If you’ve ever fantasized about owning your own online business or earning money while you sleep, you’re not alone. The concept of digital real estate has been increasingly capturing people’s imaginations over the past few years. Many people who are attracted to real estate investing also explore other passive income streams or side businesses.

I’m one of them! As a real estate investor who has spent over a decade owning and operating brick-and-mortar property, I’ve recently started exploring and acquiring digital assets as a new form of real estate investment. Just as physical buildings can generate rental income, websites, blogs, and online businesses can make money even when you’re not actively working.

Let’s be clear. Neither investment path is passive unless you are a silent partner investor in someone else’s business like a REIT or a real estate syndication.

Still, I think good investments that help you diversify your income are worth exploring. In this post, I’ll share how to make money with digital real estate, my experience and how it compares to traditional real estate.

TL;DR

  • Digital real estate refers to online properties that you can develop and monetize once you have traffic and a brand.
  • You can get started at a very low cost and your primary investment will be time. Or, you can buy existing digital assets and work to continue growing them for more revenue.
  • Sites like Empire Flippers have a number of tools you can use to go through due diligence on properties you are looking to buy.

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Digital Real Estate

Digital real estate just means some type of online property that generates traffic and income. It can really be anything like:

  • Social media accounts

  • Websites

  • Selling domain names

  • Digital land

  • Ecommerce stores

How Do You Make Money In Digital Real Estate?

Just like with physical properties, there are two primary ways to generate income from digital real estate assets:

1. Monetize the asset directly

2. Provide services to other investors

Monetize Directly

To monetize a digital asset directly, you need to have your own website, blog, YouTube channel, brand social media account or other online platform that attracts a steady stream of visitors each month.

There are several business models that allow you to generate revenue straight from your audience:

  • Display ads: Sign up for Google AdSense to show pay-per-click ads and earn money every time a visitor clicks. This requires high traffic volume. As a side note… just think about ads and the user experience. I find many sites are unusable because the ads slow down my laptop and make it so difficult to actually read the content I came to the site for.

  • Affiliate marketing: Promote products relevant to your niche and collect commissions when your referrals make purchases. No need to handle logistics or customer service. That’s what Nic’s Guide is primarily focused on — providing recommendations for real estate industry products.

  • Sell your own digital products: eBooks, online courses, membership communities and more allow you to leverage your expertise while serving an existing audience.

The key is building an engaged user base over time. Then you can continually test and optimize different approaches just like a physical property owner. But you should know that it doesn’t happen right away. I’ve been blogging for 10 months and am just now starting to see a traffic increase.

AHREFS data for Nicsguide.com

Providing Services

Alternatively, you can make money in digital real estate by providing services. A few areas here include:

  • Website development: Design sites & optimize user experience for clients. I set up my website initially on my own but over time, I hired a website designer to help me with all the pieces that were beyond my technical capability. This is like doing construction in property investment or hiring a handyman for your rental property.

  • Managing social media accounts: I have a friend who does social media management for real estate agents. Posting on a regular basis and thinking of new creative content isn’t easy, so I can see why there’s a demand for this service.

  • Managing social media accounts and online strategy are similar to property management in the rental real estate world.

Basically, the digital real estate market lets you take on an entrepreneurial or service-based role just like traditional real estate investing. You’re leveraging valuable assets to meet market demand as a digital landlord.

How Much Do Digital Real Estate Investments Cost?

How much do Digital Real Estate Investment Cost?

Just like in physical real estate, the amount you need depends on which niche you are focusing on and what you are doing. For example, a real estate wholesaler is someone who hustles to find great properties for other investors and so they are investing without owning property. But a syndicator goes out and finds a commercial property and has to invest a large amount of capital to buy and syndicate that project. Of course, there are always creative ways to buy real estate property with no money.

For digital real estate, here are cost ranges to get started:

  1. Domain Names: Registering a new domain name costs between $10-$20 per year, although premium domains can cost significantly more. I used to have all my domains through Google Domains but they recently sold to Squarespace. I’m the type of person who needs ALOT of technical support so I’m now switching everything to WPX.

  2. Website Development: If you’re creating a new website, you’ll need to pay for web hosting and website design and development, ranging from a few dollars to hundreds per month. WPX is the best option here too.

    As for development, I had a terrible experience on a freelance site and I found it’s much better to ask for referrals. Not sure how to do this? Get into a reputable online community with people doing the same thing as you.

  3. Content Creation: If your digital property involves a blog or other content, you may need to invest money in content creation. These could include hiring writers, photographers, or videographers. Some of the quality and word that goes into videos on YouTube for example — there’s an editing cost to this.

    For written content, you can write yourself, hire a writer or you might use an AI tool like Content at Scale. It depends on your goals here. For my blog, I like human writing that has some AI assistance to frame out outlines.

  4. Digital Marketing: To attract visitors to your digital property, you may need to invest in digital marketing, email marketing, social media marketing, or online advertising.

    I spend a ton of time learning SEO strategies and keeping up to date. Google periodically makes helpful content updates that can wreck havoc on traffic for sites. So no matter how much you know, you have to keep up with SEO strategies on an on-going basis.

  5. Virtual Real Estate: The cost of virtual real estate can vary widely in the virtual world. In this context, I mean virtual land. I’m not as familiar with virtual reality investments but know that some virtual properties can sell for thousands or even millions.

While the upfront costs can be low compared to traditional real estate, digital real estate investing requires significant time and effort to succeed.

Steps To Making Money In Digital Property

Steps to Making Money in Digital Property

Let’s say you’ve decide you want to purse digital real estate to make money online. Here’s what you need to know about getting started.

  1. Education: Learn as much as possible about digital real estate. There’s many online courses and forums to learn about different types of digital properties, how they generate revenue, and the skills needed to manage them.

    I joined a blogging course and community that taught me all about SEO, affiliate marketing and how to monetize my site. Over time, my established website will continue to grow in value and traffic – as long as I stay on top of maintenance, updated content and other strategies.

  2. Identify Your Niche: Decide what type of digital property you want to invest in. These could be websites, domain names, apps, or virtual land in online games or digital worlds. Consider your interests, skills, and the time and money you’re ready to invest.

    Starting a blog is relatively simple but creating an app is much more involved. It also depends on your current skills and what you are interested in. Personally, I don’t want to learn how to code or develop software but this might be right up your alley.

  3. Create a Business Plan: Define your goals, strategies, and budget. Determine how you’ll generate revenue and what kind of return on investment you aim for.

    Sites always say to create a plan. It’s a good idea but it doesn’t always happen because sometimes you don’t know enough to do this. I’d say find a group or a mentor who can help you. This holds true in the physical real estate market too. It’s highly unlikely that a new investor would know how to create a business plan for buying a single family property without learning from others.

  4. Buy Digital Property: You can create a new website or app, register a new domain name, or buy an existing digital property. Several online marketplaces and auction sites specialize in selling virtual properties.

    But… having just built this site from scratch, I don’t think buying an existing site without either a business partner or experience is a good idea. I can tell you I would have had zero idea what I was doing and what the monetary value of an existing site really could be without having experience.

  5. Develop and Monetize Your Property: This could involve creating content, optimizing for search engines, setting up advertising or affiliate marketing, selling products or services, or leasing out space.

    This is the part that takes time. If you buy digital real estate you might have existing traffic but if you are starting from scratch, it will take a while until you have enough traffic to even think about selling advertising space or generating “passive income”.

Monetizing Digital Properties

Let’s dig a bit deeper into how you can monetize various types of digital real estate.

Domain names

Investing in domain names involves buying names likely to be in demand later. You might develop websites on these domains or you might just hold them. It’s like land investing in the physical real estate world. You can buy a domain name and then hold until the timing is right.

Social Media

Social media sites, whether on platforms like Instagram, Facebook, YouTube or LinkedIn, can create income if you know what you are doing. You can either build an audience from scratch or you can buy an existing social media account.

Once you have the audience, you can monetize through:

  • Selling advertising space and sponsored posts

  • Promoting affiliate offers and products to earn commissions

  • Building a personal brand and selling merchandise

The business models are endless. But the key is attracting a targeted, engaged following around a niche like finance, cooking, parenting etc. Then monetization of this digital real estate asset becomes much easier over time.

Treat it like building a long-term tenant base for a profitable rental property. Focus on serving their needs and the income will grow.

Websites

Websites are central digital hubs, like a physical business location, to offer products, services or content. Here’s how you can monetize them:

  • Sell products or software as digital downloads directly from your site

  • Offer paid subscriptions, memberships or premium content

  • Provide paid consulting calls, online coaching sessions or informational webinars

  • Build an email list to promote new offers and discounted deals later

  • Flipping websites by finding a good deal, growing traffic and then selling

In my posts about short-term rental investing, I talk a lot about the need to create your own direct booking website and not just rely on platforms like Airbnb and VRBO. One of the primary reasons is to establish a brand and central hub for your vacation rental property.

Nic's Guide

Mobile applications

This is an interesting form of digital real estate but it might have higher development costs to get started. Once you have a mobile app, you can monetize it by:

  • Inserting ads within the app and earn money from clicks/impressions

  • Offering premium app versions with more features at a price

  • Enabling in-app purchases for items/upgrades/coins

Email Lists

Email lists can be incredibly valuable. I also see a ton of folks creating newsletters right now where their income comes from sponsorships. You can monetize email lists and newsletters by:

  • Sending promotions, deals, and offers for products/services to drive sales from your list directly

  • Featuring affiliate products or partners to collect commission on referrals

  • Promoting entry into high-value webinars, courses, or coaching programs

Virtual Real Estate

Virtual Real Estate is a distinct digital domain within a virtual world like Metaverse. It’s an interesting digital world where you can monetize by charging users for access to experiences, services, virtual concerts or games inside of the Metaverse real estate property.

Valuation of Digital Real Estate

Let’s say you want to buy digital real estate or you want to know how much your current virtual property is worth. Here’s a few areas you’ll want to understand:

  1. Revenue: This is one of the most straightforward ways to gauge the value of a digital asset. If your website generates a reliable income stream through multiple channels, such as advertising, sales, and subscriptions, it will have a higher value. It’s like buying real estate property that is cash-flowing from day one.

  2. Traffic: Organic traffic is more valuable than paid traffic because it’s typically more sustainable and indicates strong SEO. You can use paid traffic to get started but if someone is looking at buying digital real estate, organic traffic is king.

  3. Domain Name: A catchy, easy-to-remember domain name, especially one with a .com extension, can add to a website’s value. Domain names with high-value keywords can also be worth more.

  4. Content: High-quality, unique content can increase a site’s value by attracting visitors and improving search engine rankings.

  5. SEO Rankings: Websites that rank highly on search engine results pages (SERPs) for relevant keywords are more valuable because they’re likely to attract more organic traffic.

EmpireFlippers has a tool you can use to help you get an idea of what your virtual property is worth:

Digital Real Estate Investing’s Pros and Cons

I like digital real estate as a way to diversify income and in some cases, it can augment your real estate investing business.

Digital Real Estate Pros

  1. Lower Startup Costs: Digital real estate has a low initial investment than buying physical property.

  2. High Potential Returns: Digital properties can offer high-profit margins, especially if they attract a large audience or you successfully monetize through ads, products or services.

  3. Accessibility: You can invest in digital real estate from anywhere in the world.

  4. Scalability: Digital assets can often be scaled up more quickly than physical ones. For instance, a successful online business can expand its reach and offerings without physical infrastructure.

  5. Flexibility: Digital real estate can quickly transform and adapt to meet changing market trends or consumer preferences.

Digital Real Estate Cons

  1. Technology Changes: Technology changes can impact the value of digital assets. For example, modification in search engine algorithms can affect website traffic, and new technologies can make existing assets obsolete.

  2. Competition: The internet has millions of websites, apps, and other forms of digital real estate. Standing out amid intense competition can be challenging and requires ongoing effort. I found this handy site called StatsFind.com that shows the daily count of websites, as new sites get added every single second.

    Statsfind.com

  3. Maintenance and Updates: Just like with rental properties, digital assets require regular maintenance and updates. It includes updating website content, monitoring site speed, and maintaining security. You can’t just “set it and forget it”.

  4. Regulatory Risks: The Internet is subject to various regulations, which can change and vary by country. Data privacy compliance can be complex, and non-compliance can result in penalties.

  5. Monetization Challenges: While there are many ways to monetize digital real estate, each method has challenges. For example, selling products or services online requires building trust with consumers.

Final Thoughts On Virtual Assets

I believe digital real estate can be a great investment, but it’s not a passive or hands-off endeavor. Just like physical assets, you have to know what you’re doing if you want to see returns. Before you buy an existing virtual property, seek guidance from an experienced community or partner. Or if starting from scratch, be prepared for significant time and resource investments until your new digital real estate begins generating revenue.

It’s not an instant money maker—there are pitfalls and skill-building required, similar to traditional real estate. There’s so much opportunity though and more people than ever understand these digital assets now. With the right moves and patience, virtual properties offer promising profit potential in coming years for those willing to nurture and develop the space. But educate yourself thoroughly first before diving in!

Digital Real Estate Investment FAQs:

Are there any legal regulations to be aware of when investing in digital real estate?

Yes, there are legal regulations to be aware of when investing in digital real estate. Some of these are:

  1. Intellectual Property Rights: Be sure to follow copyright laws when using content, images, or trademarks on your digital assets. Obtain proper licenses or permissions when necessary.

  2. Domain Name Regulations: Be aware of domain name registration rules and restrictions that domain registrars or governing bodies impose. Avoid trademark infringement or cybersquatting.

  3. Privacy and Data Protection: Comply with data protection laws and regulations, especially when collecting, storing, or processing personal information of website visitors or users.

How much can you make with virtual real estate?

Earnings potential with virtual real estate varies widely based on your specific assets and business models. But since I’m a blogger, I found this graphic from ProductiveBlogging.com that shows blog owners make money money the more they keep blogging. I’m in year 1 and right now…. my income is zero but let’s see what happens in future years!