If you’re weighing the pros and cons of blogging vs real estate, know that I managed a real estate portfolio at a hedge fund for six years as a full-time employee while my wife and I built a blog on the side that eventually replaced my day job income.
In short, I have experience with both real estate investing and blogging.
Here’s what I think is the better business model to pursue in 2021.
Ultimately, the better option for you depends on your unique personality, strengths, weaknesses, and circumstances.
That said, I put together this table to help you decide for yourself which is better for you.
|real estate usually||blogging usually|
|requires more capital||requires less capital|
|can generate cash flow faster||generates cash flow more slowly|
|has higher risk||has lower risk|
|can be more passive||is less passive|
|has limited per property growth||has unlimited per property growth|
I’ll explore each of these in more detail below.
Blogging Vs Real Estate: Capital requirements
Most forms of real estate investing require capital to get started.
For instance, if you want to buy a rental property, you’ll need to make a down payment on that property.
Or if you want to fix and flip a home, you typically need money to renovate the home.
You don’t always need capital to profit from real estate.
For instance, you could become a real estate agent and collect a fee for helping clients buy and sell property.
Or you could become a wholesaler and collect a spread when you sell someone’s off market property.
But typically, those who profit from real estate need capital, and a lot of it for most people.
Say you need to put 20% or 25% down on a $100,000 rental property.
That’s $20,000 or $25,000!
Not many people have that sort of cash lying around.
On the other hand, blogging can be totally free to start!
And even if your blog expenses grow as ours have, they only may need to grow if you are having success in which case your income should more than cover your expenses.
Speed of Cash Flow Generation
There is of course a time value of money meaning money today is worth more than money in the future.
And in this category, real estate often wins.
In other words, real estate often generates cash flow more quickly than a blog.
If you were starting from scratch, you could build a rental property in a few months and theoretically have renters paying thousands of dollars of rent the day it’s ready to lease.
If you start a blog from scratch, it will likely take you longer than a few months to start generating thousands of dollars of cash flow.
Also, even if your blog does generate income very quickly, blog income usually starts from zero and grows from there.
For instance, I have one blog that, at the time of writing, makes only $20 a month.
But a rental property is either going to earn your rent income or not.
That means your income will be at least a few hundred dollars, or you will earn nothing.
Blogging Vs Real Estate: Risk
Real estate has significantly more risks than blogging.
For instance, the odds of getting sued as a real estate holder are typically much greater than as a blogger.
This means you likely need to form business entities to hold your real estate.
And although you will likely also form a business entity for your blog, it’s much more important to limit your personal liability as a real estate holder than as a blogger.
Why is is this?
People can fall and hurt themselves on your property and potentially sue you.
Real estate is also susceptible to natural disasters.
And although theoretically both of these risks can be eliminated with the right insurance policies and business entities, it’s never quite that simple.
As someone who has been involved in several lawsuits related to real estate thanks to my former day job, working out these issues can be messy in reality (even if the risks seem fully mitigated on paper).
Real estate also has risks related to unexpected costs.
If you own a rental property that needs a new roof, the water heater breaks, or any number of repairs are needed, those expenses could totally wipe out any income you may have earned from rent for several months!
In other words, you could easily find yourself paying expenses that are greater than your income on a property.
Unexpected expenses related to blogging are extraordinarily rare.
Also, blogs (or digital real estate) aren’t susceptible to natural disasters.
Sure, your blog could get hacked.
In fact, this has happened to me!
But if you have a high-quality web host, they can often fix the hack by restoring an old version of your site and scanning and removing the cause of the hack.
Though momentarily stressful, most blog-related hacks are surprisingly simple to fix.
As someone who has experienced both legal and other liability issues related to property as well as website hacks, I’d much rather deal with the hack!
Blogging Vs Real Estate: Passiveness
If you have a brand new rental property with high quality construction and appliances in a good area with high rental demand, you may not need to make any repairs or deal with much of anything related to your property for several years!
In other words, real estate can be very passive in some circumstance particularly if you own rental property and outsource its management to a property management company (this is what we did at my firm).
This is one of the reasons why real estate is so attractive to many investors!
Blogs can be passive too, but they often require more active work.
A blog is usually only as valuable as the content on it.
And if you don’t update that content, someone else probably will create better content than yours and then outrank your blog in search results.
For instance, every day my wife and I work on our blogs, we think of so many ways to make them better which adds countless items to our to do list.
This usually isn’t the case with real estate, particularly if it’s new and well made.
This is both good and bad for real estate owners.
It’s good in that you can really make passive income with real estate.
But it also means that the amount of value you can add with real estate is relatively fixed.
For instance, you’re never going to make $100,000 a month renting out a single family home.
But you could make $100,000 a month with a single blog!
I’ll discuss this in the next section.
Blogging Vs Real Estate: Growth Potential
The amount of money you make with any endeavor is related to the amount of value you provide and the number of recipients of that value.
The amount of value you can add with a rental unit is more or less fixed.
Also, there are only so many tenants (recipients of this value) you can have with a property.
A blog, on the other hand, can add a variable amount of value to an unlimited number of people!
Because of this, a blog has unlimited earning potential!
So while blogs are sometimes less passive than real estate can be, that’s because they have the potential to add so much value.
So which is better for you and your situation?
I think it mainly depends on your skill sets and interests.
Blogging can be a technical endeavor.
And although blogging is requiring less and less technical expertise as blogging tools become better, it will always have to do with technology.
On the other hand, real estate investing doesn’t need to be as technical as blogging.
If you’re looking to get started in real estate investing, check out the website, Bigger Pockets.
I’m personally very interested in technology and writing, so blogging is an obvious choice for me.
But if you’re less interested in technology or more interested in real estate, I think your odds of financial success are greater pursuing whichever is more interesting to you.
Also, if you have some interest in both, you may want to diversify from one into the other.
For instance, I’d love to own some rental properties in addition to my blogs.
I’m not quite there yet financially, but, like I said, diversifying from one to the other can make sense if you have an interest in both.
That said, I recommend focusing on your primary interest first and only diversifying once you have experienced success with your primary interest.
For more posts comparing blogging to other business models and strategies, check out the following Blogging Vs Articles: