Opinions expressed by Entrepreneur contributors are their own.
Those who are interested in the metaverse know it provides a virtual reality to live, work and play with others. But even those who haven’t fully dived into the pace are scooping up the opportunity to invest and turn a profit in the metaverse by purchasing virtual real estate properties.
Yes, you heard that right, you can buy real estate and leverage it just as you could in real life by populating it with interactive experiences like events, concerts, 3D objects, games and a marketplace to sell assets such as your own NFT creations.
But that’s not all — in some cases, metaverse real estate and physical real estate have started to converge. The MetaReal mansion is a real-life Miami home with an identical virtual mansion in the metaverse that will be listed for auction in early 2023. That means the purchaser of the home will also acquire ownership rights to the NFT asset. This very well could be the tipping point for adopting NFTs in the real world.
What is a metaverse real estate NFT?
In real life, we use deeds and titles to prove ownership of the land we own. In the metaverse, we use blockchain technology (ledger) to keep track of ownership records in the form of an NFT, or non-fungible token. This refers to an asset that has a unique code and metadata with no other asset holding equal value. Assets are bought and sold with cryptocurrencies using blockchain technology, ensuring the transaction is incredibly secure and ownership cannot be counterfeited.
By purchasing a metaverse real estate NFT plot, you are purchasing a one-of-a-kind asset that is unique to you and you alone. Unlike cookie-cutter homes that exist in every neighborhood, your metaverse plot is unlike any other. This allows you to develop and use the plot as you please and is only limited by your imagination.
What are the metaverse real estate marketplaces?
The main market places available today are Deceltraland, CryptoVoxels (now called Voxels), Worldwide Webb, Treeverse and The Sandbox. But those platforms are not the only places to purchase plots, and as more people realize the power of buying in the metaverse, more platforms will likely come available.
Because most land is sold on the secondary market or via third-party marketplaces at this time, it can be easier for new buyers to purchase real estate, because purchases can be made using Ethereum. Some marketplaces use their own cryptocurrency for purchases on their platform. For example, The Sandbox uses SAND and Decentraland uses MANA, but it’s not difficult to swap for different coins if needed.
Image credit: Meta Residence
Just as you would look at a city map or real estate broker website to compare prices, information and the exact location of the plot of land you are interested in purchasing, you should do the exact same thing in the metaverse. Real estate marketplaces provide the same comparative information for each plot, which allows you to make informed purchasing decisions.
Metaverse real estate plots also provide something no real-life plot offers: Friends, family, coworkers, associates, customers and even celebrities can visit and interact by simply logging into their computer. No travel time, plane rides or traffic. No matter where you are in the world, you and your networking circle can access your metaverse properties 24/7.
Why use NFTs for real estate?
It’s exciting to think that by the end of 2022 metaverse real estate is estimated to do $1 billion in transactions, but don’t let FOMO (fear of missing out) force you to make a snap decision. This space is not regulated like normal banking and investing — some people even compare it to the wild west. Like any other investment you make, do your research before diving in.
There has been an increase in entrepreneurs who are looking to expand their portfolios into assets that have the potential to yield a passive income. Many are considering the options available through metaverse real estate such as renting, flipping, selling their own creations and hosting events.
But it’s not just entrepreneurs who are investing in metaverse real estate. Due to the unique purchasing options, NFT real estate is available to anyone looking for a unique way to create passive income, host events and sell merchandise, including businesses, corporations, gamers, investors, athletes and the average Joe.
How do real estate NFTs work?
Real estate NFTs work just like any other NFT.
The buyer purchases the NFT with the cryptocurrency the seller requests. Once the purchase is made, the NFT is transferred to the buyer’s virtual wallet, which gives them complete rights to the plot of virtual land. The new owner can keep it and use it as they wish or flip it for a potential profit.
The difference between real estate NFTs and other NFTs is the option to develop and change the plot. Just like when purchasing a physical plot in real life, an NFT plot allows you to develop the land, rent it out or resell it. The only difference is that in the metaverse, real estate is 3D blocks, not a physical piece of land.
But don’t think that 3D blocks limit the potential for a metaverse plot — you have the power to use your plot as you wish, which includes inviting clients or customers to virtual events, developing the land, opening a marketplace and so much more.
How do NFTs work in physical real estate?
NFTs are making the jump from the digital world to the physical world. Kevin O’Leary has been very vocal about using the technology of the unique code and metadata to authenticate ownership of physical products like luxury watches. Watchmakers listened and began implementing this technology just in the past year. Forgery is unfortunately a massive global business, and it happens all too easily by simply replicating the certificate of authenticity. That can’t happen with an NFT due to blockchain technology that offers a level of security unavailable until now.
This technology has the potential to change how all goods are protected from fraud and forgery — including the real estate market — as owner authenticity is unable to be duplicated, which makes your purchase highly unique and secure.
With high-end retailers such as Rolex testing the waters by implementing NFT technology to verify authenticity, numerous other industries, including real estate, could eventually begin using it as well. It’s only a matter of time before using NFTs for authentification becomes the norm, and growth is only dependent on how fast industries can adapt and adopt the hack-proof technology to prevent fraudulent activities.
The 4 steps to buying real estate in the metaverse
To purchase metaverse real estate, you need to follow these four steps.
1. Open an exchange
Open an exchange to deposit your local funds and buy crypto. Exchanges provide tutorials and step-by-step instructions on how to fund your exchange, so don’t feel intimidated if this is your first time using one. Binance, Gemini, Kucoin and Coinbase are all trusted exchanges.
Tip: It is best to create and use an encrypted email specifically for anything you do in crypto land including setting up your exchange. Proton Mail is an option.
Tip: Always send small test transfers first! In many cases, the first coin you choose to purchase is ETH (Ethereum). Depending on the real-estate platform you choose to use, you might need to swap your ETH for whichever coin the platform uses.
2. Create a digital wallet
Create a wallet for your crypto that will allow you to purchase the real estate you are interested in. The most popular is MetaMask for the Chrome browser however you can look into Coinbase Wallet or Fortmatic.
Tip: Keep and save your wallet’s secret keys and passwords in a safe place and NEVER share them with anyone. There are many scams that lead you to believe you need to share them — don’t!
Tip: Now you can send your crypto from your exchange to your wallet. Always do small test transfers first. Most exchanges have great tutorials and step-by-step instructions on how to transfer your crypto.
3. Research land
Decide which platform you want to use to purchase real estate, and create an account by connecting your wallet. Right now a popular platform is The Sandbox where brands, businesses and celebrities like Snoop Dogg and Paris Hilton have their land however, Decentraland, Voxels, Worldwide Webb and Treeverse are other options.
Tip: Most of these platforms are geared towards gamers, but you don’t have to play games to invest.
4. Create a marketplace account to buy NFTs
In many cases, you will have to purchase land on the secondary market. It’s a good idea to create an OpenSea.io account to do so by connecting your Chrome browser wallet before you go shopping.
Tip: You need to make sure you have enough of the required crypto coin in your wallet for the purchase of the land and gas fees (transaction fee). ETH (Ethereum) is typically used on the secondary market.
Now you’re ready to go real estate shopping. Here’s what that might look like. I’ll use The Sandbox for this example of buying land.
- Go to www.sandbox.game and click “Sign in.”
- Connect your wallet — it recommends MetaMask.
- Click the “Buy Land” button on the homepage.
- This will take you to the OpenSea.io marketplace.
- Filter land from low to high prices.
- Choose the land you want it’s an orange box in the image. You can view it on The Sandbox map for a better idea of location by clicking the arrow in a box on the upper right corner of OpenSea.
- Make sure your wallet has enough of the coin required to purchase the land, plus enough for the gas fees.
- Click “Buy Now” or make an offer.
- Click “Complete Checkout.”
- Your wallet will open in your browser and show you the total amount including the gas fees.
- Approve the purchase.
- Now you’ll see the land in your Opensea account as an NFT and in your Sandbox account ready for you to build on.
Don’t let the FOMO get to you and force you to make purchases without researching first and or find a trusted crypto expert like Dan Hollings. But once you invest in NFT real estate, you likely won’t want to stop.