May 6, 2023

How to Earn Passive Income with Binaryx Platform?

Explore how you can invest in a tokenized apartment on Binaryx Marketplace and earn rental income from it.

Michael Scott

Have you ever rented out an apartment that you owned? Or maybe any of your friends have? Even if not, you know well where the passive income comes from in this case – the property owner rents it out and receives regular payments. Also, if the home is located in an attractive location, its value gradually increases, making the owner wealthier over time. 

In the field of tokenized real estate, it works in exactly the same way. You co-own a house, receive rental income in proportion to your share, and profit from property value appreciation.  

How do I co-own an apartment if I haven’t bought it physically? 

In fact, you have bought it. Well, a fraction of it. 

Today’s laws allow using blockchain to hold ownership of so-called Real-World Assets – familiar things like real estate, gold, stocks, and many others. One such law has been issued in the State of Wyoming, USA. It allows for establishing a company and issuing specific crypto tokens that represent its ownership. Those who own these tokens, own the company.

Think of it as a public company owned by its shareholders. The same happens here, but instead of shares, there are crypto tokens issued on the blockchain. 

And when this tokenized company buys real estate, all its shareholders – token holders – become co-owners of this real estate. 

So how do I own a house with crypto tokens? 

Here’s the flow: 

  1. When a property owner (real estate developer, most often) wants to sell the property quickly, they list it on Binaryx Marketplace
  2. For this apartment, we establish a dedicated company in Wyoming and issue tokens that represent its ownership. When you buy these tokens on the Marketplace (starting from $50), you become a co-owner of this company, according to the law. 
  3. When the tokens are sold out, the company buys the property from the developer. As the company co-owner, you also start co-owning the property. 

Binaryx Platform doesn’t own the property at any stage of this process. The apartment is transferred from the old owner to the new one (company’s token holders) directly. 

There’s only one company for each property. 

How do I earn passive income from property tokens? 

Let’s say the property is worth $100k, and you’ve bought tokens for $1k. That means you own 1% of the property. Every month, you will receive 1% of rent paid by the tenant. And if the property’s value grows by 10% within a year ($10k), the value of your tokens will also grow by $100. 

What are APR and IRR? 

On Binaryx Marketplace, there are two metrics of profitability: the APR and the IRR. 

APR stands for rent. The APR of the first property that we sold on our Marketplace is 12%: if its co-owner has invested $1000, they will earn $120 of rental income within a year. 

The rental income accumulates daily since the rent start date – the day when someone starts renting the newly sold property. There’s high demand for the real estate that we sell, so we find tenants in advance and sign long-term contracts. Find an interview with the tenant who lives in the first penthouse tokenized by Binaryx here

You can monitor your rent balance in your Account and withdraw it anytime in Polygon-based USDT. One of our users who invested $6,100 in the first property shared this screenshot. They invested $6,100 and have already earned $76 in 1.5 months:

The second profitability metric is IRR (Internal Rate of Return). It includes the APR plus the value appreciation of the property. 

Properties that we sell are located in attractive places where real estate is rapidly appreciating. It means that the value of your tokens is also expected to increase. For the first property sold in our Marketplace, we anticipate a 10% growth in value within a year. This means that the IRR of that property stands at 22% (12% is rent + 10% is projected appreciation). 

Note that you can only withdraw the rental APR. To realize the gain from the token’s price growth, you can only sell it. A basic version of the Secondary Market serving this purpose has been recently implemented on our Marketplace. 

Read more: 

5 Reasons to Invest in Tokenized Real Estate

What is Real Estate Tokenization?