NFT TRANSACTIONS - THE ULTIMATE GUIDE

NFT Guide

We all see a lot of buzz words around crypto, crypto currency, block chain, and non-fungible tokens, or NFT’s. When you see an NFT in most circles, what they are buying and selling are digital assets like a digital drawing, a digital picture, a digital song, etc. What we don’t see a lot about are physical things being purchased and sold as an NFT.

What Is An NFT?

A Non-fungible token or an NFT, is a token issued on a blockchain, similar to a cryptocurrency. One of the most popular crytpocurrencies is BitCoin. But, unlike a cryptocurrency, they are not really fungible. Each token is unique, and they are not identical and interchangeable with each other. What this means is that they can be used to identify a unique item, either real world or digital.

How Are NFTs Used?

The most widely use case for NFTs are mainly used to sell digital art. Digital art is extremely easy to copy, so it is difficult to tell the difference between the original and a copy. Due to this reason, digital art has not had a collectable value to make it a good investment opportunity. With the invention of NFTs, digital art can now be attached to a unique number stored on the blockchain so that an original can be easily identified, making it more valuable. The NFT can be sold to pass on ownership of the digital collectable, and ownership and originality can be verified and validated.

How NFTs Could Change Real Estate and Business Investment

Non-fungible tokens, or NFTs, are not just for digital art, and music. They have started to show up in the real estate, and business investment opportunities. Buying a home, a piece of property, a business, has in the past always been a cash or bank loan type of transaction. As it gets easier, and more understandable for the rest of us instead of just the elite, the blockchain and cryptocurrency technologies are starting to move into other types of transactions. The real estate, property, and business markets are no exception. NFT’s are a buzz word in many financial circles, they are exciting, interesting, but to some people still a little scary.

NFTs for Real Estate

You can’t just take a house, or building, and convert it into a digital asset so that you can mint it into an NFT. Instead the property rights are the objects that are made into the NFT. The property rights are basically converted into contracts that can be digitized and minted into an NFT. If the real estate is recorded in blockchain (minted into an NFT), then this NFT could enter the NFT marketplace, and anyone can buy it for cryptocurrency from their crytpo wallet. Then theoretically when the NFT is purchased by someone, in the end, they should own the real property in the real world. Though there is still some work that needs to be put into the legal paperwork to ensure that what you are buying, you are receiving. This is a fairly new fad for buying real estate and buying businesses, so there still needs to be some standards built out to make the process usable for everyone, and easy to use and understand. The best part of NFT transactions is that they are quick an easy, once you sign up for your profile on the marketplace, and your wallet funded and ready to go. Each country, state, and locality may have it’s own forms of regulations, restrictions, and taxation rules that you should speak to an expert to make sure everything is done legally and properly.

NFTs For Property or Business Ownership

Even though NFTs are mainly used for buying digital assets, they can also be used to buy physical assets like Real Estate, properties, and businesses. An NFT could be used for other phsyical assets like a car, or just about anything. An NFT can be used to represent ownership of any digital item, physical item, or other things. An NFT can also be used to represent fractional ownership of something as well, whether it be digital or physical. NFTs for Real Estate and Buying Businesses are turning more into a similar of stock shares, where it’s the value of the asset is purchased as an NFT as either a full sole investment, or a fractional ownership. Revenue Sharing is another type of business investment opportunity that is perfect for NFT transactions.

Using an NFT For Fractional Property or Business Ownership

The perfect example of fractional ownership using NFTs is that a homeowner could sell part of their property to a large number of small investors by issuing tokens on the blockchain to represent ownership. These investors own and possess these tokens, and they would receive a rental income for doing so, or they would potentially make a profit split on capital appreciation when the physical property is sold, or they could earn both, depending on how the contract is written up for the NFTs.

Using an NFT For Property Investment

NFTs can also open up the world of property investment. They can allow people to buy and sell fractional ownership in rental properties. This opens up the world of property investing to many more people and creates better options for those that need to unlock equity without borrowing, or selling other investments.

Using an NFT For Buying Fractional Ownership of A Business

You can also use an NFT for buying fractional ownership of a business. This could be for absentee ownership where you are basically buying a portion of the profits of a business, where the business owner themselves manage the business on the day to day. That’s really what we are interested in, when we invest in something, is the profits. This is all determined in how the contracts and documents are all written up in the purchasing agreements and documentation. This is where it’s important to have a lawyer, maybe an accounant, a business broker, and other experts that can be a part of the deal so that you know exactly what you are buying and what you are getting out of it. Buying a share of a business’s profit, and being absentee, where you get a check each month or once per year for your percentage of the profit for a set period of time is a business investment opportunity where you just sit back and collect your checks. Once you feel an investment is successful, and you like this type of investment, it’s time to rinse and repeat and find another investment opportunity, and so on and so forth as you build your wealth.

Working with A Business Broker

Business brokers are a great resource to find the perfect business. They regulary research the business market, so they know what’s available, what questions to ask, and how to ask those questions so that you learn what you need to from their response. You will want to use a professional who understands the market and may be able to save you both time and money. If you would like to discuss any of this further or the types of services that are offered, please contact Michelle Mendenhall as she is a member of the IBBA (International Business Brokers Association), a Certified Business Broker, and a Commercial Real Estate Specialist. Michelle Mendenhall Professional Business Broker, IBBA Commercial Real Estate Sales & Leasing Associate Phone: 916.459.7526 DRE #02116152 LocalGirlGoesCommercial.com michelle.mendenhall@localgirlgoescommercial.com michelle.mendenhall@expcommercial.com

Using NFTs for A Home Mortgage

Ownership is not the only type of NFT opportunity available, in the future they could also be used to borrow money to buy a property, a business, an asset, or a thing. Wouldn’t it be amazing to have NFTs used to be backed by ownership of your property. This would open up so many different types of investment opportunities that would let individual investors buy an NFT that would represent a small part of the debt. These investors, or holders of the NFTs, would then receive repayments via the blockchain in proportion to how much they lent out for the loan or mortgage.

What Are The Disadvantages of NFTs

NFTs are digital, they are a newer technology for most people. Any digital technology, whether online or offline, carries with it a new level of potential risk. For that reason, it is always important to look at the advantages and the disadvantages, or risks of using this technology. Though NFTs could offer a solution to unlocking capital in a property, who has the legal right to control the property? A question you would want the answer to is whether an NFT token holder could force someone to sell his or her home, business, or property, if the holder owned enough of the tokens. If it does, depending on the legal paperwork wording, this could be a risk for the individuals living in the property or running the property on the day to day. But, if the property isn’t actually controlled by the token holders, could the residents remain in the property forever? Could that right be transferred to someone else in a will. If so, this would prevent the investors from ever benefiting from the capital appreciation. This is why it is important to have experts review and explain these types of details, or add wording to ensure you are getting exactly what you want out of the deal.

NFTs Property & Business Investment Is Better Than Crowdfunding

Crowdfunding is a great way to grow capital. But it also comes with a level of risk. Crowdfunding sites have mixed success, but the risk is that there are several of these sites that have closed down causing issues for the investors. With the right legal documents in place, the NFT investment opportunities may be a better option.

What Happens to An NFT If A Mortgage Defaults?

Using an NFT for a mortgage could come with their own set of risks. As an example, what if a borrower defaults on the debt if they can’t make their payments? Who can collect on the debt? If there are several NFT holders for the debt, would they be able to collect individually? This type of information should be included in the legal documents of the transaction, so that there are no hidden surprises if these types of situations pop up. This is why it is so important to have experts in your corner overseeing the documentation and legal paperwork to ensure you are fully informed and setup for success.

NFTs Future Real Estate and Business Opportunities

NFT’s for digital real estate, and businesses, as well as physical real estate, and businesses are a buzz word. There is a lot of conversations happening at every level as this trend starts to take hold in the market. There are still a number of issues that will be worked through as each new transaction begins to take shape. The processes and legal documentation will continue to improve as more widespread use of NFTs for all sorts of transactions continue to occur. NFTs have such an amazing opportunity for growth, and to simplify transactions, as well as to speed up the transactions. It is such an amazing and exciting time to be an investor.

How to Create, Buy, and Sell NFTs

NFT Trading Step One - Get a Crypto Wallet

To buy and sell NFTs you have to have a crypto wallet where you can securely store you crytpocurrency. Once you establish your crypto wallet, you can then add funds to your wallet to use to buy NFTs. You will need to decide on which NFT marketplace you will use, and which cryptocurrency you will use, to identify which crypto wallets will work for the marketplace with that particular type of cryptocurrency. Make sure your wallet is funded by buying some cryptocurrency like Bitcoin, or Ethereum. Selling an NFT (recording that a transaction has taken place between two parties on a blockchain) requires the network to do some computing. That transaction will cost some money, which is known as a "gas fee." You can then transfer your cryptocurrency from your crypto wallet to your NFT marketplace account. If you are using an NFT Marketplace like OpenSea, you can purchase cryptocurrency directly from your marketplace profile by setting up a payment method such as a credit card.

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NFT Trading Step Two - Join an NFT Marketplace

To start creating, selling, or buying NFTs, you need to join an NFT Marketplace. Once you join an NFT Marketplace, you can connect your crytpo wallet to your NFT Marketplace. Join an NFT marketplace, you will take care of step one and step two at the same time and are ready for step three where you can now mint an NFT.

NFT Trading Step Three - Make An NFT - Mint An NFT

The third step for NFT trading is to learn how to make an NFT. To create an NFT or mint an NFT you start the process on your NFT marketplace. To create your first NFT, from the home page of your NFT marketplace, click on the "Create" button in the upper right corner of the screen. After that you willl be prompted to upload a digital file and give your NFT a name. You can also add additional details in the various fields such as a description for your work or item, an external link to more info (like a link to your website). Then you will choose which blockchain to base the NFT on (like Ethereum or the Ethereum-based protocol Polygon, etc. In many instances you can also select how much you will be paid in royalties if your NFT gets sold again at a later date. A standard royalty payment is five to ten percent of the secondary sales price. Now you will select “Complete” to complete the action. That’s all there is to it, you have now minted your first NFT.

NFT Trading Step Four - List Your NFT For Sale

Now that you have minted your first NFT you are ready to sell it on the open market on the NFT Marketplace. This process is very simple. Click on the “Sell” button in the upper right corner from within your NFTs description page. Then you will specify the details for your sale, where you can pick the type of sale by choosing a fixed price or a timed auction. Some NFT marketplace sites will provide the option to add the secondary sale royalty prices in this stage, so that you will make a commission when the NFT is sold again. It is usually in this stage where you will see the service fee charge for the listing, which is typically around 2.5% of the NFT selling price. The marketplace will calculate the gas fees based on the cryptocurrency network’s activity level at the time you place your listing, and these fees will vary throughout the day. Once the gas fees are paid, which are typically $40 to $1000) you will approve of the final terms, and your NFT will now be listed on the marketplace as available to purchase. That’s all there is to it, very simple.

NFT Trading Step Five - Manage Your NFT Business

Now that you have your first NFT out there on the market to sell, if you plan on creating and selling more NFTs it’s a good idea to work on growing your business, and building your brand. It’s a good idea to start engaging with your potential buyers. It’s also a good time to start thinking about building more NFTs. NFTs can also be moved around if you feel the need. An NFTs created on one marketplace can be transferred and sold on a different one, but there may be a fee associated with doing this. Just like an in person business, an online business, even for NFTs, interacting with potential customers, and doing some advertising on social media to bring them over to the NFT marketplace to buy your NFTs is a good idea, especially if you plan to grow the business and build your wealth. It’s also possible to buy an NFT business that is already doing all the things, and making money, to jump right into a profitable business.

NFT Trading - Making Money

You wouldn’t be on this page if you haven’t heard the buzz words around NFTs, and how many people are out there making big money on some pretty simple things. Not everyone will make money doing this type of work, NFTs are fairly new and a quick growing trend, so the NFT marketplace is getting crowded. The key is to create something unique, and that people are interested in. You have to stand out, you have to spread the word, and you have to build a reputation that will set you apart from the rest. There is no guarantee that anyone will ever buy your NFTs, but with hard work, an active social media profile and other online resources, there is a ton of money to be made that is just waiting for you. Creating an NFT out of your assets is the easy part, creating assets that people are looking to buy is the hard part. Blockchain technologies have given us a whole new world to buy and sell products, and I am excited to be a part of this amazing new online world of making money.

NFT Creativity Services

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News Article for first home sold as an NFT

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