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Tokenize Your Property: Frequently Asked Questions

Last updated on Jan 13, 2026

WHY TOKENIZE YOUR PROPERTY?

Property tokenization converts real estate into digital tokens on the blockchain. This enables fractional ownership and opens your property to a global pool of investors.

WHY PROPERTY OWNERS TOKENIZE

  • Unlock liquidity without selling completely

  • Access a global investor pool

  • Maintain partial ownership

  • Receive transparent, automated income

  • Enjoy professional property management

UNLOCK LIQUIDITY WITHOUT SELLING COMPLETELY
Traditional real estate is illiquid. Selling takes months and involves high transaction costs. Tokenization allows you to sell part or all of your property while it continues operating and generating income.

ACCESS A GLOBAL INVESTOR POOL
Instead of finding one buyer with deep pockets, you can sell to hundreds or thousands of investors worldwide, each purchasing as little as one token.

MAINTAIN PARTIAL OWNERSHIP
You control how much you sell. For example, you can sell 70% and keep 30%. You retain tokens representing your ownership stake and continue receiving proportional rental income.

TRANSPARENT, AUTOMATED DISTRIBUTIONS
Rental income is distributed automatically to token holders via smart contracts. No manual calculations and no disputes.

PROFESSIONAL PROPERTY MANAGEMENT
SecondaryDAO handles tenant relations, maintenance, and reporting. You get the benefits of ownership without operational headaches.

FEATURES, FUNCTIONS, AND BENEFITS

FRACTIONAL TOKENS
Function: Property is divided into tradeable digital shares
Benefit: Sell to many investors instead of one buyer

SMART CONTRACT ESCROW
Function: Funds are automatically held and released as tokens sell
Benefit: Get paid incrementally without waiting for a full closing

AUTOMATED RENT DISTRIBUTION
Function: Rental income is distributed pro-rata
Benefit: Passive income on retained tokens

BUILT-IN RESERVE FUNDS
Function: Funds are set aside for taxes, maintenance, and vacancies
Benefit: Property stability and investor confidence

SECONDARY MARKETPLACE
Function: Token holders can trade after the initial sale
Benefit: Liquidity makes tokens more attractive to buyers

KYC AND AML COMPLIANCE
Function: All investors are verified
Benefit: Regulatory protection and institutional-grade compliance

TRANSPARENT REPORTING
Function: All transactions are recorded on-chain
Benefit: Fully auditable and verifiable

PROFESSIONAL MANAGEMENT
Function: SecondaryDAO manages operations
Benefit: Hands-off ownership

WHAT ARE RESERVE FUNDS?

Reserve funds ensure the property can handle expenses and continue operating smoothly. There are ten reserve categories, divided into one-time costs and ongoing operating reserves.

ONE-TIME COSTS
Funded once from initial property sale proceeds.

  • Taxes and transfer fees
    Real estate transfer taxes, recording fees, and closing costs
    Amount varies by state

  • Appraisal and inspection
    Professional valuation and inspection reports
    Typical range: $500 to $2,000

  • LLC setup fee
    Legal formation of the property-holding LLC
    Typical range: $500 to $1,500

  • Deferred maintenance
    Known repairs needed at the time of tokenization
    Property-specific

  • SecondaryDAO listing fee
    Platform fee paid when trading begins
    Percentage of property value

  • Miscellaneous
    Buffer for unexpected closing costs
    Usually $0

OPERATING RESERVES
Automatically replenished from rent if depleted.

  • Vacancy reserve
    Covers mortgage and expenses during tenant turnover
    Typically 5 to 15 percent of annual rent

  • Maintenance reserve
    Covers ongoing repairs and upkeep
    Approximately 5 percent of property value

  • Annual taxes
    Property taxes escrowed monthly
    Based on tax bill

  • Annual insurance
    Property insurance escrowed monthly
    Based on policy

HOW RESERVE FUNDS ARE FUNDED

Reserve funds are funded from initial property sale proceeds.

Process:

  1. Buyer purchases tokens using USDC

  2. Smart contract calculates any reserve shortfall

  3. Required amounts fund reserves first

  4. Remaining proceeds are paid to the seller

FUNDING PRIORITY ORDER

  1. Taxes and transfer fees

  2. Appraisal and inspection

  3. LLC setup fee

  4. Deferred maintenance

  5. Vacancy reserve

  6. Maintenance reserve

  7. Annual taxes

  8. Annual insurance

  9. Miscellaneous

  10. SecondaryDAO listing fee (paid last)

This structure protects both sellers and buyers. Sellers receive a properly funded sale, and buyers receive tokens backed by a property with healthy reserves from day one.

WHAT WILL I RECEIVE WHEN I TOKENIZE?

Your total proceeds depend on how quickly the tokens sell.

EXAMPLE PROPERTY

  • Property value: $258,000

  • Reserve requirement: $25,000

  • Net to seller from sale: $233,000

  • Current monthly rent: $2,500

During the sale period, you continue receiving rental income on the unsold portion of tokens. Once all tokens sell, you receive the full sale proceeds.

FINANCIAL SCENARIOS

FAST SALE – 2 MONTHS

Month 1

  • Tokens sold: 50 percent

  • Your ownership: 50 percent

  • Sale proceeds: $104,000

  • Rent income: $1,250

  • Total received: $105,250

Month 2

  • Tokens sold: 100 percent

  • Your ownership: 0 percent

  • Sale proceeds: $129,000

  • Rent income: $0

  • Total received: $129,000

Total received: $234,250
Timeline: 2 months

MODERATE SALE – 4 MONTHS

Month 1

  • Tokens sold: 25 percent

  • Ownership: 75 percent

  • Sale proceeds: $39,500

  • Rent income: $1,875

Month 2

  • Tokens sold: 50 percent

  • Ownership: 50 percent

  • Sale proceeds: $64,500

  • Rent income: $1,250

Month 3

  • Tokens sold: 75 percent

  • Ownership: 25 percent

  • Sale proceeds: $64,500

  • Rent income: $625

Month 4

  • Tokens sold: 100 percent

  • Ownership: 0 percent

  • Sale proceeds: $64,500

  • Rent income: $0

Total received: $236,750
Timeline: 4 months

SLOW SALE – 10 MONTHS

Month 1

  • Tokens sold: 10 percent

  • Ownership: 90 percent

  • Sale proceeds: $800 (reserves funded first)

  • Rent income: $2,250

Month 2 through Month 9

  • Monthly token sales increase by 10 percent

  • Monthly sale proceeds: $25,800

  • Rental income decreases proportionally

Month 10

  • Tokens sold: 100 percent

  • Ownership: 0 percent

  • Sale proceeds: $25,800

  • Rent income: $0

Total received: $244,250
Timeline: 10 months

SUMMARY

  • Fast sale (2 months): $234,250 total

  • Moderate sale (4 months): $236,750 total

  • Slow sale (10 months): $244,250 total

Key insight: Slower sales often produce more total income because you continue receiving rent on unsold tokens.

FREQUENTLY ASKED QUESTIONS

WHEN DO I GET PAID?
You receive proceeds incrementally as tokens sell. Once reserves are funded, proceeds flow directly to you.

WHAT HAPPENS TO RENT DURING THE SALE?
You receive rental income proportional to your unsold tokens.

CAN I KEEP SOME TOKENS?
Yes. Many sellers keep 10 to 30 percent to continue earning rental income.

WHAT IF THE PROPERTY SELLS SLOWLY?
You continue receiving rental income. There is no penalty for slow sales.

ARE RESERVE FUNDS REFUNDABLE?
No. Reserve funds belong to the property and protect all token holders.

HOW IS THE PROPERTY MANAGED AFTER TOKENIZATION?
SecondaryDAO handles tenant relations, maintenance, and financial reporting.

READY TO TOKENIZE YOUR PROPERTY?

Unlock the value of your real estate while maintaining income potential.

Get started:
https://www.secondarydao.com/tokenize

Questions:

[email protected]

SecondaryDAO — Democratizing Real Estate Investment