Digital Real Estate – Everything You Need To Know 2024
There isn’t much difference between physical real estate and digital real estate. The fact is, they are very similar in many aspects. But unless you are already investing in these assets, you’re probably thinking digital real estate is the silliest thing you can invest your money in.
If you are of this opinion, then you’re missing out on one of the greatest ways savvy investors have been using to make unprecedented returns on their investments in the 21st century.
Therefore, in this article, you will learn everything there is to know about investing in digital real estate. We will start with What is digital real estate, then talk about how it is related to the metaverse, you will get the answer to the question, “is digital real estate legit?”. The article will also go into how to start digital real estate investing, the pros, and cons of digital real estate for beginners, and lastly, you will get “Fast Nuggets” to implement now.
Let’s dive into it without any delay.
First, let’s talk about “what is digital real estate?”
What is digital real estate?
In order not to get too technical, digital real estates are virtual assets that people can own and control. Like physical real estate, you can own, rent, and sell these assets to make money. And if maintained, they can also appreciate physical real estate.
Over the years, these assets have taken many forms. In the era of web 1.0 and web 2.0, these assets took the form of email lists, websites, social media accounts, online marketplaces, blogs, online directories, mobile apps, and so on,
But with the gradual evolution of the web, as we know it from web 2.0 into web 3.0, the idea of digital real estate has also evolved.
Now, digital real estate includes new virtual assets like Non-Fungible Tokens (NFTs) and Virtual Land on Metaverse. Some people even consider cryptocurrencies like Bitcoin, and Ethereum as digital real estate.
To understand these new forms of digital real estate, there is a need to first know what metaverse means and how it is related to digital real estate.
What is metaverse, and how is it related to these assets?
Metaverse is a virtual immersive digital world built on the internet and other technology. Users on the metaverse can interact with the computer-generated environment as well as other users. They can also engage in a lot of activities like working, gaming, and learning.
In other words, the metaverse provides a more interactive and immersive experience that is not available with traditional web browsing.
It’s no longer news that the next version of the internet is metaverse. And like the previous versions, it represents an opportunity to invest and make money.
Many savvy investors are already tapping into this opportunity in different ways.
An example of those ways is owning virtual land on the metaverse. When you purchase a piece of physical real estate from a seller, you will be provided with a deed. This deed serves as proof of evidence that confers ownership. The same thing applies to this digital real estate except that in this case you’re provided digital property deeds or non-fungible tokens (NFTs). This is recorded on blockchains and it represents ownership. And provides you the right to real, build, or sell the land again in the future.
You may be thinking no one in their right state of mind can pay money for land that doesn’t exist anywhere other than on a computer server somewhere.
Then you haven’t heard about someone who paid $450,000 to buy land next to where Snoop Dogg is replicating his California Mansion on metaverse.
Insane right? That’s right but there are other cases more insane.
Below are some examples of the metaverse:
- Meta Horizon
- Second Life
- The Sandbox
Is digital real estate legit?
It totally makes sense to still be skeptical about investing in this area.
It’s even more important to ask the question, “who will profit from an investment like this?”
With the less speculative forms of digital real estate like websites, social media accounts, email lists, and so on the answer is clear. And that doesn’t mean there is no risk in investing in these assets.
With the new form of digital real estates like cryptocurrency, NFTs, and metaverse the risk is even more pronounced.
But the most important thing is to keep open minds to see the possibilities.
Here are a few past events in this world that can help you put things into perspective.
- People have paid huge sums of money to buy virtual land. A plot of land on Decentraland has been sold for $175,000 in the past. But you should know this market is highly volatile. No one can know if the market will go up or down, or when it will do.
- The most expensive metaverse land sale was in TCG World, where 19 commercial real estate properties were bought by Curzio Research. The company paid $5 million to acquire the virtual real estate. They bought the land to create virtual headquarters in the TCG World. Another big sale happened in December 2021 for a whopping $4.3 million. It was in The Sandbox metaverse. The digital real estate was purchased by Republic Realm, a group of developers from Atari. One other big purchase was for Fashion Street Estate in Decentraland. It was sold for $2.4 million. Again, no one can predict whether sales like these will happen again or not.
- According to Bloomberg, a simple 1,100-square-foot plot in Genesis City (a digital real estate world the size of Washington, DC) has been sold for a huge sum of money, in some cases up to $200,000.
- The metaverse Decentraland when it had an Initial Coin Offering (ICO) sold more than $24,000,000 of MANA (the currency used in the Decentraland virtual world to make different purchases) in less than 35 seconds.
Although these don’t paint the whole picture as to whether you will make money investing in digital real estate.
However, they are indications that you paying attention to happenings in this world might be the best financial decision you will ever make.
That being said let’s talk about…
Digital real estate investing
If you’re familiar with real estate investing – houses, condominiums, raw lands, or even purchasing a franchise like Starbucks. Digital real estate works the same way. It’s as simple as buying a house or land to rent or sell for profit. You buy or develop a digital asset, make its value appreciates, and eventually sell it for a profit.
When we are talking about web 1.0 and web 2.0 investing and profiting from these digital real estates is straightforward compared to that of web 3.0, especially metaverse.
But here are some reputable options you can exploit to make money from the metaverse as an investor.
- Buying and selling of metaverse real estate: This is the most obvious and popular option. Metaverse is expected to be worth around $800 by the year 2024, so making money from buying and selling land on the metaverse can prove to be profitable. But there is one issue with this option.
Although relatively cheaper compared to buying physical real estate it is still very expensive to buy land from the popular metaverse. The only solution is to look for and buy land in areas you believe will take off in the future. This is very risky as it involves putting your money into something that doesn’t guarantee a profit or even making back your initial capital.
- Renting out metaverse land: Another option is to rent out your digital land as you would physical real estate. A popular way to do this is through fractional ownership agreement through a Decentralized Autonomous Organization (DAO). An example of this is Landworks which is run by Dreamworks. It allows you to rent out your digital real estate for instance land on Decentraland, and in return, you receive payment in ENTR (the native token of the platform.)
There are other options like PangiaDAO and AxieDAO. Your profit from renting out your digital real estate in this sense depends heavily on your initial investment.
To see serious profit might take some time unless you are investing a decent amount of money.
- Tokenized Fractional Ownership: This is yet another option you can explore to make money investing in digital real estate. It provides you profits in two ways; appreciation of the token’s value and the daily rent payment. There aren’t many options out there in terms of platforms when you are looking to go into tokenized ownership. But a popular one (many beginners start with this) is RealT. The platform allows you to invest the amount of money you want, then you receive payments in the two ways mentioned above.
As the metaverse as a form of digital real estate continues to evolve, there will be more options to explore in other to make profits.
But for now, those are the most popular means. And before you put your money into digital real estate investing there is a need to know the…
Pros and Cons of Digital real estate for beginners
Here are a few benefits of digital real estate that make it a good investment opportunity.
- Accessibility: The market offers free entry and exit i.e you can invest in digital real estate regardless of your status, or knowledge. You can access it anytime anywhere once you have a laptop, smartphone, or tablet with an internet connection.
- Independence: You invest in digital assets without intervention from third parties like agents. You make your own choice and get to enjoy the benefit of zero distraction. You can even do all these right in your home wearing your pajamas.
- Profitability: Digital real estate is in great demand because the internet is gaining more and more users (a trend that has no end in sight.) That makes the maths simple. When demand exceeds supply sales rise and so also the gain.
- Flexibility: There are many options to explore from websites to blogs, social media accounts to email lists, and NFTs to cryptocurrency. The opportunity is vast and each one comes with flexible features. Most important of this is in many cases you don’t need intervention from the government, to invest in digital real estate.
Those are some of the things you get to enjoy when you choose to invest in digital real estate. But that doesn’t mean investing in digital real estate is all sunshine and rainbows. Whatever has advantages will surely have disadvantages. Below are the cons you need to consider before getting into digital real estate investing.
- Poor regulation: Due to little government intervention the digital real estate market lacks control and regulation. Unless you are careful and put in enough research you can be a target of manipulation and even extortion.
- Unpredictability: You can hardly predict the next thing that will happen in the digital real estate world because it is vast and wild. Adding this to the complexities associated with some classes of digital real estate, it can be very difficult to predict or identify which assets will be profitable to invest in.
- Cyber insecurity: Anything on the internet can be the subject of a hacking attack. This threat is real as hackers are getting better and better. These people can do anything in their power to have access to systems to manipulate data and steal your money. That means you have to take measures to mitigate this risk if you plan to invest in digital real estate.
Fast Nuggets to implement now
As you can see, there are many routes you can take to make money investing in digital real estate.
Thanks to technological advancement and the massive number of internet users. You can now buy digital real estate at the lowest base prices, make some improvements, and sell them at higher prices to make huge profits.
You can go with the familiar option of investing in well-known digital real estate like websites, blogs, building email lists, social media accounts, and mobile apps.
And if exploring new territories is what excites you, then you can try your hand at others like NFTs and metaverse.
But whichever one you want to go with, here is fastnugget you can use to get started right now. First, start with your research to determine what suits you, and come up with plans to get started. Then think of how you’re going to monetize and dive straight into the work.
You can also check out this piece on income producing assets if you want to learn more about investing and making a profit from different assets.
I’m Adebayo Ridwan, an Electrical and Electronics Engineering graduate from the University of Ilorin.
I discovered my passion for writing, during my first year in Unilorin. Since then, I’ve been dedicated to mastering the art…
and sharing practical information to help people solve problems.