Real Estate Tokenization Explained: How Blockchain Is Changing Property Investing

Dan Thompson (00:00)

Well, tokenization is such a unique word still out there. It’s not like people understand it. And the easiest way to explain it is if you took shares of a company and you converted them to tokens and then you put them on a blockchain to where people can custody themselves, they can move them around the world, they can trade them. That’s really all tokenization does is it just takes ownership. It can be a real world asset like, an apartment building.

or it could be shares of a stock or shares of a company. It could be a capital raising fund and tokenization just breaks up the ownership into small fractional pieces called tokens.

Issa Hanna (02:09)

Welcome back to another episode of the Real Estate Pros show. I’m your host, Issa Hanna and today I have Dan Thompson here to share his knowledge. Dan, welcome to the show.

Dan Thompson (02:16)

thank you. Good to be here.

Issa Hanna (02:18)

super excited to have you. You are in multiple facets of the real estate business. And then you’re recently kind of leveraging out of the real estate business and getting into something new. but for our viewers at home, can you kind of break down what facets of the real estate business you’re in and then what you’re focused on nowadays.

Dan Thompson (02:33)

Yeah, well, maybe just to give you a little history, I started 40 years ago as a stockbroker. And as those kind of went the way of the internet, I had to find other ways to produce revenue. And I found that if I used life insurance as a catalyst or a capital account for other investments, I kind of got to dual purpose those funds. And

One of the first things they did is they started lending money to a builder. And he got, really to the point where he’s saying, Dan, why are you loaning me the money? Why don’t you just go start a building company and I’ll kind of work for you. So that’s what we did is we started a home building company and he kind of ran it for a while. Now my one of my sons runs it. But after that, I had been

teaching people how leverage life insurance into all sorts of assets. And I got a call from my now current partner. We said that he was interested in building a student housing complex at Texas A&M and we wondered if I wanted to do with him and looked over the numbers, looked great. So we went down that path and built some student housing there.

In the meantime, there were some commercial opportunities that came up and in the where I live in in Boise, Idaho. So I got involved in those and and over the years, particularly with my partner, because he had acquired a lot of his capital from Bitcoin mining. We started talking about Bitcoin and all that stuff. And what we ended up doing is we sounds kind of funny, but

We had our student housing company literally invest in a mining company that we created. we had our student housing mining Bitcoin every day. So we were leveraging the real estate on top of Bitcoin and it was awesome. And then we realized, gosh, what? We could do this for other people. So we started building mining companies for some of my

my clients who were also doing leverage life insurance and in real estate

did that for a while and realized we could do it better together. So we pulled all those mining companies together under one roof. We call it Yieldz, Yieldz with a Z at the end. course, you can’t spell anything, normal these days, you got have a little twist. So we’re Yieldz with a Z. And we have our mining operation.

We have the leverage life insurance and then we teach people how to literally do anything from real estate to oil and gas, equipment leasing, all kinds of tax mitigation. And recently it’s got into the whole tokenization phase, which I don’t know if you want to go there right now, but you’re probably seeing it. It’s happening like crazy. You got BlackRock, Fidelity,

JPMorgan, all these companies tokenizing all sorts of assets. My understanding is there’s about 17 trillion in tokenization right now. So we’re gonna tokenize our student housing complex, tokenize commercial buildings, apartments, multifamily. All those are really good assets to tokenize. Then they’re just easier to transfer and move. And if you’re a capital raiser,

much easier to do it through tokenization than almost any other way. So this thing’s got a long way since my stock broker days back in 1986.

Issa Hanna (06:19)

Wow. I and what? The stockbroker background, I don’t doubt you’ve been able to propel yourself through A through the real estate game, then the building or the building first. stockbrokers have a type of tenacity that that a lot of other professionals don’t have. And you guys do really well when you guys jump into to other facets of in the professional world. So I don’t doubt that at all. And then the building background,

The best way to learn real estate, the best way to learn expenses and how much things cost in real estate and investing is is to build your own house so or to build your own properties. you you get a firsthand look at what things cost, how to save money, how to save time, time versus money, what’s more valuable. So amazing, amazing background. And now you’re ahead of the game again and you’re on the tokenization. So it’s my investors at home.

Tokenization has become huge. just like Dan was saying. It’s something that is the future. So all my old school real estate investors who who got the mailbox money and the paid-off mortgages and and whatever they, and you’re just you’re happy with the money coming in, look into that because it’s definitely a great way to leverage some of your assets, some of your money into even more. amazing, amazing, Dan. I wanted to get a little bit of a background on you though.

Stockbroker, you were in the stocks in eighty six. What made you leave the stock market and and jump into the real estate and building business?

Dan Thompson (07:41)

The big impetus was the 90s dot com boom and bust. Early 90s. we were just making money hand over fist. I recommend just about any high tech internet company and we were doubling our money. And then all of a sudden that changed. And it was a wake up call because I was still early enough in my career not recognize that.

Crashes are not only real, but they can be devastating. And I saw a lot of my clients who a little older. Now all of sudden, retirement that was two or three years away pushed to 10, 12, 15 years away because it was so easy to rely those internet stocks. So I just spent the early part of or the late part of the 90s and early 2000s what can you do?

to be safe, but yet make money. How can you get some tax advantages? And after just looking at everything and dissecting everything, I found that if you just pack a bunch of money into a life insurance policy, and then you can use it as a dual purpose vehicle, you can leverage And then that’s when I said, well, what would I want to leverage it into? Where do people make money? And obviously some of the wealthiest people in the world did it through real estate.

So I thought, well, maybe I’ll get my feet wet by just working with a builder. And that’s when I started lending him the money. And then it just kind of exploded from there.

Issa Hanna (08:55)

Definitely. real estate business or business in general. you can vertically integrate and vertically scale multiple branches of business off of one successful business. but I love that you’re you’re getting into the tokenization. And a cool thing you told me earlier was you’re even tokenizing Formula One. So can you tell us a little bit more about how you got into that? And it’s it’s just very cool that.

You would be into Formula One as well.

Dan Thompson (10:02)

Well, tokenization is such a unique word still out there. It’s not like people understand it. And the easiest way to explain it is if you took shares of a company and you converted them to tokens and then you put them on a blockchain to where people can custody themselves, they can move them around the world, they can trade them. really all tokenization does is just takes ownership. It can be a real world asset like, an apartment building.

or it could be shares of a stock or shares of a company. It could be a capital raising fund and tokenization just breaks up the ownership into small fractional pieces called tokens.

Well, we wanted to obviously do this for other companies, but then we thought, how could we demonstrate this? What could demonstrate to the world how to do this? And so we thought,

Well, we just happened to be right around the Formula One races in Las Vegas. And we’re like, what? What if we fractionalize the ownership of a Formula One racing team? And so that put us on our, on our path. We haven’t quite got to the team yet, but what we’ve done is we’re starting two racing teams ourselves, that will be tokenized. And then we even have memberships to our club that are

essentially token memberships. And so you get it, you get the code of races, you get all the VIP fun stuff. And so you can join us as a, as a member and participate in all this stuff. that’s how we kind of got into the Formula One. course, I’ve got a little bit of a car problem myself. So I’ve always liked cars and fast cars. And so it was a natural, a natural move to get into Formula One.

Issa Hanna (11:35)

Definitely very classy racing organization. I always see the heavy hitters in the Formula One and the and the the top sponsors. So what an amazing way to get the word out there to the to the world and then you’re starting your own team. So amazing, amazing. you gonna be the driver or are we hiring a driver?

Dan Thompson (11:55)

I wish I could be the driver. the other circuits, the GT3 circuits, hopefully we’re in the process of doing a couple of McLarens. And so I’ll definitely drive those. I happen to have a McLaren anyway, so I drive it almost every day, but it’s not tokenized.

Issa Hanna (12:14)

Definitely. I can’t wait for for that to come out. you can buy a fraction in your team and and and or you could buy a token in your team and and and you you’ve got stock basically in in the newest, hottest Formula One team and started by a car guy, started by a guy who literally has been in so many different mo professions in the world that he has a a different kind of knowledge and a different kind of

confidence that that that projects through the screen and you don’t see every day. So I don’t doubt your your goals, you’re gonna crush them. I want to kind of ask you now something I ask all my guys, the five-year plan. In five years I look you up then where am I gonna see your tokenization? Where am I gonna see, where am I gonna see you at?

Dan Thompson (12:56)

Well, hopefully, maybe you don’t see me as much as you see our platform. And our platform is basically our own app on our own wallet that we designed. You just open up your phone, go into the app and you’ll see all the companies that we’ve tokenized. We’re starting to have discussions with even tokenizing athletes. So let me back up and tell you a little bit about how we tokenize, because I think this is critical.

So let’s just take a business. Let’s just since we’re talking real estate, let’s just talk about a real estate fund. And in the fund, you have you have key you have key employees, key execs, the founder, the visionary, the guys who make the deals. All those people are critical for that capital to to be used wisely. Right. And to grow the fund. So what we do before we tokenize a company

We do what we call ensure the driver or protect the driver. Think about it in an F1 terms. When an F1 team comes together they start to build the car, the first and foremost thing is they got to protect the driver. mean, that cockpit carbon fiber, the harness, the halo helmet, the suit. I everything is first and foremost. Let’s protect the driver because without the driver, just a pile of meta.

Well, we think of every business in the same way. We’ve got to protect the driver. The best way to protect the driver for an investor’s purpose is using life insurance. So we’ll go into a company who wants to tokenize and maybe they’ve got five critical key people that without them, something were to happen to them. Who knows if the fund might fail, the real estate might fail, the

business itself. So we protect the driver. We protect the investors by putting policies on those key people first. So now if one of those key people were pass unexpectedly, there’s capital there to keep the company going and even capital that could potentially just pay the investors back. And you shut down the business. mean, you hope that doesn’t happen. But

It’s critical for us because I will not invest in a company that hasn’t protected their drivers. why would I take that risk if one of them? And by the way, this just happened recently to us. was working with a company. have 18 businesses around the country. We were just putting all these policies in place when one of the businesses in the east, the the main guy had a heart attack and died.

And here they are. Now they’re scrambling like crazy. How’s this particular franchise going to keep going? What happens to his spouse, kids, all that stuff? just a mess. And had we been a couple of months early, we could have protected all that from from happening. So I personally and and people who really once they understand this, they won’t invest in companies that haven’t protected the driver.

Now, the nice thing about the way we build these policies it really doesn’t cost them anything. You throw the money into a policy for a few weeks, sometimes even a few days, it’s accessible to you. Now, one of the things that we do that’s very unique is if we are a believer in your company and we tokenize you, we ensure you, we also turn around and invest in So.

We become an investor in the same companies that we believe in and tokenize in. But again, we also know they’re protected. So we know we’re going to get our capital back at some point, no matter what happens to this business, even if it were to fail. We know that at some point we’re going to get our our money back. So you kind of have to see this overall picture to understand that not only do we tokenize, but we invest and we do that because we’ve we’ve protected the tribe.

Issa Hanna (16:22)

I love I love that phrase. Protect the driver. real estate investors who watch this show, we are the safest kind of investors. We don’t like to take risks with our money. This avenue right here, a safe way to invest your money, a safe avenue to travel. if you if you don’t want to risk those, that capital, we’re not gonna go open a restaurant. it’s too late for us. we like to see what we can get.

We like to know numbers, so it’s definitely an easy way to transition and not have all your eggs in one basket, because you need diversity in the portfolio. So great way to diversify. And now, if my investors at home wanted to get a hold of you and wanted to reach you w and get involved with this, where could they do that at?

Dan Thompson (17:03)

Best way is just through my email. I’m Dan at yields.com. Excuse me. I always want to say dot com. We’re actually a dot net yields with a Z dot net. Dan@yieldz.net. Yeah, feel free to reach out and ask any questions. And if your company is big enough and looking to tokenize and want to or you’re looking to raise capital, all those things we are really good at helping companies get to those next levels.

And yeah, happy to help any way I

Issa Hanna (17:29)

So guys, make sure you check out dan@yieldsz.net. because like I said, very knowledgeable man, can definitely take your money and make you more in a safe way, which is what us real estate investors love to hear. I want to close this out, Dan, with a little advice for for my younger guys, right? Because any professional business depends on growing your network, depends on business relationships. So if you had to give

a young guy, one piece of advice on where to start establishing these business relationships, what would you tell him?

Dan Thompson (18:00)

it’s funny, I just got asked this from a 14 year old kid. I drove up in my car. He was brave enough to come over, ask me what I did, what he should do. obviously, I don’t know, anything about where he wants to go in college and all his desires. But I said best thing I think you could do right now is learn AI. I would if I was a young guy, would spend

hours learning all the different AIs out there. There’s some really good courses that are just they’re cheap. They’ll show you 15 different AIs because I don’t care what you do in the future, whether you’re a city planner, you’re an investor, you want to raise capital for real estate. It will get easier, faster, better, more efficient if you can work with AI at the same time. And I know sounds like

Dan, we didn’t expect that answer, but I would definitely learn AI.

Issa Hanna (18:52)

I love that ad answer. I love that advice. I just read an article about how AI is gonna make more millionaires in the first ten years than the internet did in the first twenty. So definitely on the right track. You’re a visionary. you’ve been able to jump into multiple different businesses and be successful. So why would we doubt that, guys? at home, AI, learn it, go get certified.

Like Dan said, there’s tons of courses, they’re not that expensive. And if you’re ahead of the curve on AI, guess what? You’re gonna be the first to start making money off of it. So Dan, I wanna thank you so much for coming on and bringing so much knowledge to our viewers. was a true honor to have you on the show.

Dan Thompson (19:28)

this has been fun. Thanks for having me. Appreciate it.

Issa Hanna (19:31)

Appreciate you and to my viewers at home. If you enjoyed my conversation with Dan and want to see more like it, make sure to hit like and subscribe. I talk to people every day that can bring us different knowledge on every facet of the real estate business. Until next time, the Real Estate Pros are out.