Fractional Ownership & the Metaverse: Your Questions Answered.

◼ Grace asks: Hey Ronan, what’s your opinion on fractional ownership on an overseas property? Do you think it could be a genuine way to have a vacation home without breaking the bank?

◼ Ronan says: Yes, it could be. Fractional ownership allows a group of people to share ownership of a single asset, typically on a pro-rata basis. But the devil is in the detail, as it all depends on how the deal is structured. If a home is worth $600,000, you don’t want to pay $100,000 for a one-month or one-twelfth fractional. Sometimes marketing groups are very generous; other times, they keep the spread to themselves.

You need to consider how time will be allocated, how maintenance issues are dealt with, and how much you will be charged in annual holding costs. These are all things you need to understand and be comfortable with. I’m neither a fan nor a hater of fractional ownership per se. Like I said, it all comes down to the details of a particular deal.

◼ Raymond asks: Hi Ronan, what are your thoughts on investing in Metaverse real estate?

◼ Ronan says: Hi Raymond, I’m an old-school real estate investor. I like to own real, tangible assets, with real-world value. I make my money buying physical real estate at the right price in the right places. Usually, stunning places with sunny climates where I can kick back and spend time.

Personally, I just don’t see the appeal of real estate that you can’t physically touch. However, it’s essential for me to stay abreast of trends and developments in real estate. What may seem like insignificant developments today can have industry-changing effects in years to come.

Indeed, this isn’t the first time that real estate has been created out of thin air and made a lot of people rich…

In 1857, Elisha Otis manufactured and sold the very first commercial elevator in New York City. The buyer was the owner of a five-story department store who figured the elevator would bring in customers for its novelty value.

By the 1870s, there were 2,000 Otis elevators in service. And they were already making a remarkable difference to New York real estate. Buildings were rising higher and higher, creating more space without needing new land to build on.

It was revolutionary. And it started with the simplest of ideas… considered a novelty when it first began.

So, what is the Metaverse? For readers who haven’t heard of it yet, or don’t understand it… the metaverse is what’s billed to be the internet 3.0. If the internet as we use it now is two-dimensional, meaning flat screens, then the Metaverse is 3D. Theoretically, you and I will one day have our virtual reality headsets strapped on and we will experience an online virtual “world.”

And people are buying “land” in this virtual space, often for hundreds of thousands or even millions of dollars—usually in cryptocurrency.

Metaverse land was all the rage during the 2021 bull market and into the first half of 2022. Virtual parcels were getting snapped up at big prices. Additionally, huge global brand names like McDonald’s and Pepsi apparently bought up large swathes of Metaverse land.

But fast forward to mid-2023, and the virtual landscape looks rather bleak for those early investors. Metaverse values have fallen by as much as 90% from their peak—a crash of epic proportion. A crypto bear market… slower than expected adoption of the metaverse… there are a few reasons.

In fact, the only big winners I can see so far are the developers who built these platforms and raked in real investment dollars from early buyers.

To put it bluntly, it’s hard to see any case for buying virtual land, even with a 90% discount.

That’s not to say that land in the Metaverse will never have real value. In five, 10, or 15 years’ time, if the technology matures and gets adapted, it very well might. But whatever your opinion about the future of the Metaverse, investing while the market remains so volatile is not a prudent move. There are still too many unknown variables.

And that gets to the crux of my whole investment philosophy. I invest in internationalized destinations overseas because that’s where people want to go. They want to feel sun on their skin, sand under their feet, and the soft ocean breeze against their face. I simply buy the land… condos… or homes before they get there, and wait as demand rises and land becomes scarcer.

I’ll continue to keep a close eye on the Metaverse and its development… but you can bet I’ll be doing so from the comfort of my oceanview condo in Cabo. Now that’s an investment! I bought when the RETA price was $336,136, and the last time I saw a similar condo listing in my building, it was in the region of $600,000. Plus, my condo generates income when I’m not using it.