How to Invest in Virtual Real Estate: Everything You Need to Know

Introduction

There is a new way to invest in real estate and it doesn't require you to leave the comfort of your home. Wait, what? Well, it's been almost impossible to avoid hearing the word Metaverse if you've browsed the internet at all in the past few months (we wouldn't blame you if not). Now, real estate is now becoming available for sale in the digital universes that are being created. In this blog post, we will discuss firstly what it is, and how to invest in virtual real estate. We will cover everything from how it works to the risks involved, and whether you'd even want to. By the end of this post, you will know everything you need to get started!

What is the Metaverse?

In case you're still scratching your head, wondering what the heck we're talking about, the Metaverse is a digital universe that allows for users to interact with each other and create things. It's like a cross between Second Life and Minecraft - allowing people to buy land, build homes and businesses, and generally just live out their online lives in a virtual world. It's not just for fun and games though - the Metaverse is being touted as a future platform for business, with users already able to buy and sell real estate there. Perhaps the most public use of the word has been Facebook's recent rebrand to Meta, a thinly veiled reference to their plans to focus on digital alternate worlds in the next decade.

What is Virtual Real Estate?

Virtual real estate is, well, exactly what it sounds like. It's land that you own in the Metaverse - and just like regular real estate, you can buy, sell, or rent it out to other users. The benefits of learning how to invest in virtual real estate are obvious - there's no physical location to maintain, no repairs needed, and you can even earn income from it while you're offline. Plus, with the current state of the world, there's never been a better time to invest in something that doesn't require you to leave your house!

Sounds a bit ridiculous, right? Well one way of thinking about it is like purchasing a domain name or a premium social media username. One key difference is that whereas before you were beholden to the platform, on Web 3 you are free to decide what to do with the space - whether that be displaying virtual art or earning income by playing games or selling products.

From a corporate perspective, it also acts like a CRM. Companies who choose how to invest in virtual real estate can track their customers and users and allow them to interact in a semi-controlled environment: a community where they are given more freedom and essentially have another online dimension to be reached through, where competition for engagement is lower than in "real" life.

How to Invest in Virtual Real Estate?

  1. Firstly, you'll need to create an account with a virtual world platform like The Sandbox, Somnium Space, Decentraland, or Arkadia. These are just a few of the platforms that offer virtual real estate for sale, but there are many more so do your research to find the one that's right for you.
  2. Once you've created your account, you'll be able to browse the available properties and purchase the one that you like. These appear in different ways on your browser depending on the world. Some show up in first person and you can walk around with other characters and view plots and billboards with digital art, whereas others show aerial views of land with brand logos denoting ownership and delineation of plots.<br><br>There are a few things to keep in mind when purchasing virtual real estate:&nbsp;<br><br>- The size of the property - how much land do you want?<br>-&nbsp;The location - just like regular real estate, location is key and some properties are more desirable than others<br>- The price - virtual real estate prices vary, so do your research to find the one that's within your budget. Be wary of buying into hype but also perhaps stick to projects you know well or that have established users.<br>

Once you've purchased your property, it's yours to do with as you please! You can live on it, rent it out to other users, or even use it to run a business. Just remember, like regular real estate, the value of virtual real estate can go up or down so it's important to keep an eye on the market and only invest money you can afford to lose.

The Risks Involved

When considering how to invest in virtual real estate, risks are in some ways much the same as with regular real estate - you can lose money if the property doesn't appreciate in value, or if it's not rented out. However, there is also the risk that the platform you've chosen may go bankrupt, in which case you could lose your investment.

There is also the volatility risk of cryptocurrency: of course, digital assets are traded using digital currencies and so you can be at the whim of price changes while your cash is locked up. This has second order effects when virtual worlds have their own currency. Decentraland, for example, has its own currency, MANA. To purchase real estate there, you'd have to convert your native currency to ETH, convert that to MANA and then buy the property, exposing you to two sets of currency risk.

It's important to do your research before investing in virtual real estate, and to weigh up the risks against the potential rewards. If you're comfortable with those risks, then it could be a great way to get involved with Web 3.

Conclusion: Whether you should Invest in Virtual Real Estate or Not

In a word, maybe. If you're reading this it's probably of interest, so explore the platforms mentioned and see what you think. By no means is this an investment to bet the house on (the real one, not the virtual one). But learning how to invest in virtual real estate is a great way of learning more about the subject and investing in something with an asymmetric payoff.The benefits of virtual real estate investment are many - there's no physical location required, it's relatively low risk, and the potential rewards are high. So if you're looking for a way to invest extra funds in alternatives asset classes, virtual real estate could be a great option!

Addendum: Can you track your virtual real estate on Strabo? Not yet but this is something we are considering and would love to hear some thoughts!

Ben Waterman

Written by Ben Waterman

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