Virtual Real Estate Investing: What is it and Is it Worth it? (2024)

Many people know that there are tons of virtual investing opportunities. For instance, many people explore cryptocurrencies, NFTs, or other digital currencies. That said, virtual real estate has been gaining a lot of attention lately from investors and creators. However, not a lot of people understand what it is. If you want to learn more about virtual real estate investing, just keep reading.

What Is Virtual Real Estate Investing?

Real estate has always been a significant avenue for investors looking to grow their investment portfolios. That said, most real estate purchases are “real” or consist of physical properties you can touch and see first-hand. However, investors today are expanding their portfolios with investments that you can’t physically touch.

Virtual real estate is a unique land in a digital world, often called the metaverse, a collection of online worlds. An online world is comparable to virtual reality, with communities and social components.

Land in the metaverse can be just as valuable as land in the real world. In fact, although they may seem very different, virtual real estate investments are similar to real-world property investments in several ways. So next, let’s go over how virtual real estate investing works.

How Does Virtual Real Estate Investing Work?

Similar to investing in real estate in the real world, the supply of virtual real estate is limited. Additionally, once you purchase virtual real estate, you own a unique parcel of land in the metaverse. Like physical real estate, you can do things with your virtual land. For instance, you can create income-generating properties, like leasable buildings or interactive venues.

Additionally, each parcel of land in the metaverse is unique and backed by a non-fungible token (NFT). An NFT is essentially proof of ownership for something digital, making it identifiable in a unique way. When you buy virtual real estate, your NFT guarantees ownership and makes it possible to sell the property to another investor, it automatically and instantly records transactions, eliminating the time you’d wait to close on a property.

How to Invest in Virtual Real Estate

Buying and selling virtual real estate in the metaverse is not difficult. In fact, you can easily access most platforms with a desktop computer or laptop, making it extremely simple to look over your virtual real estate before making a purchase.

Investing in virtual real estate is similar to buying cryptocurrency. First, once you’ve found a piece of virtual real estate, you’ll need to open a digital wallet to hold your assets, including the cryptocurrency you use to purchase your virtual land. The type of wallet you choose depends on which metaverse platform you use.

You’ll have to purchase cryptocurrency to complete the virtual real estate transaction. People use two main cryptos to purchase virtual real estate, including Decentraland and The Sandbox. If you use Decentraland, you’ll need to purchase MANA coins. On the other hand, if you use The Sandbox, you’ll need SAND coins.

Once you have the currency in your digital wallet, you can purchase your virtual real estate immediately. It only takes a few seconds for the platform to verify the transaction, then your property is legally yours, and you receive an NFT to represent the purchase.

To sell the virtual property, you’ll list it for sale, and someone else will buy cryptos to trade for an NFT. Then, your wallet will trade the NFT for cryptos, hopefully at a profit.

How Much Does Virtual Land Cost?

Virtual real estate prices depend on which metaverse you buy in and where you purchase your digital land. Additionally, prices can change very quickly with virtual real estate compared to prices in the real world. After all, it can take months for real estate prices to decrease or rise.

Each digital world or metaverse uses a different type of currency, making it difficult to determine prices for each piece of virtual land. For instance, you can purchase properties for as little as $1,000, or you could be spending $2 million on one piece of virtual real estate.

As such, investors must do their research before investing in virtual real estate. Before making a digital purchase, explore different digital worlds, prices, and properties. Next, let’s discuss the pros and cons of virtual real estate investing.

Pros and Cons of Virtual Real Estate Investing

Any investment is going to have some pros and cons. While many people have made money with virtual real estate investments, some have also lost profits. After all, investments like this are high risk with the potential of high rewards–it’s not guaranteed. If you’re unsure whether or not this is a suitable investment for you, here are some of the pros and cons.

Advantages of Virtual Real Estate

• Accessibility- Purchasing real estate digitally is extremely accessible, and anyone can invest. Additionally, since it’s all digital, you can buy and sell properties from the comfort of your home with just a smartphone, laptop, or computer.
• Profitability- Buying digital real estate offers profit opportunities. After all, more and more people are looking to purchase virtual land, meaning current investors can sell their properties at higher prices.
• Flexibility- Unlike purchasing physical real estate, you don’t need to go through banks or government intervention to purchase properties. Instead, you can explore several options and invest in properties directly by yourself.

Disadvantages of Virtual Real Estate

• Poor Regulation- Since there’s a lack of control and regulation, investing in digital real estate can be extremely risky. After all, you could end up losing your money due to extortion or manipulation.
• Hard to Predict- The internet is ever-changing, so it’s hard to predict what will come next. With more and more digital investors, prices and virtual properties could vary day by day.
• Increased Cyber Threats- Everything done online is prone to cyber threats and hackers. As such, investors must take cybersecurity measures to avoid data alterations, manipulations, and loss of profits.

Is Digital Investing Worth It?

Ultimately, every investment is a bit risky. However, some investments have more risk than others. When it comes to virtual real estate investing, the risks can be higher than physical real estate investing. On the other hand, profits when you sell digital land can also potentially be similar or higher.

Investors must researchtheir options and make educated decisions on their purchases. Understanding the advantages and potential risks of digital real estate investing is the first step in making an informed decision.

The digital world is changing and evolving day by day, and there is still so much to learn. Some digital worlds may become extremely profitable, while others could die off and fizzle into nothing. So, before you commit to an investment, make sure to do as much research on the digital world as possible.

Make Rental Property Management a Breeze

If you’re looking into virtual real estate investing, perhaps you already own physical properties and want to expand your portfolio. Well, it can be difficult to manage properties while investing in new ones. Luckily, you don’t have to do it all alone.

Bay Property Management Group offers comprehensive rental management services if you need help with your rental business. Some of our services include tenant screening, maintenance, rent collection, and more. Contact BMG today if you need rental management services in Baltimore, Philadelphia, Northern Virginia, or Washington DC.