Physical Real Estate is one of the most lucrative forms of residual income. However, one of the main cons of traditional real estate is a large amount of capital is required. Investing in physical real estate involves a lot of risks. What if there was a way in which you can become a landlord and generate residual income without all the risk of investing in rental property?
With the rise of the digital world, becoming a landlord with no physical assets is possible. Digital real estate existed long before it became a trend. However, it was only recently that people began seeing them as investments. Owning a piece of virtual land generates traffic. Traffic which advertising networks would want to rent a piece of. Business models like local lead generation use virtual real estate. They act as a digital bridge between potential buyers to sellers. Investing in digital real estate has a lot of upsides. However, there are some things to consider before becoming a digital real estate investor. In this article, we will discuss digital real estate pros and cons to help you decide on your digital real estate investment.
What Is Digital Real Estate?
Digital Real Estate is anything you can own online. These are virtual assets that you can use to generate income. YouTube videos to virtual products such as online courses, or even social media accounts. It’s not something that’s new. Ever since they created the first email address, digital real estate has existed. However, it isn’t only until recently that people have leveraged and seen the true potential of owning virtual property.
Two Ways of Acquiring Digital Real Estate
4 Digital Properties with High Profitability
Owning a website is one of the most common ways of earning with digital real estate. The average cash flow a website can make is $2000 a month, according to colibriwp. With big sites having the earning potential of over $5000. A lot of digital real estate investors earn by renting out spaces within their websites to advertising networks.
The predicted revenue for the overall mobile app market is around $935 billion, according to techjury. There are various ways of creating a residual income with mobile apps. You can rent out spaces to advertising networks, leverage in-app sales, or create subscriptions to continue usage. There is a ton of potential with investing in applications. However, this requires a lot more work in creating and maintaining a complex system.
Registering a domain was free until 1995. Currently, the registration fee is around $10-$15. However, you will need to create a domain name that is completely unique and unused. Domain names are a good way of creating your brand. Your domain name can be the reason your site drives more traffic. They sold the highest costing domain name for $872 million, according to GoDaddy.
4. Virtual Products
Digital products such as online courses and software are a good way to generate residual income. Creating something that people can just purchase would only require an amount of effort in the beginning.
6 Reasons Why You Should Invest in Digital Real Estate
1. Low Initial Investment and High Margins with Less Risk
Being a digital real estate investor, it's scary to make an enormous investment in something intangible. The good thing with virtual real estate is that it requires lesser initial investment compared to a physical product like traditional real estate. It generates residual income. However, the digital real estate investment would be considerably less, especially if you will build instead of buy.
You can expect an investment of around $200 with an ongoing of $50 a month if you create a website. The profitability of having digital real estate may not compare to actual real estate, but it is still a higher margin considering the lesser risk you take.
2. Fast Appreciation
With the digital world being more and more accessible, the faster digital assets appreciate. Unlike a lot of business models which could take years before you can create a profit. Digital real estate investing calls for a faster turnaround time.
An example of this would be bitcoin. In 2021, it had only 59.8% of returns but that quickly grew to 187.5%, according to Influencer Marketing Hub.
One struggle of people looking into starting a business is discrimination and lack of access. Say you’re interested in creating a business, however, the area you’re in doesn’t cater to your market. That problem goes away with digital real estate as the internet is on a global scale. It doesn’t matter where you’re from, as you can reach millions of different people depending on your market.
4. Independence and Flexibility
The reason people search for passive income is for financial freedom and control of their own time. Investing in digital real estate allows for that, as the digital world exists wherever you have Wi-Fi. There is no specific time you would need to clock in, as you would be self-employed and in control of your own hours.
5. Scalability and Portfolio Diversification
As an investor, it is important to have a variety of options and not to put all your eggs in one basket. Since there is an array of digital assets and the virtual world continues to develop each day, so does your business. Once you invest, it is easier to widen your horizons and create a diverse business profile that allows for sudden changes without affecting your income.
6. Preparation for the Future
The digital world is continuously growing with people working remotely and using the internet in their day-to-day lives. Investing in virtual assets now allows for a greater return in the future as it continues to grow and develop. Since digital real estate appreciates fast, what you invest in now has the potential for a higher return in the future.
3 Reasons Why You Shouldn't Invest in Digital Real Estate
1. Poor Regulation and Cyber Insecurity
Leveraging your digital property isn’t something that has been widespread recently. Because of this, the regulations surrounding it aren’t that developed. The government doesn’t have any control or effect on digital real estate. This leaves you vulnerable to digital real estate manipulators.
Cyber Hackers are also a problem that you might face. Anything digital is free real estate to them. Blockchain technology and smart contracts have lessened this issue. However, since everything is still virtual, hackers can come up with ways. If you’re investing in digital real estate and plan to go all out, it’s best if you take precautionary cyber measures.
2. Regular Maintenance
The trends in the digital world seem to develop rapidly. If you want to keep up with other digital land investors and your competition, you have to be up to date. This means that you need to make sure your website is current and do regular digital property management
3. Lack of Predictability and Unforeseen Taxes
Since the digital world continues to develop, there is insecurity in investing. What’s profitable now could easily be replaced by something else in the next year. As of now, the government has not regulated the digital world. However, it’s still a possibility. There could be taxes added along the way as the digital world becomes more prevalent.
Conclusion: Does Digital Real Estate Have Any Real Value?
Intangible investments are tough to wrap your head around and there are pros and cons to digital real estate. However, it has real value. The virtual world allows for many opportunities for passive income, but owning digital real estate can open you to so many more. The more control you have over your investments, the more control you have over its profit. As time progresses, the usage of the internet and the virtual world develops. Popular people such as Snoop Dog even host virtual parties in-game and sell tickets for entry.
Big digital landlords like Facebook or now known as Meta are preparing for the boom of metaverse real estate. This signifies a big change in how we view virtual reality, as it becomes more and more important in the real world. Investing in digital assets today could have even greater returns in the future. But that doesn’t mean you just have to sit around and wait for it to become profitable. Local lead generation uses digital real estate by selling leads to hungry companies by creating a website. This acts as a digital bridge between the consumers and the sellers.