A veteran real estate executive who oversaw $3 billion in transactions at Cushman & Wakefield is warning investors about the high costs embedded in traditional real estate investment vehicles. Edward Nwokedi, founder and CEO of RedSwan Digital Real Estate, says that conventional REITs impose excessive fees that significantly erode investor returns—costs that many investors do not fully recognize.
Nwokedi, who spent 18 years in capital markets before moving into blockchain-based real estate tokenization, claims that REIT investors pay a combined 10-11% in fees before realizing any profit. He breaks down these costs clearly: “If you’re going to buy into a REIT right now, you’re going to probably pay a fee to enter the REIT, probably six to 7% what they call load fee. And then when you want to exit that transaction, you’re going to pay a fee to exit. So you’re spending six or 7% to enter, that takes away from your overall yield, and then you’re spending again four to 5% to exit, which takes away from your overall yield.”
This structure means investors must first recover this 10-11% cost just to break even, a significant hurdle in a market where returns are already compressed by higher interest rates and economic uncertainty. For many, these fees can be the deciding factor between making a profit or incurring a loss.
Nwokedi proposes a digital alternative: tokenizing real estate assets on blockchain networks. By removing traditional intermediaries, he says, transaction costs drop dramatically. “Digital to digital, we’re now just talking about no gatekeepers like broker dealers or lawyers involved. You’re now looking at just fees from your blockchain and transfer which are your gas fees, which are in many cases today, very efficient. You’re paying pennies instead of tens of hundreds of dollars to make a transaction.”
This approach replaces the multiple layers of fees found in traditional real estate with automated smart contracts and direct peer-to-peer transfers, reducing transaction costs to a fraction of a cent. The impact is not limited to lower fees—efficiency improves as well. Traditional real estate transactions settle on timelines of T+2 or T+3, meaning funds are tied up for two or three days. “Those two more days actually are losing interest on your behalf as a consumer,” Nwokedi notes. In contrast, blockchain transactions settle instantly (T+0), eliminating both delays and the associated opportunity costs.
The established fee structure supports billions in revenue for traditional financial firms, creating strong resistance to change. Nwokedi observes that large industry players are working to maintain control as blockchain alternatives gain traction. He suggests that as investors become more aware of the cost difference—paying 10-11% in traditional fees versus pennies on blockchain—the pressure to adopt lower-cost alternatives will increase.
For investors currently in traditional REITs, these numbers prompt a critical reassessment: are the fees justified by the service provided, or could blockchain-based platforms deliver greater net returns with far lower costs? As awareness grows, the future of real estate investing may depend on who adapts fastest to these new efficiencies.
