Digital Real Estate vs Real Estate: Is One Option Better Than The Other In 2023?

November 29, 2022

A recession is imminent, inflation is at a 40-year high, and interest rates are rising. Yet 41% of Americans aren't ready for the slump. But now is the time to consider having a backup plan. First, think that economic downturns present options for investment strategies. Plus, they can be a chance to secure a passive income. Or, at the very least, a steady cash flow. 

The key is knowing how to leverage the market. And how to take advantage of long-term security options. Real estate and digital real estate investing are two ways to create a secondary income. Both business models can protect against inflation and diversify your income. But is one better than the other? What are the differences? Can you earn a profit, and how high are the returns? 

In this article, we take a closer look at the pros and cons of each business model. But we'll also discuss three things you need to consider before investing in real estate. Plus, three reasons why you should invest in digital real estate. Finally, we'll examine why you should consider starting a lead generation business. (At least if you want to make money in 2023). And why now is the ideal time to invest. 

What Is Digital Real Estate?

Digital real estate is anything you own on the internet that generates online traffic. So digital real estate can be things like websites and YouTube channels. Or social media accounts and bitcoin or crypto. The key is to develop virtual property that has value.

So you need to create an online entity that sits at the top of search engines and gets in front of a ton of eyeballs. Then it's front and center for your target audience. But once you get to the top, it's considered prime real estate. And that's where you'll find the people and the money. Much like traditional real estate, digital property appreciates over time. So the higher you land in the SERPs, the more your online entity is worth.

Then you can either rent your space and be a digital landlord. (Like we teach in our local lead generation coaching program). Build and rank generic websites for phone-driven services and generate leads you sell to small business owners for a profit. So not only do you secure a steady stream of monthly income. But if you build an empire, you can harness time freedom and a passive income. 

What Is Real Estate?

Real estate is a property you own. Real estate has value but is typically illiquid. Meaning you can't convert it into cash easily. But physical real estate offers a chance to generate steady cash flow. You can use real estate for residential, commercial real estate investments, or industrial purposes. The global real estate market held a valuation of  USD 3.69 trillion in 2021.

Current data indicates that the market will continue to grow at 5.2% from 2022-2030. So if you're looking for an investment opportunity, owning physical property and investing in real estate checks a lot of the boxes. First, consider that its value is based on demand. And it's primarily influenced by the economy. Real estate appreciates or depreciates over time. But its worth is based on a few factors, including things like:

Factors That Influence The Value of Real Estate

  • Employment & Crime Rates

  • Transportation & School Quality

  • Access To Municipal Services & Property Taxes 

But if you can find a deal and sell for more than you paid. Or you can secure a rental tenant and produce a monthly income. Then real estate is an excellent way to diversify your investment portfolio and establish cash flow or even a passive income. 

Real Estate vs Digital Real Estate Pros & Cons

Advantages Of Real Estate Investing

Investing in the right real estate asset can garner predictable and continuous cash flows and even a passive income.

Real estate investing provides long-term security and tax advantages like write-offs and deductions for operating expenses and mortgage interest. 

You can leverage real estate to build wealth and protect against inflation. 

Advantages Of Digital Real Estate Investing

Low-cost investment with minimal overhead and potential for 10X ROIs.

Digital real estate allows you to scale fast. Plus, there's no limit to the number of online assets you own or how much money you can earn.

Future forward and a chance to stay ahead of the curve and take advantage of trends.

Disadvantages Of Real Estate Inventing

Real estate investing requires significant capital and is inaccessible to most investors.

Because real estate is illiquid, you can't access the cash value of your asset quickly, making it capital and management-intensive.

Real estate investing takes a ton of time and effort to find. Plus, you need to find the right property at the right price.

Disadvantages of Digital Real Estate Investing

There's no industry regulation, and cyber threats continue to pose a risk for investors.

High levels of market volatility and unpredictability.

Risk of future tax regulations.

What Are The Differences Between Digital Real Estate & Real Estate?

Digital real estate and real estate can be profitable investments. Both are long-term strategies that appreciate over time. The secret is to develop a valuable property in a good neighborhood with a lot of traffic. You need to be willing to invest the time and hard work at the beginning.

But when done right, you can generate a passive income. Of course, other similarities exist, like the potential for high returns and a steady cash flow. Plus, both offer a way to diversify revenue streams. However, there are distinct differences between the business models, like the price tag and liquidity. But there are other disparities like the ones listed below. So let's take a closer look:

Digital Real Estate

A low-cost investment strategy with minimal overhead

You don't need to be an SEO expert or have any prior online experience to be successful with digital real estate investing

You generate profits when you work to make your virtual asset more valuable, plus you're looking at insane ROI potential. (Up to 10X in as little as a year or less)

Real Estate

You need significant capital to invest (a minimum of 3.5% of the listing price). Plus, you should have a solid reserve for any unexpected expenses

Beginner investors grossly underestimate the costs of ongoing maintenance, taxes, insurance, bad tenants, etc. 

Real estate investing takes skill, time, and a bit of luck. 

3 Things To Consider Before You Invest In Real Estate

Investing in real estate is a great way to build your net worth and increase your cash flow. Real estate investing lets you create capital, beat inflation, and benefit from tax breaks. Consider that real estate is a less volatile market than things like stocks and crypto or Metaverse real estate investing.

But with real estate, you make money when you buy. Not when you sell. So the cost of your real estate investment dictates your future profit margin. So there are a few things you need to consider before you begin:

1. Obtaining Funding Can Be Difficult

Real estate investing takes money. First, consider that you need capital for a down payment, so most people need to take out a loan. But it can be extremely challenging to get funding from the bank. Most financial institutions will analyze your credit and finances before they're willing to approve your loan. 

Banks aren't interested in taking risks, so you need to earn enough money to cover your mortgage. Plus, you need a good credit score (at least 620). And unfortunately, people with a credit score of 650 or less make up only a fraction of approved loans; even then, there's no guarantee that the bank will approve you. 

For example, self-employed individuals or business owners may face challenges. Or if you take too many tax benefits deductions, you might not be approved. Plus, interest rates are rising. So it's getting even harder to qualify for a loan. But, of course, there are other options to secure funding like:

Alternate Ways To Fund Real Estate Investments

  • Apply for a HELOC (revolving line of credit)

  • Ask friends or family for a loan

  • Tap into your retirement savings

  • Get a bridge loan (high-interest rates)

  • Utilize assistance programs

But these options can be expensive and are often riddled with red tape and legalities. For example, you can get a down payment for as little as 3.5%. But then, you might face higher interest rates or monthly payments. Or you may even be denied mortgage insurance.

But for investors with the funds to put down 20% or more, there will be rewards like lower interest rates and reduced monthly payments. But consider that 99% of investors are losing money in real estate. So you need to do the right things to make money.

Investing in real estate is not a get-rich-quick way to make money. It takes capital, expertise, and some luck. But buy when the market's low and sell for a profit. And it's a way to make money in 2023

2. High Investment Costs & Uncertain Returns

Real estate comes with high investment costs. So before you consider buying real estate, you need to assess your debt-to-income ratio. But current economic uncertainty has made obtaining approval for a bank loan difficult. Many banks have also raised the minimum credit score requirements. But most will let you put down 20% or less if you meet their investor criteria.

So you can use this leverage to increase your cash flow. (If everything goes according to plan and your investment appreciates). However, if the market falls or prices drop, you could face a cash flow problem. For example, 20% down on a $400,000 single home ($80,000) with price increases of 6% in one year (or $24,000) equals 30% ROI. But if prices fall 6%, you lose 30% (24K). Of course, real estate investing is less volatile than the stock market, and the returns are often higher. Let’s look at another example like the one below:

REAL ESTATE INVESTMENT EXAMPLE

Buy a single-family home for $300,000 with 3% down. So you're borrowing $291,000, which equals $1,740 a month over the life of a 30-year loan. But you pay about $110,000 more in interest. (That's not counting your PMI costs) then a person who puts 20% down on the same home.

So you need to have a plan on how you'll cover costs. For example, whether you rent your home and the tenant covers your mortgage monthly. Or you flip and sell at a higher price than you purchase to make a one-time profit.

But you're still only sitting at about 10%-25% ROIs. Plus, you're leaving a lot of aspects to chance. So you need to be willing to take risks to secure a steady income with real estate investments. 

3. Market Volatility & Competition

To make money investing in real estate, you need to consider two critical factors:

  • How much is your investment worth?
  • How much will it be worth on the date you want to sell?

To make money with real estate, you need to buy low and sell high. But market volatility dictates that you can either make a ton of money with your investment or potentially lose capital. So you need a competitive edge. Or you need to find an underpriced property you can buy and sell for profit.

Unfortunately, you're competing against some pretty savvy real estate professionals. Not to mention that your chances of finding an underpriced property in today's real estate market are marginal at best.

So you need an inside track or be willing to dedicate the time to search for the ideal investment. The key is to capitalize on opportunities the market presents. So you need to be willing to take risks and make mistakes. But a few tips on how to get ahead with real estate investing include things like:

Tips On How To Win At Real Estate Investing

  • Master one area and stay motivated to hustle and network

  • Connect with other realtors or experts in the market

  • Niche down and commit to one type of real estate investing 

Real estate investing takes some luck and perseverance. Plus, it's a competitive playing field. Not to mention that individual real estate investors account for about 74.4% of rental properties in the USA, so you have some competition.

But homes will continue to increase in value in 2023 (by about 4%). So there's still an opportunity to make money with this investment strategy. But you need to learn the rules of the game and be prepared to do the hard work. 

3 Reasons To Invest In Digital Real Estate

Digital real estate is an online business model that offers high ROIs for a minimum investment. First, consider that there are over 4.95 billion global users. Plus, the internet continues to evolve and present new and untapped markets. All are full of income potential. The key is to develop an online entity that gets in front of the eyes of a specific target audience.

So you need to create virtual real estate that can get to the top of the search engines. But then you can make serious money with digital real estate in 2023. Of course, there are other reasons to consider investing in this business model, like the ones listed below. Let's check it out:

1. Low Cost & High Returns

Digital real estate requires minimal capital. In fact, you can purchase a domain for as little as $1/year. Then you can create a blog, cater to a specific niche with an active online community and build a trusted online presence.

You can then monetize your blog with things like affiliate links, paid sponsorships, and influencer marketing. In addition, there are other free or low-cost ways to generate an income from digital marketing like:

  • Start a YouTube channel

  • Create a social media profile

  • Develop and sell an online course

Of course, you pay with your time. Plus, you need to be a content creator. And invest the effort to build an online reputation and authority with your readers.

But there are other options like building rank and rent websites for phone-based service industries. You build simple websites that you rank in Google. But get your sites to the top of the SERPs, and they bring in leads. Then you find a local contractor and sell those leads for a profit. The beauty is that you own the website, the tracking number, and the leads.

So not only do you control every aspect of your business. But you control your overhead costs (which are minimal-around $40/month). Take this site below. This is a lead generation site I built in 2015. But this one site has been making me $2000/month for seven years. So that’s a total revenue of $24,000/year. I spent about $500 getting it to the top of Google in around six months. But my ROIs are at 95% just from this website. (I own over 80). 

Local lead generation

Let’s break down the costs:

LEAD GENERATION SITE COST BREAKDOWN

$500 initial start-up cost
$15/month for the tracking number
$10/month for hosting
$15/year for the domain
Revenue Total: $168,000

But now I'm like a digital landlord. And I collect monthly payments on autopilot to generate a passive income.

2. Scale Fast

Digital real estate allows you to scale fast. Consider that investment costs are minimal. So you can build numerous online assets at the same time. For example, you could start a lead gen business and create multiple sites. The secret is to niche down. Find markets where you can reach the top of Google for specific keywords.

But once you're at the top of the SERPs. Then you own prime real estate. And small business owners are more than happy to pay for that kind of traffic. Another way to invest in digital land is to develop a YouTube channel or social media profile. Become an authority in a specific niche, and you can be an influencer or a brand ambassador. 

You can also use affiliate offers (like the ones Tai Lopez affiliate ecommerce store promotes). Or you can flip websites by buying and selling domains. But you need to pick a strategy. Then you can devise a plan on how you'll create value and make money with your virtual land. But you need to consider your skills, interests, and long-term goals. For example,

What Digital Real Estate Investment Is The Right Choice For You?

  • Do you like writing content or prefer being in front of the camera?

  • Do you want to rent your assets and generate a monthly income, or would you prefer to buy, add value and sell for a one-time lump sum?

  • Are you active on social media? Do you have a large following you could leverage? Or are you willing to invest the time to build one?

Once you have a plan, you can scale fast if you're willing to invest the time and effort to get to the top. But after you reach the top spots, your sites are pretty hands-off. So not only are you creating time freedom, but you also secure a steady cash flow. 

3. Passive Income Potential

Digital real estate is a way to harness a passive income. But it's far from a get-rich-quick-scheme. Of course, unlike real estate investing, you don't need to worry about bad tenants or leaky faucets. You won't get a call at 3 am asking how to turn on the heat in your rental home. But you do need to be prepared to grind and commit to taking massive action.

Digital assets can generate a passive income when they offer value. But that means your virtual property needs online traffic. So you either pay for that traffic. Or you learn how to get your entities to the top of the algorithms. But once you're at the top, you've got a ton of eyeballs on your asset. And this is how you make money.

So you need to decide on your platform. Then learn everything you can about your target audience. Finally, determine how you can solve a problem, improve a person's life, or fill a market gap. Of course, it takes dedication and consistency. But the payoff for your hard work is a valuable piece of online real estate.

One that you can rent, like a rank and rent site. Or sell for profit like a YouTube channel. Plus, your digital asset will only appreciate over time. So the more value you offer, the more money you make. Plus, once you own the top spots, you hold the keys to the most coveted real estate on the internet. And that's how you create a passive income with your digital real estate. 

Why You Should Consider Local Lead Generation

Local lead generation is our number one recommendation if you want to invest in online real estate in 2023. Not only is lead gen a proven concept. (And how I amassed a monthly income of $52K). But natural barriers minimize the competition. So unlike affiliate marketing, where there's a ton of competition. (Or even market saturation in specific niches).

With the lead gen business model, the focus is on services people are actively searching for on Google. So you don't need to rely on paid advertising or interruption marketing to get leads. Moreover, once your sites are at the top of the SERPs, they don't require much maintenance. So unlike a YouTube channel or social media profile. (Where you consistently need to be publishing new and valuable content to stay front and center for your target audience).

With local lead gen, once you have a paying client, you're making money on autopilot. So you have time to build more sites and scale your business. Take this site above. Here is another example of one of my lead gen sites that's been bringing in $750/month.

I get mailbox money every month because I did the hard work at the beginning. The beauty of this business is that you don't need a ton of money, and you don't need to take significant risks. Plus, once you have your systems in place and understand the process, there's no limit to how much money you can make with local lead generation. 

Conclusion

Real estate and digital real estate are two investment strategies that offer a way to make money in 2023. So you can capitalize on the current economic turndown and diversify your income stream. First, of course, you need to consider how much capital you have to invest. Or what level of risk you're prepared to take.

But the real estate industry is a competitive market. Plus, it's only getting harder to land that lowball deal. But the internet continues to advance. And business owners continue to take advantage of an online presence. So they're getting online to leverage Google and make more money. That's why starting a lead generation business is one of the best ways to generate a passive income in 2023

Not only are you providing a valuable service. But there are thousands of untapped markets and niches that you can build and scale in to generate a passive income. So now's the time to prepare for your financial future. But as a real estate investor, you need to develop your investment strategy. Be prepared to take massive action and do the hard work. But if you get it right, you'll make money with real estate or digital investments. 

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Ippei Kanehara
Founder/CEO

$52K per month providing lead generation services to small businesses

Ippei.com is for digital hustlers, industry leaders and online business owners.

His #1 online business recommendation in 2023, is to build your own lead generation business.

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