Should I Buy a Land-Based Property or an NFT Property?
Whether to invest in a land-based property or a non-fungible token (NFT) property is an important question for the modern-day investor. Non-fungible tokens are a new and exciting asset class, offering a different way to make money in the digital world. This article will explore the strategies and methods you can use to make money with NFTs.
NFTs and blockchain technology have been quite in demand, with their branches spreading to various applications and disciplines. The real estate industry has also entered a virtual phase with the introduction of real estate NFT. This is where a question arises about which investment is worth it by debating land-based property vs. NFT. The best way to determine which investment might be the most beneficial option for you is by discussing the advantages and disadvantages of both
Let’s explore.
Advantages of Investing in Real Estate
Real estate has always been the favorite investment of many investors. Investing in land-based property is beneficial, and you can expect high returns in the future. Once you have invested in a good property, it can get you a reasonable passive income in the long run. But this is not it! Investing in real estate has various advantages, including;
#1- Diversification of assets
Real estate is known for its diversification of assets. This is the only asset that doesn’t directly relate to other assets like debt and equity. It has a negative correlation with popular assets like gold and stocks. Therefore, even if the stock market is performing badly or the economy is declining by the day, real estate will still prove to be quite beneficial.
#2- Greater resale value
Contrary to the constructed properties, land properties have a higher appreciation rate. This is because the land tends to remain in the same condition and takes all the weather impacts without much change. Moreover, a limited supply of land in the market ensures higher resale costs because of more competition.
#3- Excellent inflation hedge
Real estate combines rental income and value appreciation, which means it can beat inflation. Land-based property is the only investment that is consistent in beating inflation. Investing in the right property can help you outsmart inflation without any effort.
Disadvantages of Investing in Real Estate
Investing in Land-based property comes with some disadvantages too. These disadvantages are discussed below;
#1- Risk of encroachments and acquisition
Land encroachment and acquisition are something that we all might have heard about. There are many cases in which the land owner’s rights over the piece of land get jeopardized, which results in high legal costs and litigation. Such expenses may reduce the appreciation of the value of your land. In addition, the government might also take over your land, and the compensation might need to be more satisfactory.
#2- Illiquid investment – Not easily converted into cash
Land value might skyrocket quickly, and finding a suitable buyer willing to pay such a high amount for the land can be complicated. Unlike gold, mutual funds, or other financial products, the land-based property cannot be sold as quickly as needed.
Advantages of Investing in NFT Property
Digital environments can be established with NFT houses, buildings, or apartments, but some of the real estate NFTS are also connected to the real estate of the physical world. Therefore, they have great advantages and some disadvantages too.
#1- Future of the virtual world
Even though NFTs are quite new to the virtual world, they have gained quite a popularity among many investors. Virtual real estate is emerging as the investing frontier, and NFTs enable investors to buy and sell virtual properties. It is said to be the future of the virtual world, with its increasing popularity among big companies, gamers, investors, and collectors.
#2- Undeniable ownership history
With NFT property, the investors have the whole history of every transaction and process step, which might differ from land-based properties. For example, if you are buying an NFT asset or property, you get all the information about its previous owner, investment, legal dispute, action, payment, and everything else.
#3- Secure and fast transfers
Unlike land-based properties, NFTs are known for providing the most secure and immediate transfer in case of investments and assets. If you buy a land-based property, you will have to go through weeks or months to complete the process, which differs from NFT properties. You can securely and immediately use fiscal currency or crypto for asset payment.
Disadvantages of Investing in NFTs Property
Here are some disadvantages of investing in NFT Property:
#1-Ether ownership
Most of the NFT sales occur through the Ethereum platform. Therefore, it might be necessary to own the native blockchain currency Ether to purchase a property through NFTs. But investors should keep in mind the limitations that come with buying through NFTs.
#2- Highly energy intensive
NFTs are mostly supported by the Ethereum blockchain, which uses an operating protocol named proof of work that is highly energy intensive. This means that while making a single NFT transaction, you might need as much electricity as is required to run a whole house for a day and a half.
Land-Based Property vs. NFT Property - Which One Is the best?
It depends on the individual’s goals and preferences. Land-based property, such as a house or a piece of land, can provide a tangible asset and a place to live or invest in. NFT property, or non-fungible token property, is a digital asset that is unique and cannot be replicated. NFTs can be used to represent ownership of digital artwork, collectibles, and virtual real estate. Each type of property has its own benefits and drawbacks, and the best choice will depend on the specific use case and investment strategy.
Final Words
It is clear that the virtual world is the new future of investments and NFTs are all about virtual investments with multiple opportunities. But if you are still uncertain about the potential of NFT property and need clarification whether to invest in land-based or NFT property, you can contact a reliable NFT consultant like Arvin Khamesh. With decades of experience in the field you’ll definitely get genuine and honest suggestions regarding future investment in the NFT and web 3 space.