Investing in the stock market has always been lot been easier compared to investing in real estate simply because it is easier to trade off stocks while liquidating unforeseen expenses.
Real estate investing is also a more complicated process as this usually includes buying and selling illiquid assets. This means that it is difficult to sell off if you need more cash for your other investments, making you only wealthy on paper, but might still be recovering from the expenses incurred for property repairs.
But now, CFX Markets, a Chicago-based company that provides a new high-end trading platform for alternative assets, makes real estate investing easier, getting around complex documentation with the use of the Etherium blockchain technology.
CFX Markets and Etherium Blockchain
The blockchain system, as described by the Harvard Business Review, is “an open business ledger that can record transactions between two parties efficiently and in a verifiable and permanent way.” This makes the secondary market trading platform for alternative assets, facilitates effectively and efficiently the trades between sellers and buyers.
According to Jordan Fishfeld, the co-founder of PeerRealty and managing director of CFX Markets, buying asset years ago will take a buyer to spend more or less ten hours to process one of the many asset acquisition transactions before the transfer of ownership will actually happen. But with the new technology, clearing period will only take 10 days and the process can be done with a few clicks.
Together with PeerRealty co-founder, Juan Hernandez, Fishfeld wanted to find a way for investors to easily sell their assets and get the return on their investment. After working on some features, they found it possible to make it as a standalone platform for real estate investments, making real estate a more favorable form of investment than other asset classes.
While PeerRealty focuses on equity crowdfunding, the CFX Markets’ goal is to allow crowdfunding investors to sell their shares online. Aside from that, users will have a way to resell their shares on the secondary market if they want to earn investment returns and get out from the investment circle. This doesn’t only apply to real estate assets but for all illiquid assets.
Fishfeld added that there are a great number of data points available to estimate a value without the need for the seller’s information because the underwriting process is much quicker than the traditional process.
Furthermore, he confirms that the value of the real estate market trust alone is more than $90 billion, with over 1 million shareholders.
A Startup’s Challenge
Despite all the statistical facts and the feasibility of the new platform, CFX Markets’ major challenge is to get the majority of the real estate companies to be open to the new technology. However, their reluctance, according to Fishfeld, gives CFX the initiative to create fundamental advancements to become more efficient than the current investment culture.
“We need to make certain that they take the demo,” Fishfeld said. “Just like Zillow, it was once a startup, but now has become an everyday virtual platform used by everyone in the real estate industry… that’s where we want to be.”
CFX Markets closed its Series A funding round in November, which was led by West Loop Ventures and joined by M25 Group, Harvard Business School Angels of Chicago, Origami Capital Partners, SixThirty Ventures, Waterton, and ISE. Currently, CFX Markets in Chicago has 7 employees and will be hiring four to five more people over the next few months.