As my online marketing business has grown over the years, my main goal has always been to diversify my business as much as possible. That includes investing both into my online business as well as investing in other businesses that don’t involve the internet. My ultimate goal is to have as many passive income streams as possible including my websites, a 401K, a diverse array of financial investments, and of course real-estate is something I’ve always wanted to break into. I would like my first real-estate investment to be a rental unit. But what is more profitable? Rental investments or websites?
More Millionaires Are Born In Real-Estate Than Anywhere Else
It is a widely known fact and easy to verify that the majority of millionaires and billionaires are self-made. They were not born rich. In most cases, millionaires and billionaires grew up in rather modest conditions. Many millionaires and billionaires even came from very poor backgrounds and were first generation migrants starting with nothing in a new country.
As someone striving to be very rich someday, I like to determine what has already worked. In other words, if I could find out how most people got rich, I could just do what they do and get rich myself, right?
When you look at the statistics, real-estate seems to be the most common theme among millionaires. Not only have people becoming millionaires by investing in real-estate, but more than 75% of millionaires and billionaires invest in real-estate. Given these numbers, I am very interested in using real-estate as part of my overall investment plan.
Have Websites Become A Better Option Than Real-Estate?
Anytime I start getting serious about purchasing and renting out a home, I get a little demotivated. In most cases, I figure I’ll only be making maybe $300 to $400 per month on a rental, assuming I purchase a small single-family home. That’s also assuming I’m able to rent it out every month of every year and that’s also before I factor in repair costs and other unexpected expenses.
But you know what? Let’s get crazy. Some people might think my $300 to $400 is optimistic, but let’s say I make $600 per month on my rental every month and I always have a renter. It still doesn’t even come close to the income I earn on my websites.
I have about a dozen websites right now that earn me an income. On the low end, I have a site that only earns a couple hundred dollars per month. On the high end, I have a site that earns me over $10,000 per month. Most of my established sites (more than 2 years old) earn more than $1,000 per month.
How much did I invest into those sites? For the majority of my sites, I only invested my time by writing content. Of course, time is money, but it’s better than shelling out $15k for a downpayment on a home, another several thousand dollars to furnish it, and an ongoing mortgage that will need to be paid.
Once the site is turning a profit, I will often begin to re-invest by outsourcing even more content. While I initially invest all profits back into content, thus making no money, the site growth explodes and so does my revenue. Worse case scenario? I don’t have to worry about having my website foreclosed on. I just stop outsourcing and the expenses go away.
So, I essentially spend far less money creating websites and have far less risk than investing in real-estate home rentals, but my revenue and profits are higher. If real-estate has made a lot of people millionaires, just imagine how many are being created right now through online businesses and websites?
Websites DO Build Equity!
One thing I haven’t factored into a housing rental is the fact it is an asset that can be sold at a later date for a profit. Of course, we’ve seen in the recent past that this isn’t always the case, but as an overall long-term trend, houses do tend to increase in value over time making the home itself an investment in addition to the rental income.
Is a “web property” any different? Nope! Buying and selling websites has quickly become a huge industry. The business of buying and selling websites is still relatively new, especially when compared to real-estate, but it is clear that selling websites can be insanely profitable. Sites such as Empire Flippers tend to sell websites for 24 to 30 months of net profit. So, in addition to earning monthly income on my sites, I can turn around and sell them anytime I want.
This is why flipping websites on sites like flippa have become so popular. People use the same concept for flipping houses only they apply it to web properties. They find websites in distress, make a purchase, revamp the site so it is profitable, then turn around and sell it. Rinse and repeat!
Heck, even domain names are still selling for millions of dollars, JUST FOR A DOMAIN! Check out this list of domain name sales this year. You’ll see that domain names are still frequently sold in the hundreds of thousands or even MILLIONS of dollars!
Compare THAT to real estate and tell me which one is more profitable and involves less work.
My New Plan For Entering The Real-Estate Market
I’ve decided I will not invest into any real estate or rental properties until I am able to comfortably purchase a place in cash. Having a mortgage on a rental unit does not create a high profit business when compared to websites. Therefore, I will continue to invest into my sites while saving as much as possible to purchase my very first rental property in cash.
At this time, I believe investing into virtual “web properties” is FAR more profitable than investing in physical real-estate. The only main issue with investing in anything that relies on the internet is the fact the internet is a very fast changing place. Will real-estate still be a good long-term investment in 2020? It may have some ups and downs, but over the long-haul, it’s pretty safe to say real-estate will be a good investment. Can we say the same for investing in online businesses? I don’t think so.
I’ll tell you what, though. As profitable as the internet is right now, I’m going to ride this out as long as I can while also saving for the possibility that it will end someday. Investing in real-estate will come soon enough. I’ve got more work to do online, first.