Thread: Real Estate vs. Virtual Real Estate - Part 1

Just recently I did a writeup comparison of Real Estate and Virtual Real Estate as an investment. I wanted to share it with everyone here in the hopes it may help some, and also encourage some great discussions .. This is Part 1 of a 3 part series.


Table of Contents

• Advantages of Real Estate Investment -- Part 1
• Disadvantages of Real Estate Investment -- Part 1
• What is Virtual Real Estate?
• The Advantages and Disadvantages of Old Single Model Virtual Real Estate
• The Advantages and Disadvantages of New Multi Model Virtual Real Estate
• Conclusions

Throughout history the value of real estate and the laws and regulations surrounding it have evolved. What is great about this evolution, is that it creates new opportunities for discovery and adaptation of the market.

Not long ago there was a fluctuation in the real estate market that shook many in the industry and changed the perceived value and investment protection put into real estate today. Once again, this has created opportunities for those who can see them, while causing others to run for the hills.

Advantages of Real Estate Investment

The case for real estate, as an investment, has many attractive qualities. It also has some drawbacks. Some of the more commonly understood benefits include:

- Creating a diversification of your profile that is documented as part of your assets.
- Returns on investment from tenants that keeps ahead of inflation
- Performance improvements can be done to increase the value of your real estate. This is very popular with purchasing low cost low value properties and with a few improvements significantly raising the value and then selling. Because of this control over the investment real estate, it is often preferred over other investment models.
- Lending institutions favor real estate investment, making such investments easier to access for more people (though this has recently taken a downturn in the mortgage lending market)
- Income potential is rather high with deals that can range anywhere from $5000 upwards to $150,000 in a single transaction.
- It is a socially accepted investment which provides status among peers within any social circles and all classes.

The last point is something that many do not consider. However, for the sake of this comparison it is an important element to note, as there are emotional attachments that are culturally instilled to make real estate a more attractive proposition.

Disadvantages of Real Estate Investment

While these benefits are rather well known, there are other aspects to real estate that have drawbacks. Some of the more commonly understood issues include:

Cost of Buying, Selling and Operating