Digital real estate investing has been the source of wealth for 12% of billionaires in the world, according to Forbes. But that raises a lot of questions—like how do you acquire digital real estate, and what are digital worlds?
We’ll discuss the global market and how to create passive income or earn capital gains by investing in digital real estate. By the time you’re done reading this, you’ll understand how to create, buy, and monetize digital real estate.
The following information is educational and isn’t meant to be financial advice. Cryptocurrencies, NFTs, and other forms of digital real estate are highly volatile, mostly unregulated, and speculative assets.
In addition, the author of this blog holds investments in many of the assets mentioned.
What is digital real estate?
Digital real estate is the ownership and monetization of online assets or properties.
It isn’t an investment in land but rather investing in virtual properties or digital assets that have value because of their online reputation, visibility, and potential for generating income.
The term is borrowed from the real estate industry to describe the concept of owning and profiting from online properties. Forms of digital real estate include:
- Domain names
- Websites and blogs
- Social media accounts
- Apps and software
- eCommerce stores
- YouTube channels
- Email lists
- Real estate in digital worlds
- Cryptocurrency and NFTs
Let’s look at each of these digital real estate assets to show you how you can make money on them. But first, an important disclaimer:
Digital real estate is a high-risk asset
Many of the assets in digital real estate investing are high risk. Cryptocurrencies, NFTs, and metaverse (i.e., virtual reality space) assets are not regulated as either securities or commodities. These assets have high volatility and may incur 100% losses, but some investors make up to 1,000 times their money in very short periods of time.
What is digital real estate investing?
Digital real estate investing is buying digital assets with the hope that they will provide additional cash flow or increase in property value. Digital properties can be a good source of passive income and can see substantial profits when sold, but they also run the risk of never providing any value, unlike physical real estate.
A domain name is the web address (e.g., www.upflip.com) where users can access a website. Valuable domain names are often short, memorable, and relevant to a particular industry or keyword.
They can be bought and sold, and owning a high-quality domain can be a lucrative investment. Domains like cars.com, business.com, and LasVegas.com have been sold for as much as $872M.
When you own a domain name that others view as a valuable brand asset, selling it can earn you a huge premium over your annual investment, which can be in the single digits.
Case Study: LasVegas.com
The digital world is full of virtual real estate opportunities. One of the largest digital real estate transactions was the 2005 sale of the domain name LasVegas.com.
LasVegas.com acts as a travel agency focused on travel to Las Vegas. It was bought in 2005 by Vegas.com LLC, another site that helps people find activities in Las Vegas. LasVegas.com gets over 70K views each month in addition to the 1.1M monthly website traffic that Vegas.com gets.
According to TheDomains.com, the original owner of LasVegas.com received $12M in June 2005, plus:
- $2.988M ($83K per month for 36 months)
- $7.5M ($125K for the next 60 months)
- $7.488M ($208K for the next 36 months)
- $34.944M ($208K per month through June 30, 2040)
That’s a combined $90M for selling a successful domain name.
Websites and blogs
In addition to domain names, a fully developed website or blog can be built and sold as digital real estate. Many local SEO (search engine optimization) gurus will build sites with quality content, good SEO, and high traffic, then sell the website to a company.
They can also earn revenue through methods like hosting ads, affiliate marketing, or selling products and services.
Social media accounts
Social media accounts with more than 10,000 engaged followers can be valuable assets. They can be monetized through sponsored posts, brand collaborations, or by promoting products and services. With a large enough following, you can even sell them.
Apps and software
Developing and owning popular mobile apps or software programs can be a form of digital real estate. These assets can generate revenue through app sales, in-app purchases, or advertising. The best apps can be sold to major tech companies and earn the founder millions (or billions)!
Online stores can be considered digital real estate. The value of an eCommerce store is often determined by its revenue, customer base, and brand reputation.
YouTube channels with a substantial subscriber base and regular viewership are valuable. They generate revenue through ad revenue, sponsored content, and merchandise sales.
A well-curated email list with a large number of engaged subscribers can be a valuable asset for marketing purposes. Email lists can be monetized through email marketing campaigns, affiliate marketing, or selling products and services.
Real estate in digital worlds
In virtual reality worlds and games, like Decentraland, The Sandbox, or Minecraft, owning and developing virtual land or properties can be a form of digital real estate. These can appreciate in value and potentially generate income through virtual businesses or events.
You can also buy metaverse real estate to offer virtual concerts and other types of online businesses. For instance, my buddies at Crypto Lids sell clothing in digital lands like Decentraland. These products are called “phygital goods” because the buyer gets both real-life clothing and an NFT to wear in the virtual space.
Cryptocurrency and NFTs
Owning valuable digital currencies can be a form of digital real estate investment.
Digital currency may be either cryptocurrencies or non-fungible tokens (NFTs), which represent ownership of unique digital assets. Some blockchain platforms offer virtual real estate investing opportunities, like:
- NFT real estate titles: Propy partnered with Tech Crunch Founder Michael Arrington to sell the first real estate NFT that serves as proof of ownership for real-world real estate.
- Selling domain names: ENS and Avvy sell domain names for blockchain wallets, websites, and more.
- Art NFTs: Opensea.io is one of the more well-known places to buy art and gaming NFTs, but other sites sell them as well. I use Joepegs frequently because I like the Avalanche blockchain for its business use cases.
- Virtual reality real estate NFTs: Buying virtual land gives you a piece of internet real estate to create your own virtual reality.
Remember, the value of digital real estate can fluctuate based on market trends, technology changes, and user behavior. It’s crucial to research and assess the potential return on investment before acquiring or investing in any form of digital real estate.
Is digital real estate legit?
Yes, digital real estate is a legitimate concept. And just like physical real estate, digital properties can hold value and generate income.
Legitimate digital real estate has:
- Tangible value: They can be bought, sold, and leased, and they can generate revenue through various monetization methods.
- Market demand: There is a thriving market for many digital properties. Individuals and businesses are willing to invest in established online assets that can provide them with opportunities for revenue generation.
- Diverse opportunities: Digital real estate encompasses a wide range of opportunities, including domain flipping, website development, content creation, social media influence, app development, and more. This diversity allows individuals and businesses to find niches that align with their expertise.
- Legitimate monetization methods: There are legitimate and widely accepted ways to monetize digital real estate, such as advertising, affiliate marketing, eCommerce, sponsored content, and subscription-based models.
- Growth potential: With the increasing importance of the internet in various industries, the demand for certain digital properties could continue growing. This can present opportunities for individuals and businesses to enter the market and build valuable online assets.
However, like any form of investment or business venture, there are risks and challenges associated with digital real estate. It’s important to conduct thorough research, understand the market dynamics, and carefully assess potential opportunities.
Additionally, staying informed about industry trends and best practices is essential for success.
How to avoid a digital real estate scam
Avoiding digital real estate scams is crucial to protect your investments and financial well-being.
Due diligence and caution are essential when engaging in any form of digital real estate transactions. If you encounter a situation that raises concerns, it’s best to err on the side of caution and seek further verification before proceeding.
Here are some tips to help you steer clear of potential scams in the digital real estate market:
- Research thoroughly: Take the time to research the specific type of digital real estate you’re interested in (e.g., domain names, websites, social media accounts). Understand market trends, valuation methods, and common practices within that niche.
- Verify ownership and legitimacy: Ensure that the seller has legitimate ownership of the digital property they’re offering. Request proof of ownership and verify it through reputable platforms or third-party services.
- Use trusted platforms and marketplaces: When buying or selling digital assets, use established and reputable platforms and marketplaces that have a track record of facilitating legitimate transactions. Be cautious of deals made on obscure or unverified platforms.
- Check for red flags: Be wary of deals that seem too good to be true, such as incredibly low prices for high-value assets. Look out for suspicious communication, lack of transparency, or requests for payment through unsecured or untraceable methods.
- Ask for detailed documentation: Request detailed information about the digital property, including traffic statistics (for websites), history, revenue reports, and any other relevant documentation. A legitimate seller should be willing to provide this information.
- Escrow services: Consider using an escrow service for transactions. Escrow services act as intermediaries, holding funds until both parties fulfill their obligations. This provides an added layer of security.
- Avoid rushed decisions: Don’t feel pressured to make a quick decision. Take the time to carefully evaluate the offer, conduct due diligence, and consult with professionals if needed.
- Beware of unrealistic promises: Be cautious of sellers who make extravagant claims about potential earnings or the future value of the digital property. While there may be potential for growth, avoid deals that rely solely on speculative projections.
- Seek professional advice: If you’re unsure about a deal, consider seeking advice from professionals or experts in digital real estate. They can provide valuable insights and help you make informed decisions.
- Trust your instincts: If something feels off or too good to be true, trust your instincts. It’s better to pass on a deal than fall victim to a scam.
How to make money from digital real estate
Making money from digital real estate involves acquiring, developing, and monetizing online properties or assets. Here are some strategies you can use to generate income from various forms of digital real estate:
- Flip web domains.
- Develop and flip websites.
- Monetize content.
- Monetize social media.
- Build and sell virtual real estate.
- Invest in crypto and NFTs.
- Create membership sites.
- Provide coaching and consulting services.
Flip web domains
Look for short, memorable, and keyword-rich domain names that have potential market value. You can sell them at a higher price to businesses or individuals looking for a relevant web address.
Develop and flip websites
Another way to invest in digital real estate is to build or buy websites, improve their content, design, and SEO, and then sell them for a profit. Websites with established traffic, revenue streams, and a good reputation tend to fetch higher prices.
Create quality content on a blog or website and monetize it through methods like:
- Advertising: Use ad networks such as Google AdSense or join an ad exchange program to sell ad space on your website.
- Affiliate marketing: Promote products or services and earn a commission for each sale made through your referral links.
- Sponsored content: Partner with brands for paid blog posts or articles.
- Products and services: Offer products, online courses, or services related to your content.
Monetize social media
If you have a large and engaged following on platforms like Instagram, YouTube, or TikTok, you can earn money through:
- Sponsored posts: Promote products or services in exchange for payment.
- Affiliate marketing: Share affiliate links and earn a commission for sales.
- Brand collaborations: Partner with companies for sponsored promotions.
You can also build accounts on social media platforms and sell them to someone else once you’ve achieved the goals that you set.
Build and sell virtual land
To fully utilize these sites, you’ll need to:
- Get a crypto wallet, like Metamask, which is available for Chrome, Android, and Apple products.
- Save your account information somewhere safe. Most people suggest writing it on a piece of paper and locking it in a safe.
- Buy some ETH—the digital currency, or “gas token,” used to pay transaction fees on the Ethereum blockchain. You can do this through Metamask. It will require Know Your Customer (KYC) verification, then you can pay with a card, bank account, Google Pay, or Apple Pay.
- Log into the virtual world with Metamask.
- Build what you want to build.
You can use a debit or credit card to interact with the virtual world, but without a crypto wallet, you won’t have anywhere to store the digital land and other virtual property.
Invest in cryptocurrency and NFTs
Invest in valuable NFTs or participate in cryptocurrency-related activities, like staking, lending, or trading.
Most people will start investing in cryptocurrency and NFTs through centralized exchanges like Coinbase or Crypto.com, but you should be careful with digital real estate investing on these platforms. Many exchanges have failed and the investors often get pennies on the dollar.
You can use Metamask or other decentralized platforms in the digital world to reduce the loss of assets due to lack of custody, but you should educate yourself on how blockchain works because once you perform a transaction, you cannot change it.
My personal favorite way to interact with crypto projects is VaporDEX, a decentralized exchange.
Simply put, “decentralized” means there is no central governing agency. With decentralized platforms, you can process and review transactions and store your digital assets yourself. This makes you the primary custodian of your wealth.
Bitcoin was created in response to the global recession in 2009, which started because banks and money lenders made many decisions that were solely for their profits. The theory behind decentralization is that a programmatic, unchangeable public database and monetary supply would prevent government manipulation of money.
Create membership sites with subscription services
Create a platform where members pay a subscription fee for access to premium content, exclusive resources, or a community of like-minded individuals.
Provide coaching and consulting services
Use your expertise in a specific field to offer consulting or coaching services through a website or social media platform.
How to buy digital real estate
Buying digital real estate involves a process similar to traditional real estate transactions but with unique considerations.
Here are specific steps to guide you through the buying process.
- Search and evaluate listings: Browse listings to find digital properties that align with your objectives. Pay attention to factors like asking price, history, revenue reports (for websites), traffic statistics, and any relevant documentation.
- Contact the seller: Reach out to the seller to express your interest and request additional information. Ask questions and confirm the advertised details about the property.
- Verify ownership and legitimacy: Make sure the seller has legitimate ownership of the digital property. Request proof of ownership from the seller and verify it through reputable platforms or third-party services.
- Negotiate terms: Discuss the terms of the transaction with the seller. This may include the purchase price, payment method, transfer of ownership, and any conditions or contingencies.
- Draft a contract: Depending on the complexity of the transaction, consider drafting a contract that outlines the terms and conditions of the sale. It’s advisable to involve legal professionals for complex deals.
- Finalize the transaction: Once both parties agree on the terms, proceed with the payment. Ensure that all necessary documentation (e.g., transfer of ownership, login credentials, access rights) is provided.
- Complete the transfer: Follow the specific transfer process for the type of digital property you’re acquiring. This may involve domain transfer, website migration, or other relevant steps.
- Update registrations and ownership: Make sure that the digital property is officially transferred into your name or ownership. Update any relevant registrations or accounts associated with the property.
- Monitor and manage: After acquiring the digital property, monitor its performance and manage it according to your investment goals. This may involve optimizing content, marketing, and other aspects.
Most of these steps will be done in a digital exchange of assets or using a blockchain explorer. Attempting to bridge between the real and digital world can be a real challenge; it is not advised to try to hand a person U.S. dollar bills for the purchase of assets in the digital world without a trusted intermediary.
And when buying digital real estate, you’ll want to employ all the scam-avoidance tactics listed above. To summarize:
- Define your objective.
- Do your research.
- Use a reliable platform or marketplace.
- Look out for red flags.
- Ask for documentation.
- Use an escrow service.
- Avoid rushed decisions and “too good to be true” deals.
- Get professional advice.
- Trust your gut.
What other digital properties should we discuss?
Now you know how to invest in digital real estate. Digital real estate depends on people’s perception of value and can be a significant investment of time and money.
Don’t forget to read digital real estate reviews before investing in any project. You’ll also want to interact with the companies you invest in because digital real estate marketing on the community of holders to increase awareness.
Remember to exercise caution, conduct due diligence, and seek professional advice if needed. It’s important to approach digital real estate transactions with the same level of diligence and care as you would with physical real estate.
What else would you like to know about how digital real estate works?