Solving The Real Estate Liquidity Problem: The Parvis Secondary Market
October 6, 2022

Solving The Real Estate Liquidity Problem: The Parvis Secondary Market

Real estate has traditionally been a highly illiquid investment due to its limited pool of buyers, and the considerable time and effort required to complete transactions.

This lack of liquidity has unfortunately discouraged investors from reaping the benefits of strong, steady returns and lower volatility that come with investing in private real estate. 

Luckily times are changing. Through innovation and technology, solutions like the Parvis Secondary Market have become far more prevalent, giving real estate investors plenty of liquidity opportunities which have historically been few and far between.

In this article, we'll discuss what secondary real estate markets are and how the Parvis Secondary Market is modernizing real estate investing – solving its liquidity problem, enabling transparency, and allowing investors to more easily diversify their portfolio.

Keep reading to learn about:

  • The difference between primary markets and secondary markets
  • The Parvis Secondary Market and how it enables liquidity, transparency, and diversification

Primary Markets vs. Secondary markets

If you're considering investing in real estate, then it’s essential you have an understanding of the primary and secondary markets. Below we outline the differences in these two markets and how they affect real estate liquidity.

Primary Market

The primary market refers to when a real estate investment is first made available to potential investors.  Investors directly invest capital in order to fund the project, and once fully funded, no more commitments are accepted.

Real estate investments made in the primary market generally require you to commit to holding on to the real estate asset for a specified period of time. This is called the holding period, and can range anywhere from one to ten years, depending on the investment strategy

Therein lies the inherent liquidity problem that real estate investment faces. The notion of being locked in for up to ten years may turn potential investors off from an otherwise strong investment.

Secondary Market

In real estate, the term secondary market is sometimes used to describe a smaller geographical market. In this case, however, what we're talking about is the secondary investment market. 

A secondary market is where new investors can buy out the stake of an active real estate project/development from an existing investor. The desire for secondary markets has risen significantly due to their ability to improve the liquidity of real estate investments.

The Parvis Secondary Market

The vision of the Parvis Secondary Market is driven by the understanding that no matter when you invest or what you invest in, modern investment strategies need flexibility to potentially liquidate. 

As an accredited investor with Parvis, you receive a wide range of benefits and get access to high-quality institutional-level real estate investment opportunities, but where Parvis really differentiates itself is with the Parvis Secondary Market. With it, investors will have the ability to efficiently resell their tokenized real estate assets with simple and seamless online transactions using blockchain technology and smart contracts.

The Parvis Secondary Market benefits accredited investors by:

  • Enabling liquidity
  • Providing transparency with transactions
  • Providing more ways to diversify your investment portfolio

Enabling Liquidity

For many investors, liquidity is an important factor to take into account when deciding whether or not to move forward with an investment opportunity. When your assets are tied up in illiquid investments converting them to cash at market value can be difficult, leaving you cash poor. This could result in missed investment opportunities or the inability to cover unexpected expenses that pop up.

As we discussed earlier, one of the most significant challenges that real estate investing faces is its liquidity issue. Not with Parvis. The blockchain-backed Parvis Secondary Market gives investors that have made a direct investment into a real estate project the ability to sell their investment to one of the many other accredited investors on the Parvis platform. Furthermore, the platform's real estate assets are tokenized, making buying and selling them on the Parvis Secondary market as simple as a stock transaction.

Transparency

When investing in public markets, investors receive a plethora of data, including company financials, third-party data, and market data. In comparison, the data available for investors in private markets is typically lacking. This lack of information can lead to investors avoiding an investment altogether, or real estate assets being discounted to make up for the buyer's uncertainty in their purchase.

The Parvis Secondary Market strives to solve this problem, bringing much-needed transparency to the real estate investing process. Buyers and sellers alike receive up-to-date information about the real estate asset’s value, history, progress of the project, and more. With all this information available, investors can enter into investments and transactions with confidence.

Diversification

Real estate investments have historically hedged against inflation and shown a low correlation to returns in the stock market. This makes adding them a great way to diversify a stock-filled portfolio. 

As a Parvis investor, you can take your real estate investments to the next level and diversify your portfolio with high-quality institutional-level real estate assets usually unavailable to regular investors.

Plus, the Parvis Secondary Market enables additional diversification opportunities. It gives investors the ability to acquire or exit positions to better align with their liquidity needs, desired investment horizon, and risk profile.

For example, investors looking to take on more risk for the potential of a higher return can look to enter into real estate investment opportunities in the ideation phase with longer holding periods and more uncertainty as an early investor. 

On the other hand, if you are an investor looking to diversify your portfolio with a lower-risk investment, the Parvis Secondary Market will provide opportunities for you to invest in real estate projects at a later stage in development. With this type of investment, the project plans have already been established and are more likely to produce lower but more stable returns.

As a result, investors can diversify into different markets, property types, risk levels, and more, with complete control.

Become an investor with Parvis

The Parvis Secondary Market is slated to launch by the end of year, aligning with our onboarding of several high-quality, institutional-level real estate investment offers. Investors in our projects will be able to take advantage of our Secondary Market to diversify, meet liquidity needs, and buy and sell positions with greater transparency.

Sign up today to gain access to premium real estate investment opportunities.