Flipping Virtual Real Estate

Flip This…What?

August 13th, 2007 | by JP Moses | in Commentary

While perusing the blogosphere over the weekend, I stumbled upon an interesting bit from JohnChow.com - a fascinating write-up about a “flip” transaction he’s just been a part of - but not with the kind of real estate you and I are used to dealing with.

Now you may not know John Chow, but in the world of professional bloggers you could say he’s considered one of the “big dogs”. His blog is a top online watering hole for folks who want to learn about blogging and how to hone their craft to a fine art.

Last week John posted his dissatisfaction with a recent drop in revenue from one of his website’s ad blocks. The Google “pay-per-click” ads he’s been using have apparently turned lackluster in their performance, prompting him to put the ad spot up for sale to the masses for a flat thousand bucks. That’s how it all started….

Now there’s something you should understand about John Chow’s website: It’s pretty highly trafficked. One of the most highly trafficked sites on the net for the topic of better blogging in fact.

In real estate terms, think of it like a high profile corner on one of the busiest intersections in town. And the ad block in question is like a nicely placed park bench staged right on the median, where it’s sure to be noticed by many a passer by.

I am in fact talking about real estate - just virtual real estate (or VRE for short). And just like physical real estate, each tract of property on the web has an “as is” value, a prospective value if improved (think “ARV”) and a variety of key elements that come into play in determining just how valueable it is or isn’t.

And just like physical real estate, VRE can be bought, renovated, resold, or even rented.

(But I’ll bet virtual tenants don’t complain about a stopped up toilet, then play dumb when I…er…the landlord mysteriously pulls out a baby doll head that just mysteriously appeared somehow.)

So back to John’s toublesome ad space, when he decided to put the space up for sale for only $1,000, I remember thinking it sounded like a pretty good deal, given the high traffic he gets. And apparently someone else agreed, because within an hour of posting the spot, John revealed someone had already Paypal’d him the thousand bucks.

But here’s where it gets interesting……

Going back to John’s website a day later, here’s what can now be seen in the ad spot…

$1,500? So what’s up? Did John suddently realize he was giving the spot away too cheap, change his mind and up the price at the last minute?

Nope, not at all. It’s being flipped.

That’s right. As happens so often in the “real world” of physical real estate, someone saw an opportunity most people missed when John offered up this little tract of virtual real estate for a measley $1,000. And now “Mr Flipper” aims to be a hundredaire with a VRE quick-flip. Nice!

Truth be told, flipping virtual real estate isn’t a totally new thing - folks have been quietly flipping domain names for years, and brokering advertising isn’t exactly unheard of.

But it’s also not really something you hear about every day, with the possible exception of Anshe Chung, the video game maven who last year announced having made well over a million real dollars buying and selling imaginary real estate in the virtual world of Second Life.

Again I say - NICE!

As of the time I’m posting this, the ad spot’s not yet been resold. But it’ll be interesting to see how long it takes, and whether or not Mr. Flipper scores quickly or has to change his approach.

Whether he sells the spot or not, I’m sure he’s already getting plenty of referral traffic, and you can tell from Mr. Flipper’s landing page that he’s trying to monetize the traffic any other way he can - which is akin to having multiple possible exit strategies in place for any given real estate investing deal - it’s only smart.

To be sure, the concept of virtual real estate investing/flipping exists a little outside the mainstream box. But if you really look closely enough, you’ll likely also realize some familiar facets and key principals that aren’t really all that different from our “real world” real estate after all - such as the wisdom of having multiple exit strategies for any deal, or even just the immense value of taking bold, decisive action when opportunity presents itself (remember, he snagged the property within only an hour of it going up).

I look forward to seeing how it all pans out.

What do you think? Leave a comment below and let me know…

…jp

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