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Physical real estate is a great investment, but when the industry struggles, you may wonder where else to invest your money. Today, many investors are trying digital real estate. While this sounds abstract and complicated, if you understand domain names, mobile apps, and advertising, you know much more about investing in the digital world than you thought.
Like any investment, there are pros and cons to investing in digital assets. Keep reading to see how investing in the virtual world works and how it compares to the real world.
What Is Digital Real Estate?
Digital real estate refers to any digital assets you own. A common example is a website. It's easy to see how this digital property takes up space in the digital universe. Other complicated examples of digital real estate include non-fungible tokens, mobile apps, or digital billboards.
In short, digital real estate investing is investing in any real estate in the 'alternate world,' aka the internet. Many investors today are turning to digital real estate because of the state of the housing market and its volatility.
You can still see and use digital real estate, even rent it out like you would if it was physical. However, the buying and selling process and how you earn your profits differ. Fortunately, you don't have to be a “techie” to understand how to make money in this way.
How Valuable Is Digital Real Estate?
Like any property, there's no way to predict the value of digital real estate beyond today, but we can look at the gains it’s made thus far.
With market values in the trillions, it's easy to see why investors are jumping on board with digital real estate investing to diversify their portfolios from the volatility of real estate in the real world.
In Decentraland, investors have seen as much as a 500% property value increase.
All investments have their ups and downs, though. So don't fixate on a specific period when virtual assets went crazy. Instead, look at the big picture and be realistic about your potential earnings (or loss).
How To Make Money From Digital Real Estate
Learning how to buy digital real estate and invest in it isn't as complicated as it seems. But, like any investment, there are simple and complex ways to invest your funds.
Build Or Buy Websites
Building a successful website or buying an already established one is the most common form of digital real estate investing. If you build a large audience, you can sell the website for more than you invested in it, earning capital gains.
If owning a website doesn't appeal to you, consider advertising to earn money in digital real estate. Blog owners can use affiliate marketing to earn commissions, get sponsored by other businesses to post content on their blog, or create their own brand, advertising on other investors' websites, increasing their company's sales.
Renting Website Space
Just like you rent out investment properties, you can invest in digital real estate and rent it out. You earn cash flow for renting the property to others while gaining the capital appreciation the site makes.
Making money on social media is another way to invest in digital real estate. You might even know someone who is a social media influencer. They get paid to do sponsored videos and posts or to sell their products on their social media platforms.
The key is to know how to build a following. Pick a niche with pain points existing influencers haven't touched and build your audience. Like a blog, the more followers you have, the more advertising and sponsored posts you'll have.
Flip Domain Names
Domain names can be worth money if you know how to find the right options. Look for domain names that companies can easily brand, are short and easy to remember, and have the .com extension for the greatest returns.
Like fixing and flipping homes, flipping domain names can be risky. First, you must know what will sell (and won't). You can buy a “dud” and not make anything, or you can buy an incredible name and sell it for thousands of dollars in profits.
The Bottom Line: Digital Real Estate Investing Has Profit Potential
Investing in digital real estate can be enticing with its fast earnings and popularity, but you should consider the pros and cons before investing. You shouldn't put all your money in digital assets, just like you shouldn't put all your money in physical real estate. They are great for diversifying your portfolio but consider physical real estate investment opportunities too.