Could tokenized RWAs help cover your next vacation?

The cost-of-living crisis has lasted far longer than initially expected. Despite global inflation approaching typical levels, individuals continue to contend with rising costs unseen in decades while wages lag. So, how are people getting creative to earn supplemental income during challenging times? 

For years, Airbnb has offered individuals an alternative means of earning extra income by renting out their homes or spare rooms, providing another avenue for supplementing their earnings. Being founded in the wake of the 2008 financial crisis also certainly helped its prospects.

Airbnb has grown exponentially since its inception, expanding its presence to over 100,000 cities worldwide and hosting millions of guests annually. However, amid this success, many cities face the challenge of effectively regulating the short-term rental sector.

Fearing the displacement of long-term rental housing and maintaining residential integrity in favor of the tourist market, governments have experimented with a handful of regulations to strike a balance.

For example, Dallas has restricted vacation properties in particular residential neighborhoods, while cities such as San Francisco and Seattle have imposed limits on the number of properties a host can manage. Some locales have limited the number of nights a property can be rented out annually, while others, like New York and Tokyo, require hosts to reside in the rental property.

Despite regulatory challenges, the flexibility offered by platforms like Airbnb remains a compelling draw for real estate owners. Financially, hosting such platforms offers potential supplemental income without the commitment of long-term rental agreements. In 2022 alone, hosts in the United States collectively earned $22 billion by welcoming travelers into their homes. 

But what happens if plans are disrupted by regulatory mandates, resulting in the loss of this investment opportunity? 

As Airbnb continues to face tightening regulations, investors may pivot and explore alternative avenues for investment opportunities. For instance, tokenized real-world assets (RWAs) have emerged as a potentially transformative force, even capturing the attention of traditional institutional players. Tokenizing real estate, in particular, has unlocked new opportunities for prospective investors, reshaping the public’s perception and interactions with digital assets. 

FreeBnk, for example, is a fintech app founded by a group of entrepreneurs to help unite web2 and web3 banking on one platform. Part of its mission to make crypto more accessible for everyone is by allowing users to invest in fractional RWAs, enabling retail investors to access a wide range of properties with smaller capital commitments and mitigating the traditional entry barriers in real estate investing.

Instead of splurging on a new household gadget, FreeBnk can help users allocate those funds towards browsing and potentially investing in a property. The interface operates akin to Airbnb—but instead of booking a vacation, users can assess a potential investment property by its alignment with their financial objectives and then put funds toward its fractional ownership. Finally, the user will earn a rental income, with FreeBnk handling the management of the real estate properties, collecting the rent, and depositing the money directly into the user’s account.

Making real estate more accessible allows a new class of investors to diversify their portfolios. As the real estate market expands, investors from all backgrounds should benefit from long-term appreciation of tangible assets. RWAs present an opportunity to create an inclusive market where the potential for financial growth is shared and economic prosperity is driven by many participants, rather than a select few.