Everything You Need to Know About Digital Real Estate

As the world went digital during the COVID-19 pandemic, digital real estate became popular. Is it the best investment you can make in 2022?

Table of Contents

1. What Is Digital Real Estate?
2. Why Should You Invest in Digital Real Estate?
3. Risks of Investing in Digital Real Estate
4. How to Buy Digital Real Estate
5. Invest in the Metaverse With Caution
6. Bottom Line

For a long time, many pundits have predicted that the future is digital. Well, we can also say that the future is already here with us. Many people are already considering getting their piece of cake in the digital world. 

Before you can jump onto the digital trend, you may have a few questions. What is digital real estate? What are the advantages and possible downsides of investing in digital real estate? How do you even buy and sell assets digitally?

The concept may seem a bit complex, especially for newbie real estate investors; that’s why we’ve crafted this comprehensive digital real estate for beginners guide. This guide is for you if you’re looking for what to invest in 2022.

What Is Digital Real Estate?

Digital real estate refers to an online asset that you can purchase, rent, or sell to make a profit. Just like traditional real estate, where you buy land or property to rent or sell for profit, digital real estate works in the same way. 

Digital assets refer to anything that exists online and carries value. Other people call them virtual properties. Conventionally, the most popular forms of digital assets include social media accounts, domain names, or popular websites. 

For example, let’s say you own the domain name realestate.com. Such a digital asset is valuable because it makes it easy to rank on search engines, giving you online exposure. It’s also simpler and easier to remember than other complicated ones.

While many people think of valuable blogs and websites as digital assets, they’re not the only ones. Newer forms of digital assets such as the metaverse are becoming increasingly popular.  It will be our main focus today. But first, let’s look at why you should invest in digital real estate.

Why Should You Invest in Digital Real Estate?

It’s becoming more evident that buying virtual real estate can change your life. It provides various benefits over other forms of investment, including:

Portfolio Diversification

Every real estate investor knows the importance of portfolio diversification. Among other reasons, diversification helps in lowering the level of risk involved in investments.

Digital real estate offers just that. Since it’s here to stay, there’s no doubt that it’ll continue to grow and make it an excellent investment option for both seasoned and newbie real estate investors.

Great Income Potential

Digital real estate is going to become one of the biggest income sources for real estate investors. Just like other investment options, digital real estate also offers compounding returns that can multiply quickly.

For example, you can buy assets in the metaverse right now, hold them for a longer period, then sell them for tens of millions of dollars. If you’re looking for a way to make passive income, it is a great source since you can grow your wealth in the long term and eventually be financially free.

Related: Passive Income vs Active Income: Real Estate Strategies 

Great for Self-Employment

If you’ve been working full time, but you’re looking for an avenue to quit and join self-employment, digital real estate offers enough potential to sustain your dreams. You can invest in the conventional forms of digital real estate, such as a blog or ecommerce website, and slowly transition into self-employment.

Let’s do some math to make sense of the idea. Let’s assume you invest about $300 to start a website from scratch, grow the traffic, and generate revenue. If you manage to get about 12,000 views every month, you can qualify for display advertising platforms. It alone can make you about $500 a month. If you combine it with affiliate marketing, you can potentially make over $1,500 per month.

Low Barrier to Entry

When it comes to the start-up costs required to invest in digital real estate, they can be really favorable. It’s a viable option for all investors since the initial investment amount can be minimal.

For example, you can purchase and maintain a domain name for $10 annually or build a valuable website or blog for less than $100 with annual hosting. If you don’t have the desire to start a website, you can start a YouTube channel and teach your audience about real estate concepts, such as starting an Airbnb business or how to get into real estate.

Scalability

Digital assets can compound and grow in value really fast. It is mainly because you can rent or sell to virtually anyone on the internet. While starting out, the growth can be a bit sluggish, but things change once it picks up.

Risks of Investing in Digital Real Estate

While digital real estate has many benefits, there are also several drawbacks and possible risks. They include:

High Volatility

Digital real estate offers great potential but is also highly volatile. If something were to happen to your acquisition channels, your source of income would be highly compromised. 

The most common scenarios that bring volatility include changes in algorithms and new technologies. If a new algorithm is deployed, you’ll need to spend some time understanding how the new one works and how you can leverage it to get ahead. It can be frustrating for many digital asset investors.

Require Advanced Digital Technologies

While digital real estate comes with a low barrier to entry regarding the initial investment amount, the technology needed to start up may be a stumbling block to many investors. For example, investing in the metaverse requires you to invest in newer and advanced technologies, such as haptics, VR headphones, blockchain, and many other advanced requirements.

Also, a fast internet connection is one of the major requirements of investing in the metaverse. A majority of the people around the world can’t access high-speed internet. It means they can’t take advantage of the maximum potential the metaverse offers.

In addition, many people can’t access the advanced communication gadgets needed to enter the metaverse.

Skills Required

Many people want to invest in digital real estate passively. If you won’t be investing through a third party, you need to get some skills, such as blockchain technology, to help you generate income and grow your wealth. It can leave many people on the sidelines.

Related: How Blockchain Technology in Real Estate Is Changing the Industry

How to Buy Digital Real Estate

There are many ways of investing in digital assets, such as building and purchasing websites, buying high-value domain names, and investing in cryptocurrency. However, since our main focus is on the metaverse, we’ll be looking at how to buy digital real estate metaverse.

Many real estate investors already maintain some form of exposure to the metaverse. It is because many companies in the US are already actively participating or looking into getting into the metaverse.

Luckily, metaverse investments are democratic since anyone can buy digital assets without any minimum investment threshold. Also, unlike traditional real estate, there are no geographical limitations. It is an excellent opportunity for investors living in areas with capital markets of their own or with no mature stocks.

Here are some options if you’re looking for how to join the metaverse.

Purchase Metaverse Crypto

Investing in metaverse crypto is easily the most straightforward way of investing in the metaverse. You only need your digital wallet to hold your metaverse crypto and the ability to exchange your coins with other investors.

Before investing in metaverse crypto, make sure you understand your country’s laws and regulations. Different countries impose different laws governing the said trade. For example, some have identity verifications in place. However, the barrier to entry is low, and the process is relatively straightforward.

The best thing about the said option is the excellent growth potential. As the metaverse platform grows, so do the values of the respective tokens you own.

Buy Land in the Metaverse

Investing in land in the metaverse is another popular way of buying digital currency. Its difficulty level is easy to moderate, and it’s straightforward since it shares the same buying requirements as buying metaverse crypto.

Now, you may be wondering how to buy land in the metaverse? Here’s how it goes:

Once you’ve set up your digital wallet, you can select an emerging metaverse platform, and survey its layout and the available parcels of land. Once you’ve identified a parcel you desire, simply make a purchase.

Though the process is rather straightforward, it involves a level of risk. The value of metaverse land depends on a number of unpredictable factors, like the pace at which other adjacent parcels develop.

However, such a type of digital real estate investing is growing and experts believe the market could hit $1 billion by the end of 2022.

Rent or Purchase Prefabricated Metaverse Properties

Instead of purchasing metaverse land, you can buy prefabricated structures in the metaverse and put them to use. For example, let’s assume you’re a real estate agent in the real world. You can buy a metaverse storefront and use it to showcase 3D digital replicas of the properties you’re selling in the real world.

However, the barrier to entry and difficulty level is quite high. The minimum investment threshold is high, and you must buy a considerably large space to generate actual value in the metaverse.

Buy Metaverse Stocks

Purchasing metaverse stocks is one of the easiest options for investing in the metaverse since it doesn’t require you to own a digital wallet or handle cryptocurrency. On the flip side, it’s a bit difficult since metaverse stocks are basically meant for serious investors.

With cryptocurrency, the value fluctuates and you can make a good profit within a short time. With metaverse stocks, the shares operate just like real-world companies and can be traded on a traditional stock exchange.

Purchase, Sell, or Create NFTs

In case you’re not already familiar, non-fungible tokens (NFTs) are cryptographic tokens that depict a particularly unique product. You can think of it as a digital certificate to represent ownership. Presently, NFTs are commonly used to sell collectibles and works of art.

You can create 3D objects and list them on any marketplaces on the metaverse. The process is a bit technical with a high difficulty level. You can also take a simpler approach by buying NFTs and selling them for a profit.

Related: Should Real Estate Investors Care About the Metaverse?

Invest in the Metaverse With Caution

We’ve already looked at how to get into the metaverse. We’ve seen that buying digital real estate offers a lot of potential and it’s evident why many investors are getting into the said venture. However, the risks can’t be ignored. Since metaverse digital real estate is still an evolving concept, the risks can be substantial.

How long will the metaverse remain shiny? Is it a sustainable investment? How much would you be willing to lose in case the market pops? These are some of the questions you should ask yourself when investing in digital real estate.

While the traditional real estate market may pop, your investment property remains intact. It may hold less value than land in the metaverse, but it still exists. Your metaverse investment can disappear overnight.

To spread your risk, invest in tangible real estate, too. Make sure you use Mashvisor’s tools to invest in profitable properties.

Book your demo today to see how our tools can help you.

Use Mashvisor for Your Investment

Our Property Finder will help you find investment properties in any housing market in the US in just a matter of minutes. The best thing about the tool is that it comes with a range of filters that will enable you to find properties that match your criteria and requirements. 

The filters include:

• Property Location
• Selling Price
• Rental Strategy (Traditional or Airbnb)
• Property Type (Single Family Residential, Multi Family, Condos/Coop, Others)
• Number of Bedrooms and Bathrooms

Once you’ve set up your search criteria, the tool will find property listings that fit your requirements. The search results are displayed based on the potential return on investment. The properties with the highest return on investment are ranked first.

Another special thing about our investment property finder is that you can search for properties in more than one housing market. It makes Mashvisor’s Property Finder tool the best one to use especially if you’re not sure where to start.

Bottom Line

Investing in digital real estate is becoming popular. The trend isn’t going to slow down any time soon. With people becoming more interested in owning digital assets, the metaverse is slowly gaining acceptance among investors. However, there are some risks involved as the metaverse is highly volatile.

It is why we recommend you spread your risk by purchasing tangible properties. Use Mashvisor’s tools to find profitable properties and maximize your real estate income potential.

Sign up to Mashvisor today and access your 7-day free trial, followed by 15% off from your quarterly or annual subscription.