Virtual real estate is land or property that you can own or rent within online gaming environments or virtual spaces. With the growth of virtual reality, it’s likely that real estate in these virtual worlds will increase in potential as well as value.
Individuals and businesses may be interested in virtual real estate because of its many applications. Learning about what virtual real estate includes, how to invest in it, and the pros and cons of virtual real estate can help you determine whether this is a good venture for you.
At Galaxy Title & Escrow, our team of experts can help you buy or sell any type of property. And if you have questions about this newer type of real estate, review this guide to virtual real estate.
Where Did Virtual Real Estate Come From?
The concept of virtual real estate originated from online gaming. As early as the 1990’s players were able to buy virtual property including houses, shops, and businesses within games. This idea of owning virtual property gained more popularity later in the 2000s when there were more online games. In these game worlds, players could create custom avatars and build their own virtual environments.
Online gaming that includes virtual real estate also has a virtual economy and currency for gamers to buy and sell their property and structures to customize the property, such as houses. These assets are valuable because of their desirability within the games and the popularity of the gaming community.
Who Invests in Virtual Real Estate?
Virtual real estate has many types of investors including:
- Gamers: People who play online games may buy virtual real estate to enhance their playing experience. They can also make virtual money by selling goods and services in these virtual environments.
- Entrepreneurs: By developing virtual real estate, some are able to earn profits when they sell property or create a business in online gaming communities.
- Businesses: Companies in a variety of industries have invested in virtual real estate in order to have a presence in virtual worlds. This is a useful way to advertise to gamers.
- Institutional investors: Institutional investors, such as venture capital firms or banks, may invest in virtual real estate because it is recognized as an asset.
- Cryptocurrency investors: Since this type of property is bought and sold using cryptocurrency, investors may join online gaming communities to increase their virtual currency, which can be exchanged for real money.
Why Should You Invest in Virtual Real Estate?
You may consider investing in virtual real estate because it’s an asset and has potential to become even more valuable. Here are reasons why you should invest in virtual real estate:
This is still a new market and has lots of potential to grow in the future. With technological advancements, virtual realities and environments that include virtual real estate will continue to grow and become more sophisticated. By investing in virtual real estate now, you may increase the value of your virtual property overtime.
Naturally, as this type of real estate originated in gaming communities, investing in virtual property can be fun. When you buy land, a house, or a business in a virtual environment, you have the opportunity to customize your property. This allows for a lot of creativity in designing and maintaining your property.
Virtual real estate is a new asset class that’s different from stocks or bonds that you may invest in. You can diversify your investment portfolio by purchasing virtual assets such as real estate. Having diversity in your investments can improve your returns and reduce risk of your portfolio being ruined by a single type of investment.
When acquiring assets it may be beneficial to form an entity so that your investments can be separate from you as an individual. An entity ensures that your investments are not personal assets and protects you from losing these assets due to debt or legal trouble.
Just like traditional real estate, virtual real estate can generate passive income through rental payments or other fees. Some sell goods and services within the virtual world that also enables passive income.
As an entrepreneur, it’s a good idea to invest in virtual real estate because it helps you gain access to a new audience. Creating your business in a virtual world helps you advertise to a large audience. For example, in some games there is a marketplace where you can host a storefront.
How to Invest in Virtual Real Estate
Here are steps on how to invest in virtual real estate:
- Research virtual real estate platforms: Discover what your options are for where you can buy and sell real estate online. Look for platforms that use blockchain technology to create a virtual world.
- Create an account: Choose a platform and create an account. You will have to purchase cryptocurrency so that you can buy, sell, and lease property in this virtual environment.
- Determine your investment strategy: Once you acquire virtual property you can hold it long-term hoping the value grows, buy and flip the property, or lease your assets.
- Participate in the virtual real estate community: Engage with others on the platform and in online forums so you can stay up-to-date with developments that may affect your investment.
- Manage your investment: Even in a virtual world, you have to manage your property. This may include upgrading, leasing, or selling your virtual real estate.
Pros and Cons of Investing in Virtual Real Estate
Before investing in virtual real estate, you should learn how it can benefit you. Investing always comes with risks, so learning about the cons of investing in virtual real estate may also help you determine if this is the right for you.
Pros of investing in virtual real estate:
- Potential for high returns
- Diversification of your portfolio
- Low barrier for entry
- Unique investment
- Growing niche market
- Low maintenance costs for ownership
- Highly customizable
Cons of investing in virtual real estate:
- Market volatility
- Limited liquidity
- Technical issues on platforms
How Can Galaxy Title & Escrow Help You?
At Galaxy Title & Escrow we want to help you with all your real estate plans. While we don’t offer a virtual real estate service, we’re happy to offer our expert advice and guidance. If you’re buying and selling virtual real estate, you may want a title to authenticate your ownership. Consider escrow to protect your transactions as digital assets can be vulnerable to cyber-attacks.
Contact us today to discuss your real estate or virtual real estate needs! And if you’re thinking about investing in property in South Florida check out our services to see how we can help.
* Disclaimer: Galaxy Title & Escrow doesn’t offer virtual real estate services. This is for informational purposes only.
Mitchell has been a licensed attorney since 2014 and has practiced in both the transactional and litigation fields of law. His experience allows him to approach every transaction with a depth of knowledge and practical experience most attorneys do not possess. Mitchell prides himself on providing top notch service to his clients.