platform that issued them, and different platforms use different chains, so there is no shared exchange where every tokenized house meets every buyer. (Coinpaprika) A single house is also a hard thing to price from a distance, which makes buyers cautious.

None of this means you can never sell. It means you should assume you might have to hold until the platform sells the building, and only buy what you are happy to hold that long.

Five questions before you buy

Use these on any tokenized property, whatever the platform promises.

  1. What exactly does my token represent? A share of an LLC, stock in a company, a debt claim, or a contract with the platform? Ask for the operating agreement or offering document, and read who owns what.
  2. Who manages the building, and what happens if they fail? Get the manager's name. Check local records for code violations and lawsuits. Ask how holders can replace a manager, and whether that has ever happened.
  3. Is the property legally allowed to be rented right now? Rental licences and certificates of compliance are public in many cities. Detroit showed what happens when they are missing.
  4. Where can I sell, and how often does anyone actually trade? Ask for real trading history on the secondary market, not the size of the platform.
  5. Where does the yield figure come from? Is it rent actually collected after costs, or a projection? Over what period, and for this property or an average across the platform?

If a platform cannot answer these in writing, you have your answer.

Sources

  • Michigan Public, "Detroit sues crypto-based real estate company over blight violations", 3 July 2025. Link
  • Michigan Public, "'The model no longer works': Crypto landlord's Detroit enterprise is crumbling", 20 March 2026. Link
  • RealOpen, "RealT Review 2026: Anatomy of a Tokenization Collapse". Link
  • Tokenized Living, "RealT Review 2026: Liquidation, Risks, and What Happens Next". Link
  • The Detroit News, "Detroit sues cryptocurrency-based real estate firm to correct hundreds of property violations", 2 July 2025. Link
  • BridgeDetroit, "Detroit sues Real Token real estate firm with hundreds of violations", July 2025. Link
  • ClickOnDetroit, "Court order halts rent collection by Real Token until Detroit properties meet code standards", 23 July 2025. Link
  • City of Detroit, "City scores major win for tenants living in troubled Real Token properties". Link
  • CrowdfundedWealth, "Lofty Review 2026". Link
  • Algorand Foundation, Lofty case study. Link
  • California Department of Financial Protection and Innovation, Consent Order, Lofty AI, Inc., 2022. Link
  • CrowdfundInsider, "Aspen Coin: Elevated Returns Is Tokenizing Real Estate Investments", September 2018. Link
  • The Aspen Times, "In $18 million deal, nearly one-fifth of St. Regis Aspen sells through digital tokens", October 2018. Link
  • Blocksquare, "RWA tokenization explodes in 2025: Blocksquare surpasses $200M in tokenized real estate". Link
  • Oceanpoint. Link
  • "Tokenized but Illiquid? Evidence from Real-World Asset Markets", MDPI FinTech, 2026. Link
  • arXiv preprint of the same study. Link
  • Coinpaprika, "Liquidity in Tokenized Real Estate: Secondary Markets Explained". Link

TokenCrib is an information service, not investment advice. Figures are as reported by the sources above on the dates given; platform claims are the platforms' own.