NFT real estate moguls operating in the metaverse

How investors are cash-flowing NFT land for huge passive returns

Real estate has a new niche market that generates huge returns for passive income investors – digital land. Savvy buyers pour cash-flowing real estate into NFT projects such as Axie Infinity, Wolf Game, NFT Worlds and Aavegotchi and achieve better returns than what is possible with traditional real estate.

The best part? Digital Land doesn’t come with any of the typical headaches of brick and mortar real estate; there are zero maintenance costs, no professional cleaners to schedule, or tenants to screen.

Axie Infinity

Take Daniel Maegaard, for example. Better known by the Twitter handle “Seedphrase”, he recently posted a screenshot of his daily earnings from investing in land from the Axie Infinity ecosystem, a game to make money with financial backing from well-known investors Paradigm, Andreesen Horowitz and Mark Cuban .

His 91 plots bring in 149.24 AXS ($1,364) tokens every day, and a whopping $597,860 per year in passive income. Incredibly impressive considering that he has managed to achieve this in a generally low cryptocurrency market.

The opportunity is still there for new investors as well. The cheapest Mystic Plot for sale today is $12,319 and pays out 1.64 AXS per day, good for a 44% annual return of $5,471, if the price of AXS maintains its current level.

Not too bad! Remember that the AXS token has already gone through a full market hype cycle. It peaked at $160 in the euphoria of November 2021 before hitting a low of $3.99 a year later in November 2022. Since then, it has settled at a price between $9-$11. However, the numbers highlight a potential volatility surrounding the token.

Wolf game

Wolf Game is another NFT project that has generated huge returns for investors since its launch in December 2022. There are 20,000 Genesis plots in Wolf Game, and 2,577 of these plots have structures on them. Holders can upgrade these structures into either barns or bathhouses, then rent them out to other players for Wolf Games’ native token, WOOL.

Bathhouses are in demand, and the cheapest bathhouses in less popular locations currently rent for 15,000 ULL for a 30-day rental period. WOOL costs 1.5 cents today, and bathhouses can be bought for as little as 2.5 eth (roughly around $4125).

Here is the calculation:

15,000 x $0.015 = $225 every 30 days, good for $2,700 per year and a net return of 65% in just the first year.

NFT Worlds

We even have DAOs stepping in to act as the Web3 version of REITs, or Real Estate Investment Trusts. These groups pool money to buy NFT assets in bulk and then share the cash flow as dividends to the DAO members. A DAO called WRLD TakeOver recently tweeted that they are generating $18,000 WRLD tokens per month for their DAO members, all thanks to a $9,352 purchase of 6 parcels of land in the NFT World ecosystem.

At 1.3 cents per WRLD token, that equates to $2,808 per year or a theoretical 30% return on investment. Pretty good!

Aavegotchi

Not surprisingly, many NFT projects also use Layer 2 blockchains to reduce transaction costs and maximize returns for holders. Aavegotchi is a leading project on the Polygon blockchain that allows holders to farm land in the “Gotchiverse” for four different tokens (FUD, FOMO, ALPHA and KEK) collectively known as Alchemica. Alchemica can then be used to purchase in-game upgrades or sold on the open market through a decentralized exchange.

An Aavegotchi whale, Dr. Wagmi, recently tweeted that he will earn $3000 in the next 8 weeks for growing Alchemica on his plots.

Combined with other assets he bought for approx. $80,000, Dr Wagmi stands to earn a total of $16,000 during this 8-week period, and according to his calculations, should generate a 45% return for the year.

Going forward

It gets better – Axie Infinity, Wolf Game, NFT Worlds and Aavegotchi are all designed to be played for years, and purchasing these revenue-generating assets is a one-time cost. Assuming these projects can stay afloat, there’s a chance these investments will yield insane returns over multi-year timeframes, and if gaming becomes the next meta in Web3, then there’s a strong possibility those returns could become even more lucrative if their tokens recover any. of their price levels from the previous bull cycle.

This type of opportunity for return on investment is unheard of in traditional real estate. An attractive property for a cash flow investor will sell at around 8-10% cap rate (the net income divided by the purchase price). So if you were to buy a property with cash, owners would expect an 8-10% return on investment after paying expenses such as taxes, insurance, maintenance, repairs, landscaping, loss of vacancies, etc.

There is, of course, a catch to the huge returns made possible by investing in NFT real estate projects. Investing in real-world real estate is much more predictable than investing in anything related to NFTs. When you buy an apartment building in a good neighborhood, for example, there’s very little chance of seeing your property value drop 90% in a year during a market downturn, nor do you have to worry about losing your private keys and control over your property. .

So the question is:

Is the upside of outsized digital real estate returns worth the risk of investing in this new frontier? Many NFT investors are betting big that it will be, and even during a bear market they enjoy fantastic returns on their investments without having to deal with a single clogged toilet. But on the flip side, many also believe that it is a very dangerous venture, where the risk largely outweighs the reward. Essentially, there is always the possibility that both the token premium and the Land value could plummet, leaving investors with little more than an NFT reminder of their escapade.

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*All investment/financial opinions expressed by NFT Plazas are from personal research and experience of our site moderators and are intended as educational material only. Individuals are required to research all products before making any type of investment.