Digital Real Estate: What It Is, and How To Invest

Digital real estate is a hot topic these days.

People regularly talk about buying and flipping digital assets on social media. Celebrities brag about the property they bought in a virtual world like the Metaverse. Occasionally, you’ll even see online real estate discussed in the news.

But what’s digital real estate? And why is it becoming such a popular topic amongst investors?

This article will help you navigate the sometimes murky waters of digital real estate investing. We’ll highlight the benefits of owning digital real estate, explain how (and where) to buy digital real estate, and even how to get started building it for yourself.

What is Digital Real Estate?

Digital real estate investing, put simply, is the ownership, development, and management of online assets and properties. This can include websites, social media accounts, online marketplaces, and other digital platforms. Digital real estate can be bought and sold, similar to physical real estate, and can be valuable for businesses and individuals looking to establish an online presence.

Here is a short list of the more common digital real estate assets:

• websites
• mobile apps
• blogs
• social media accounts
• domain names
• online stores
• digital advertising space
• virtual real estate (like that in a video game)
• non-fungible tokens

Is Digital Real Estate Valuable?

Short answer? Yes, digital real estate can be extremely valuable.

Several factors determine the value of digital real estate, including the quality and relevance of the content, the level of traffic and engagement, and the potential for monetization through advertising or other revenue streams.

Benefits of Digital Real Estate Investing

There are several benefits to owning a digital asset, such as:

1. Passive income potential – Digital properties can generate passive income through advertising, affiliate marketing, or other monetization strategies.
2. Low overhead costs – Digital real estate typically has lower overhead costs than traditional real estate investing, as there are no structures or property to maintain.
3. Flexibility – Unlike physical property, an Internet property can be accessed and managed anywhere in the world.
4. Scalability – Digital assets can be easily scaled up or down depending on your goals and resources.
5. Greater reach – We live in the new digital world, and digital real estate can reach a global audience, giving you the potential to reach a much larger market than traditional real estate.
6. High demand – As more businesses and individuals turn to the internet for information and commerce, the demand for digital investments will likely grow.

It’s important to note that owning digital real estate can come with responsibilities, such as maintaining and updating the site, managing user data, customer service, and privacy, and ensuring the site is secure. (This is especially true if you offer digital products, like software or online courses.)

Ways to Invest In Digital Real Estate

Investing in digital real estate works as it would for traditional real estate investing — you can buy or build it. Both strategies have pros and cons, but this generalist approach to investing should feel familiar (especially for traditional real estate investors.)

1. Buying Digital Real Estate

Purchasing digital real estate is arguably the quickest path toward seeing a return on investment from a digital asset. And buying/selling digitial real estate is more approachable than people think. After all, building and selling digital assets in 2023 is mainstream and one of the safest ways to make money online.

You can look for buying opportunities in several places, including online marketplaces like Flippa and FE International. Or you can search online forums like Twitter, Reddit, or Quora for digital assets being sold privately.

Pros:

• Time – Buying digital real estate can be a faster way to get a foothold in the market, as you don’t need to spend time building a website or online presence from scratch.
• Established traffic – When you buy an existing website, it likely already has some level of traffic and may even have established search engine rankings, which can be beneficial for generating revenue or attracting visitors.
• Turnkey operation – Buying an asset that is already operational means you can start generating revenue or achieving your business goals more quickly.

Cons:

• Cost – Buying an established website can be more expensive than building one from scratch, especially if the website has a strong track record and a large user base.
• Limited control – When you purchase an established asset, you may have limited control over certain aspects, such as design or content.

2. Building Digital Real Estate

Have a website, blog, or social media account, maybe one you’ve built for your hobby or niche interests? Congratulations, you’ve already made the low initial investment toward building an online business or passive digital income stream.

If you’re willing to start investing your time to create content and generate traffic, you can build a digital asset entirely from scratch!

Pros:

• Customization – Building a website, software application, or online presence allows you to customize it to fit your specific needs and goals.
• Ownership – When you build your digital assets, you have complete ownership and control over them — they become your intellectual property.
• Cost – Building a digital property can be more cost-effective than buying an established one, especially if you can do it yourself or have access to affordable resources.

Cons:

• Time – Building from scratch can be time-consuming, especially if you are unfamiliar with web design or development.
• Traffic – A brand new website or online presence may not have established traffic or search engine rankings, making generating revenue or attracting visitors harder.

Buying vs. Building: Which is Better?

Whether you buy or build digital real estate will depend on your specific goals, budget, and resources.

The argument for building:

It can be more cost-effective and customizable if you have the time and skills to build your website or online presence. Do a Google search with the keywords “digital real estate for beginners,” you’ll soon discover a thousand ways to build a digital asset; luckily, most are cost-free and can be done during your free time.

The argument for buying:

Buying established digital real estate may be the better choice if you need to get up and running quickly. It takes time and effort to capture traffic with a brand-new digital asset, and it might be months before you make money online.

Next Steps: Building a Digital Real Estate Portfolio

Investing in digital real estate can be just as lucrative as physical real estate and can be acquired much more quickly due to the lower comparative cost. However, as with any business, building a portfolio takes careful planning and ongoing management to scale successfully.

Step 1: Get familiar with managing digital property.

Social media platforms earn money online differently than a blog or podcast would. If you plan to diversify your portfolio, take time to learn the ins and outs of each type of asset.

Step 2: Hire help.

You should get comfortable hiring and managing contractors to help with your portfolio, even if you plan to invest full-time.

Having help with troubleshooting, updating, and creating content is crucial, especially for content-driven assets like blogs or podcasts. The consistency, quantity, and quality of your content will drive traffic. Traffic = opportunities for revenue.

Step 3: Learn to self-fund new purchases.

There are ways to finance digital real estate, but your options are few compared to physical real estate. Many investors have learned to fund their next purchase by “flipping” assets.

Here’s an example of how you might flip a digital property:

Let’s say you purchase a blog for $5,000, and it generates $300 in monthly ad revenue. If you were to make improvements to the blog that doubled the traffic and monthly ad revenue, you’d have a blog that generates $600 every month. You now have a blog worth $10,000+ to sell and use the proceeds to fund your next venture.

‘Old’ Digital Assets vs. ‘New’ Digital Assets

You’ll notice I talk primarily about ‘traditional’ digital assets in this guide, things like websites and domain names. Still, when people ask, “What is digital real estate?” they commonly refer to virtual land, virtual worlds, and NFTs.

However, virtual property inside a digital universe that pays digital currency you can then spend in the physical world is a BIG, complex topic. While there is a lot of hype around this new type of virtual asset, blockchain technology is still very new, and the scene is rife with disinformation.

Suppose we see further retail adoption of blockchain and cryptocurrencies. In that case, I may have to write a new article diving deep into that topic, but that’s another conversation for another day.

For this guide, I’ve attempted to stay in my lane and talk about digital real estate investing in the “traditional” sense.

Final Thoughts

Digital real estate investing sounds like something from some alternate virtual reality, but it’s a very real way to build your own business in 2023.

Digital opportunities are unique, and revenue sources varied — ad revenue, rental income, royalties — there are numerous ways to profit. Plus, these digital assets are within range of nearly anyone, sometimes requiring only a few bucks and hours of your time.

Don’t believe me? I built this blog using free plugins and a cheap web host (Bluehost if you’re curious.) And my overhead, or “cost to do business,” is almost non-existent, and I write all of the content myself, so payroll is… just me.

If you can afford $20 monthly to host a website, you can build an asset from scratch using YouTube tutorials and free software. And just like physical real estate, once you know how to create one profitable asset, you can “copy-paste” your way to wealth.