Monday, April 12, 2021
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Digital Real Estate: Building Passive Income Online

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Digital real estate sounds like just another superfluous investment opportunity that thrives through sleazy sales emails and telemarketing.

But in reality, it’s quite the opposite. Digital real estate can provide a tremendous opportunity for both entrepreneurs and investors looking to make money online.

In this post, I’ll explore what digital real estate is, how you can invest in digital real estate, and much more. Let’s get started!

What is Digital Real Estate

Digital real estate can be multiple “things”. It can be defined as any digital asset that you own that can be bought or sold. As you can see, this is a very vague description. That’s because digital real estate is so versatile. Just as there are many forms of physical real estate, the same goes for digital real estate.

Examples of Digital Real Estate

Digital real estate can include domain names, websites, blogs, digital products, social media accounts, email lists, and more. Any digital asset that can be bought or sold is likely a piece of digital real estate.

Related: Types of Blogs That Make Money

Top Reasons to Invest in Digital Real Estate

Investing in digital real estate can be life-changing. It provides several advantages over other investments that I’ll explore below.

Increase Diversification

Every investor knows the importance of diversification, and digital real estate can help you to lower your risk by diversifying your portfolio.

Digital real estate is here to stay. As the internet and technology continue to evolve, there’s no doubt digital real estate will continue to grow in line.

Tremendous Income Potential

Digital real estate can provide tremendous returns for investors. Similar to other types of investing, digital real estate offers compounding returns that can multiply in a hurry. Websites can sell for tens of millions of dollars, making it a great opportunity for many.

Potential for Self Employment

If you’re currently working as a full-time employee and are looking for a path to quit your job, investing in digital real estate can be the perfect option. By building or buying a website or domain name, you can transition out of full-time employment with the income you make.

Let’s do some math to help better understand how your online business can become a full-time job.

If you start a website from scratch for under $200, you can gain traffic and grow revenue by utilizing various acquisition channels. By receiving over 10,000 page views per month, you’ll qualify for the Ezoic platform that pays much more than Google Adsense for display advertising. This can earn over $500 per month. Couple that with affiliate marketing and you can easily earn over $1,000 per month from your website. Considering the cost of your website was a couple of hundred dollars, this would be a great investment to many.

Sound Fundamentals

Digital real estate is by no means new, in fact, it’s been around for some time now. While early investors have made a fortune investing in digital real estate, there are still plenty of opportunities.

While some might consider it speculative in nature, certain steps yield historically strong returns.

Low Start-up Costs

The cost to get started with digital real estate can be minimal, making it a viable option for people of all ages and income levels. You can purchase a domain name for less than $10 annually or build a website for less than $100 with hosting.

Easily Scalable

Digital real estate compounds quickly. Because you have access to virtually anyone using the internet, or billions of people, you can grow your assets tremendously. When building an audience, it can take a few months to start seeing growth, but it can gain speed rapidly.

Drawbacks of Digital Real Estate Investing

While there are many benefits of investing in digital real estate there are also a couple of drawbacks. I’ll explore the most common below.

Volatility

Digital real estate can be volatile under certain conditions. Because many websites rely on certain acquisition channels, if something were to happen to these channels, your income could suffer.

The most common reason websites suffer is from algorithm changes by Google or social media sites. If an algorithm change is deployed, you’ll be tasked with understanding what reasons impacted your rankings or impressions. This can be quite difficult and frustrating for many website owners.

The takeaway here is to use several acquisition channels in case that one suddenly drops.

Skills Needed

Unless you are going to invest in digital real estate passively through a third party, you’ll need certain skills (more on this below!) to grow your income and assets. This can leave some investors on the sidelines.

How Much Money Do I Need to Invest in Digital Real Estate

Digital real estate is unlike many other investments in that you can get started for essentially free. Depending on the type of digital real estate you invest in, it could cost you $9 for a domain name, or completely free by creating digital products. If you plan to build your digital real estate portfolio, this can take some serious work.

How Can I Invest in Digital Real Estate

There are many different options when it comes to investing in digital real estate. This gives investors the opportunity to put their money to work through projects they believe in or are passionate about.

Build a Website

Building a website can be one of the least expensive digital real estate investments. But this does come with a cost, your time. You’ll need to spend the time to build and grow the website.

Before deciding to build a website, you’ll want to ask yourself a few questions.

  • What am I passionate about?
  • How will my website make money?
  • How long until I expect to turn a profit?
  • How crowded is my niche?
  • Do I have the time to properly grow a website?

To get started building a website, you’ll need 3 things: a domain name, website hosting, and a content interface. You can purchase a domain name through several websites but my favorite is Namecheap because of its affordability. You’ll then need to purchase web hosting. Again, you’ll have many options but my favorite is SiteGround because of their superior customer service. Your web hosting will store any files online for users to access. The last step is installing a content management system on your website. Depending on the system you use, this will often be free. WordPress is the most common CMS used by millions worldwide. You can learn more about WordPress here.

SiteGround is my favorite hosting platform to easily start a blog. They have top-notch customer service and prices starting as low as $7 per month. Sign-up below!
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Disclosure: This link is an affiliate link, meaning, at no additional cost to you, I will earn a commission if you click through and make a purchase.

Purchase an Existing Website

If you’re looking for a quicker method to invest in digital real estate, purchasing an income-producing website can be your best bet. This form of digital real estate investing might be the most hands-off for some. However, if you’re looking to grow the site, you’ll need to dedicate resources to do so.

Before deciding to purchase a website, you’ll want to ask yourself a few questions.

  • How can I grow the website and revenues?
  • Is the website valued at a reasonable price?
  • Am I passionate about the website or topic?
  • Does the website have sound fundamentals?

Sell Website on Flippa

There are several places to find websites to buy. Some of the most common include Flippa, Empire Flippers, and Motion Invest. These websites have a marketplace to browse listings of websites and online businesses for sale. You can see many metrics regarding the business like monthly revenues, website traffic, and more. You’ll need to do your due diligence before making an offer on any website. This process is known as website flipping.

Purchase a Domain Name

Purchasing a domain name can be a simple way to invest in digital real estate but it can be one of the most volatile. By purchasing the right domain name, you could make a fortune. But most domain names will likely never make any money. Domain flipping can be a great option to make money online.

When considering purchasing a domain name you’ll want to find one that has a few of these qualities:

  • Shorter in length
  • Premium extension (.com)
  • Easily brand-able

My favorite place to purchase a domain name is Namecheap because of its affordability. You can browse domain names on Namecheap here!

NameCheap is my favorite domain registrar to easily purchase your next domain name. They are extremely affordable with domains costing less than $9. Sign-up below!
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Disclosure: This link is an affiliate link, meaning, at no additional cost to you, I will earn a commission if you click through and make a purchase.

How Does Digital Real Estate Grow and Make Money?

Depending on your asset, digital real estate can make money through a variety of methods. I’ll explore some of the most common below.

Display Advertising

If you own a website, one of the easiest and quickest ways to make money is through display advertising. Display advertising consists of all of the advertisements displayed on a website. These can be various sizes and formats and are usually placed through an ad publisher like Google Adsense, Ezoic, Mediavine, or others.

The amount of money you can make through display advertising varies widely based on numerous factors. Pageviews, impressions, and RPMs will help you to determine your income potential with display ads.

Affiliate Marketing

The second most common and easiest monetization method for digital real estate is affiliate marketing. Affiliate marketing describes the relationship between website owners and companies. Website owners will partner with companies that offer a small commission whenever facilitating a transaction through their content in the form of an affiliate link.

Affiliate marketing can be an excellent way to increase revenues for an online business because there is no cost to the website owner to get started and the income potential is almost limitless.

There are entire websites built around the revenue model of affiliate marketing. A majority of these sites, known to many as affiliate websites, make money by comparing and reviewing products.

Sponsored Content and Ads

Offering sponsored content on your site is another way to make money with digital real estate. At its core, it is a combination of display advertising and affiliate marketing.

For example, you might see a banner ad for a company on a website’s homepage. This ad was paid for directly by the company to the website owner. The terms of the deal are private in nature therefore you have full control of the price and income you could make.

Another form of sponsored content is a sponsored post. Many websites will utilize this in the form of a product review. Similar to banner ads, you can set prices and negotiate offers on your own.

Selling Digital Products to Make Money

Another popular income stream many online businesses utilize is selling digital products. These products are created by the website owners and sold through the website to directly make money.

The downside of this method of monetization is that you’ll need to dedicate time and resources to building your product.

There are many types of digital products you can offer including:

  • Courses
  • Ebooks
  • Checklists
  • Templates
  • Documents
  • Videos

It’s common to offer a variety of products ranging in price and detail to satisfy the varying wants and needs of potential customers.

Sell Services

While this is not a passive income stream like the other methods listed, selling services can be a great way to make money as a freelancer. Depending on the type of website you operate, this could include various services.

Start a Membership Community

Some websites will offer exclusive memberships for paying individuals to join. These groups can include a variety of offerings like free consulting, advice, and more.

Have a Pay Wall for Content

You’ve likely run into a website that requires you to pay to access the content. You’ll need to have strong content in order to justify the price tag you put on it but it can be an easy way to generate some income if you have the right following.

Some websites might use a mix of free and premium content to satisfy more users. If the content you create is good enough, many free content viewers may convert to your premium content.

Value Increase

Because digital real estate is an asset, it can increase in value over time just for existing. This is mainly for the digital asset of a domain name. As names are registered and names become rarer, your domain might become worth more.

What You Need to Grow Digital Real Estate

While there are some passive ways to invest in digital real estate, most people will need to be knowledgeable or skilled at building and growing websites to succeed.

Below are some of the skills you’ll need to become a successful digital real estate investor.

Digital Marketing

Websites are run on digital marketing. Because your websites rely on users visiting them to make money, you need to know how to acquire them. By utilizing various digital marketing channels, you can grow your user base and revenues.

Lite Technical Skills

Depending on your method of digital real estate investing, you may need some lite technical skills to build a website or make improvements. If you plan on passively investing in digital real estate, you may not need these skills at all.

If you’re planning to build a website, you’ll want to be knowledgeable with select types of code such as HTML, CSS, and some Javascript. This will allow you to build a website and make changes as you desire.

Time

Time is one of the most critical resources for websites to grow, especially if your website relies on search engine traffic to make money.

You cannot expect your digital real estate portfolio to triple in size overnight (although it is possible for some!). Your digital real estate will grow exponentially over time. It might seem slow at first, but as it gains steam, your income can become considerable.

Final Thoughts On Digital Real Estate

Digital real estate can be an excellent avenue for both investors and entrepreneurs looking to grow their income streams and make more money. With many options available, there are several ways to get started investing in digital real estate.

Between building a website, purchasing a domain name, or creating digital products, digital real estate allows anyone the opportunity to make money online.

Have you invested in digital real estate? Comment your experience below!

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Forrest
Forrest is a personal finance, entrepreneurship, and investing enthusiast dedicated to helping others obtain life long wealth. He owns several different blogs and is also passionate about health and fitness.

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