Investing in real estate has always been very popular. However, the traditional market for such investments has many disadvantages making this option out of reach for many people. First of all, it's a high entry threshold and low liquidity, though thanks to technology, these problems are gradually being solved. Primarily, this is due to digitalization and new opportunities it opens up – you can buy digital real estate as NFT, tokenized shares, or a part of the Metaverse.
In the modern world, fundamentally new methods for investing in real estate through digital assets are emerging. There are several ways in which such investments can be made. In this article, we will talk about the main methods for generating income, how to invest in digital real estate, and why digital real estate investing is profitable.
Three ways to make money on digital real estate
Is digital real estate a good investment? Yes, sure. Digital real estate investing is one of the most convenient and simple ways. There are ample opportunities for investors here, including the ability to buy or sell assets without leaving home. There are three main ways to invest in real estate through digital assets.
Buying and selling real estate in the Metaverse
One of the popular ways to make money in the Metaverse is buying and selling virtual land. According to forecasts, the cost of the Metaverse by 2024 will reach $ 800 billion; respectively, we can expect a rapid increase in land prices. In 2021, Metaverse sales exceeded $500 million.
There are dozens of Metaverse projects, and interest in them is constantly growing. This is a very lucrative method as there are already examples of virtual land sold for millions of dollars. Despite the industry's challenges over the past few months, investors continue to invest heavily.
However, investors will have to face the problem of a high entry threshold. Even though investing in a virtual land in the Metaverse still requires less capital than buying a real asset, the cost is still quite high. The higher the popularity of the project, the higher the price. Perhaps the solution to this problem will be the initial investment in less popular projects. However, such a move comes with significant risks since it is impossible to say how to buy digital real estate in the Metaverse with proven returns.
Renting land in the Metaverse
If you already own land, it can be rented out in the Metaverse. The digital technologies of the Metaverse allow this. This way of earning may become popular as the market grows and develops. Some large companies like Nike have already indicated their desire to lease land through the Metaverse.
The most popular way to rent through the Metaverse is to work with a project that offers a lease through a fractional ownership agreement. However, the return on such investments depends largely on the initial investment. If you are not ready to invest hundreds of thousands of dollars, you will have to wait a long time before making a significant profit.
Real estate tokenization
Asset tokenization involves the transfer of rights to a certain object to the blockchain. Real estate tokenization is gaining popularity as it has certain advantages over other methods of attracting investments using digital assets. Real estate rights are entered into the blockchain and divided into shares, represented in tokens. Those who buy tokens own part of the asset.
Thanks to tokenization, real estate investments are becoming more accessible. Fractional ownership significantly lowers the barrier to entry, making investment easier for private investors.
If a client invests in tokenized real estate, then, as a rule, they receive income from rental payments. The payments can be made with a particular frequency – usually monthly. The investor receives income in proportion to the size of their investment. Payouts can be made in various cryptocurrencies or stablecoins.
In addition to receiving income from rental payments, investors can also earn from selling their digital shares. If real estate grows in value, they can sell their tokens. We'll consider the main benefits of digital real estate investing in the next section of this article.
Benefits of real estate tokenization and investments in it
Analyzing the three ways to invest in real estate through digital assets, we can conclude that tokenization will be one of the best options. This is especially true for private investors who do not have vast opportunities for large investments and, at the same time, are interested in obtaining stable profits.
Availability of investments
Investing in tokenized assets means the investor does not need to buy the entire asset. It is enough to buy only a certain share. The claim may be small in this case, but its cost will be appropriate. Asset tokenization provides a low barrier to entry, which is great for private investors.
Passive income without expenses
As a rule, real estate is bought in order to receive passive income. However, the property is an asset that requires significant capital investment. In addition to buying it, it is also necessary to carry out repairs to the property, furnish it, spend time searching for tenants, manage the facility, etc. You can hire a property manager, but in this case, you will have to pay at least 25-30% of your property income.
Real estate tokenization solves this problem. It is enough for an investor to buy a token and start receiving passive income right away. You do not need to manage the property, look for tenants, and bear the costs required to repair the facility. All these problems are solved by the company that issued tokens to raise funding.
Simple tokenization process
It is quite easy to tokenize assets, especially when turning to special consulting agencies like Stobox. This is important for property owners who want to transfer their assets to the blockchain. Using tokenization, a company can free up capital, raise funds from investors, buy new real estate, and so on.
Unlike cryptocurrencies and utility tokens, a company issues security tokens in the process of tokenization. These tokens are recognized as securities in many countries. Accordingly, all guarantees from state regulators apply to them. This provides reliable protection for investors.
It isn't easy to sell real estate sometimes. This process can take several months, given the need to find a client, complete the necessary documents, etc. Selling tokens is much easier, especially with the development of products such as DS Swap by Stobox, which opens up a secondary market for security tokens. Interest in tokenized real estate is growing in the world, and the liquidity of digital assets is growing accordingly.
Digital assets make real estate investment more accessible. People can invest in three main ways – purchasing, renting real estate in the Metaverse, or buying tokenized assets. Tokenization will be an excellent choice for companies that want to attract private investors. As a result of tokenization, the company issues security tokens, which are considered analogous to securities. This protects both investors and the issuing company, also lowering the investment threshold. Please contact our specialists if you want to learn more about real estate tokenization and consider this option for your company.
Is it possible to make money on digital real estate?
Sure. The field of digital real estate is actively developing and brings good income to both investors and property owners.
How to invest in digital real estate?
There are several options for buying digital real estate. For example, you can buy tokens during the Security Token Offering (STO). You can also make a deal through the DAO.
How to make money on digital real estate?
Earnings on digital real estate can be achieved in two ways. These are dividends from the rental of property (distributed in accordance with your share) or the sale of assets after their price rises.
Is digital real estate a good investment?
Yes. Real estate is always attractive because it will never lose its relevance. However, investing in virtual real estate helps solve the disadvantages of investing in physical properties, namely, it provides high liquidity, easy purchase, etc.