What are some asset classes that I think could potentially be very successful in the next decade with regards to real estate investing? Note that this is not financial advice, this is my personal opinion, you should do your own research and be responsible for your investments.
I have recently been pondering about all of the missed opportunities that came right in front of my face, just by a matter of living in Silicon Valley. Things like investing in Google, even though I didn’t have any money at the time, or investing more in Facebook when they went public. I actually met the founder of Coinbase nine years ago, who told me that he thought that there was a huge opportunity in Bitcoin. Nine years ago, Bitcoin was worth $13.30, if I had put $10,000 into it, it would have been worth $45 million today. I told my friends to buy Amazon stock when it was $250 a share, and I didn’t buy because I thought it was too expensive. I test drove the very first Tesla Roadster 11 years ago, and never thought of investing in Tesla.
As a fully grown responsible adult that has some money to invest today, I was pondering recently, what is right now right before my eyes today, that could be huge tomorrow, just like all of these companies that I just mentioned. I’ll go over three things that I think could be very interesting and potentially very successful, and give us a good return for our money in a decade or more. These things can be controversial, and you might not like it, and you may think is the stupidest thing ever, or you may simply disagree with it. But it’s just what it is. And you can either learn about it, or you can go fight it. We’re just here to share what we know about it.
The first thing that I think could be a great investment is in the cannabis space. Whether you rent an industrial building to a cannabis manufacturer or deliverer or whatever their business may be, today, cannabis is only legally allowed in a handful of states. Trends, whether you like them or not, start on the coasts. Cannabis has been legalized in a few states on the coasts. If you do a quick Google search of which states have legalized cannabis for recreational use, you will get a map and you will see that it’s taking over the coasts. Eventually it will be legalized on a federal level. And those who are ahead of the curve will benefit from it, and that is happening sooner than you think.
Cannabis tenants tend to pay significantly more for renting the property because of many factors that are related to it not being federally legal. For example, they cannot open a bank account, and many other things, even in the states that they are legalized. My recommendation here would be to rent to these tenants, being able to rent to these tenants varies on a state by state basis. But once it becomes federally legalized, and you end up having a cap rate of, let’s say, 7% when these industrial buildings with these cannabis tenants that are paying you top dollars, you automatically add value to your property. The caveat there is that once it becomes federally legal, they’re going to start paying a cheaper rent, obviously, because they’re going to pay market rent. So what I recommend is securing a very long term lease. That way you can actually exit that property on a very good return within just a couple of years of it being legalized and the buyer will still has a very long lease to go for several years.
A super controversial one, at least for me. You may think it is the stupidest thing in the planet. You can disagree with it. You can hate Zuckerberg. But the metaverse is very likely here to stay, whether you like it or not. I literally just started learning about what does it mean to invest in real estate in the metaverse, which is a completely made up world, just like Bitcoin in my mind. It’s complete air, it’s nothing, but I can’t fight it, I’m not going to fight it, I’m just going to learn and see how I can personally invest in it.
In the metaverse you are basically buying a “piece of real estate” in this fake world. I am looking at interviewing people that are experts in this topic, so we can all be enlightened and really learn what it means to invest in the metaverse with regards to real estate. What I learned so far is that there are companies already buying land in this 3D world that they will be able to build whatever they want. It can be a hotel, a golf course, an art gallery, a comedy show place, a sports stadium, a music stadium, and it can also be a game. It can basically be anything that the person that bought it would like to create in that world. They can charge people for admission, or a membership fee for example. And that’s one of the ways to monetize it.
Another way to monetize it is by the value of the property increasing. This is not anything new, 3D real estate was bought and sold in the video game Second Life. And that’s a good place for you to start learning and see some case studies of where people monetize that, how did they buy at a certain price and sold at x price higher than that later. That might be a good place for you to start educating ourselves and researching it. The owners of the real estate can also build an app in that piece of real estate, which I am not 100% sure how that would increase the value of the real estate with the app in a 3D world where you can just click a button and be “teletransported”, to a different world, and in that world, location, location, location in my mind does not make any difference. I have yet to learn if location is indeed important in that world, which I know it is. I just don’t know in what context it is important.
I have so many questions with regards to this, especially because they’re calling it real estate. But one thing to know is that how you make money is by basically putting an app in that Metaverse, you basically get the rights to build something in that world. And so that is how, from what I understand so far, you are able to profit from investing in the metaverse and also obviously, you’ll be able to sell that real estate at a later point in time. Talk about true no termite, no toilet and potentially no taxes!
And as nonsensical as all of this sounds, and as you may know, they already have art that is completely online, that is being sold, there is clothing that is being sold in these metaworlds, experiences, and many other things. I’m really looking forward to interviewing someone in this space because I have a lot of questions for them.
The last example in this series is coming back to the physical world, the more realistic world. As we all know by now, the government creates tax incentives in order to incentivize a certain behavior that they want you to act upon. Like we have mentioned before they have tax incentives for real estate investors because the government does not want to build and maintain buildings. That is why real estate investors have these tax incentives. And these incentives change over time because the government’s goals also change over time. Today’s incentives are in the environmental space. They are in wind farming, carbon capturing, clean energy, and a few other things that you might want to learn about.
Of all three that I mentioned today, this is probably the one that you can benefit from soonest. I would say cannabis is a close second. And then the metaverse is just, putting some eggs in there and have fun with it, don’t worry that you’re going to lose them, and hopefully that will be the the golden egg for you.
These are just some of the things that I am seeing today that you can learn, diversify, and be ahead of a lot of people. One thing I know is that these exponential investments are all available to us. For the most part, we can all see them coming. It’s just that a lot of people don’t act on them soon enough. They just come in later in the game, where it’s already extremely overpriced. And so it’s an opportunity for you to start learning about these asset classes and how you can monetize them. I hope this was helpful to you and not too trippy on the metaverse side, but I am really looking forward to learning more with an open mind even though I 100% do not agree with it.