Real Estate investing is one of the oldest, most tried and true forms of investing on the planet. For those webmasters who are unfamiliar with it, the basic idea is either that you buy a house that you find cheaply, remodel it, and resell it for a profit, or alternatively, buy a house cheaply, remodel it, and then put renters in there and enjoy the passive income that comes from that. This business model has worked for literally 1,000’s of years, and this article will go over some of the ways which you can apply it to your own online business, in order to see some big profits, in a powerful, high ROI, relatively low-risk investment model.
The Original Real Estate
First, we should really understand the original business model for investing in Real Estate, because it applies very much to what we’ll be discussing in this article. In Real Estate investing, and in investing in general, there’s two types of income, known as portfolio income, and passive income. Portfolio income is when you make a profit off buying and selling, so for example, if you bought a website for $400, made a few tweaks, and then sold that website a couple months later for $650, you’d have a $250 profit, and that would be known as “portfolio income”, which is a profit on what you got from trading (e.g buying and selling). This is how many people make their money in Real Estate as well. You just need to know how to find and buy houses for a good price, and then you’ll need to know how to increase their value relatively cheaply (just as with Virtual Real Estate), so you can resell them for a much higher price down the road.
The other model, called passive income, is what real investors do. People that focus on portfolio income, are more traders than actual investors. While portfolio income is more profitable in the short term, passive income, is generally a lot more profitable in the long term (and generally lower risk as well). When someone buys a house cheaply, and fixes up the paint, replaces the carpets, etc, and then finds renters to give them money each month in exchange for being able to stay there, the money they get from those renters is known as passive income. This is more profitable long-term, because as you collect more of these assets, your revenue stream builds up higher and higher, so what started out a tiny trickling stream, turns into a raging river. It’s lower risk, because just like a stock, a house can lose value after you buy it, and then, if you’re forced to sell because you need the money, or can’t afford the mortgage, then you have to sell it at a loss and put yourself in a tough spot financially.
Virtual Real Estate
Most Internet Marketers are looking to generate passive income. That’s why many people get into Internet Marketing in the first place. However, that usually doesn’t happen. You’re either managing marketing campaigns (which allows you to leverage your time, but doesn’t exactly give you passive income) or building new campaigns, creating a product, or what have you. Virtual Real Estate is a way to truly get passive income online, and provides you with a MUCH higher ROI than traditional Real Estate. Where it might take someone 10 years to recover the cost of buying a house, you can sometimes recover the cost of a website purchase in only a few months.
Virtual Real Estate vs. Traditional Online Marketing
With traditional Internet Marketing, you’re the advertiser, meaning you buy ad space on someone else’s website, and advertise your product, or an affiliate product. You have to make sure that what you’re paying for traffic is less than what you’re making. The Virtual Real Estate model is a bit different. With VRE, you’re publisher, or your both the publisher and the advertiser, but you’re never just the advertiser, because you own the site. However, the way you make money in VRE can be very similar to that of standard Online Marketing. You can sell your own products on the site, for example, if you purchase an asset that’s related to a niche you already have a product made in. You can use the website’s inventory to promote affiliate products as well.
With this method of monetizing your websites, you can still expect to do some work… you’ll have to choose the right product, split-test products, possibly create a pre-sell page, split-test banner ads, and a lot of the same stuff that you have to do with regular Online Marketing. However, if you’re monetizing your sites like this, you’ll definitely be bringing in the most profit from each and every website that you own.
Truly Passive Virtual Real Estate
The other way to make money through Virtual Real Estate, is by selling banner ad inventory on your website to other Online Marketers. You can do this by selling it to them directly (basically being on the other side of a Media Buy) or you can use a large service like Google Adsense to worry about finding people and placing ads on your site for you. Using a service like Adsense is the LEAST profitable way to monetize a site, because your just offering up the ads (half the equation) while the advertisers do the rest (the other half of the equation), and on top of that, Google will always take a nice cut. But, of course, this is truly the definition of passive income. And if you can build up enough of these, they can definitely fund a very comfortable lifestyle for you, without you having to lift a finger.
In the next part of this series, we’ll talk about how to acquire these websites so you can either flip them immediately for a good profit (portfolio income) or hold onto them and monetize them yourself for some nice passive income.