Metaverse real estate mortgages: the future of real estate investing?

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Metaverse virtual real estate continues to be one of the biggest gainers in the crypto world, maintaining the impressive traction it gained in 2021 by growing at a rapid pace – both in terms of interest and price. On Jan. 27, metaverse tech company TerraZero announced one of the first-ever “metaverse mortgages” with the Decentraland platform, with the goal of enabling more people to acquire virtual real estate.

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TerraZero said it will offer a newly designed metaverse mortgage service to its customers who intend to finance the acquisition and purchase of virtual real estate – represented as a non-fungible token or NFT – with the company’s Metaverse Mortgage Loans backing each transaction with the respective underlying NFTs as digital assets, according to a press release.

Dan Reitzik, CEO of TerraZero, told GOBankingRates that the company’s infrastructure products accelerate secure transactions and eliminate barriers to entry for any business or individual wishing to discover and explore the metaverse.

“Not only does TerraZero empower real estate for businesses, artists, and individuals – we help our clients and customers leverage their real estate through advertising, what can be built on their virtual land, and more” , said Reitzik. “All of this will come together, at scale, as we launch the Amadea platform from TerraZero – which will connect the virtual world and the real world together for everyone, everywhere.”

Reitzik explained that since land is finite in most decentralized metaverse worlds, the cost of land increases over time.

“TerraZero recognized early on that to accelerate the growth and adoption of the metaverse, the same tools that are available in the real world must be available in the metaverse, and that includes asset financing,” he said. .

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Metaverse Real Estate Buyers Big and Small

In terms of interest, he said it came from a wide range of groups, from real-world mortgage companies to individuals looking to start new businesses.

“We don’t have a specific audience per se right now – it’s the early days of the metaverse and the industry is learning and evolving,” he said. “We are already working with well-known brands, entrepreneurs and businesses to help them grow their presence in the metaverse. In the real world, retailers rarely buy their properties outright, they lease or finance their storefronts. We believe the same trading rules will apply in the Metaverse.

Asked about mortgage rates, Reitzik said the interest rate and term of the loan vary “depending on many factors, including loan size, property location, down payment and due diligence.”

“We are looking at shorter terms than real-world mortgages with competitive rates to ensure this is viable for all parties. As the metaverse matures, we will adapt accordingly,” he added.

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How Metaverse Mortgages Work

According to the announcement, potential customers can go online to the TerraZero platform and explore offers as well as listings. Once a customer has signed the mortgage agreement, TerraZero authorizes the customer to take out the mortgage on the property, with the NFT land to be held by TerraZero as the registered owner until the loan is repaid according to the terms agreed. At the same time, TerraZero grants the customer “deployment rights” so that the customer can – without delay – build on their land, organize events, manage digital storefronts and host their internal office.

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“For this service, customers make monthly payments until the mortgage is paid off, after which the Virtual Land (NFT) will be fully transferred to the customer,” the company’s press release reads.

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About the Author

Yael Bizouati-Kennedy is a former full-time financial journalist and has written for several publications, including Dow Jones, The Financial Times Group, Bloomberg and Business Insider. She has also worked as a VP/Senior Content Writer for major New York-based financial firms, including New York Life and MSCI. Yael is now independent and most recently co-authored the book “Blockchain for Medical Research: Accelerating Trust in Healthcare”, with Dr. Sean Manion. (CRC Press, April 2020) She holds two master’s degrees, including one in journalism from New York University and one in Russian studies from Toulouse-Jean Jaurès University, France.