To become a real estate developer or a real estate investor. Which one should I choose?
It is not up for anyone but yourself to choose the right career for you. With that being said, when faced with the decision between becoming a real estate developer and becoming a real estate investor, and in order to make that decision, you will need to first know the difference between the two.
In this blog, we will be laying out the major differences between being a real estate developer and being a real estate investor with regards to the experience or level of education required for each career path, the pros and cons of each, the cash flow that is to be expected of each career, and the time required for each career choice to succeed.
Related: 6 Tips On Becoming A Real Estate Investor On Your Own
What is the difference between a real estate developer and a real estate investor?
A real estate developer is, generally, someone who develops new real estate properties from the ground up with the intent of selling these properties for a profit. In order to start a career as a real estate developer, you will need to have sufficient knowledge in the field and the financial means used to generate large funds. If successful, a career as a real estate developer will provide you with a hefty amount of income but at the cost of a higher risk associated with failure.
For more in depth details about the requirements for becoming a real estate developer, read our blog on How Do You Become a Real Estate Developer?
As for a real estate investor, this is someone who invests a certain amount of money in buying an investment property with the purpose of either renting it out, or for the purpose of selling it out after renovating it or upgrading it. This investment property can be a large single family home, a single room apartment, or even a small hut in the woods.
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What is the level of education or experience required to enter each field of career?
When it comes to the level of education or experience required, you should know that a career choice as a real estate developer will require a high level of education, an associated degree, and around 5 years of experience. In addition, becoming a real estate developer requires extensive knowledge of the real estate market. In order to start a career as a real estate developer, you will need to have sufficient knowledge in several different fields, including the fields of law, business administration, construction management, civil engineering, urban development, and the different processes required in order to develop new real estate properties from the ground up.
Additionally, you will need a minimum or a bachelor’s degree in a related field, and preferably a master’s degree as well as some professional and practical experience in the field in the form of internships and actual work experience with real estate development firms.
As for a real estate investor, all of those requirements can be bypassed. Not because a real estate investor does not require an extensive amount of knowledge, but because this knowledge can be self-learned. Moreover, the risk associated with real estate investing mistakes is far less than that associated with real estate development.
Related: How to Learn Real Estate Investing On Your Own
What amount of income is to be expected from a career in real estate development and real estate investing?
As a real estate developer, you can expect large amounts of return on your investment, but at a higher risk. The amount invested in developing a new real estate property is far greater than the amount needed to invest in an already existent one. This is due to the costs of construction from the ground up, in addition to other legal fees, contractors, etc. However, once your real estate property is sold, the return on investment is usually very high.
As for a real estate investor, the amount of money that you make will always depend on your investment choices and preferences. Not that you can’t make large sums of money from a career as a real estate investor, it’s just that you will have the option to make smaller amounts of income at a lower risk, in addition to being able to start an investment with a smaller amount of money than the amount associated with real estate development.
What are the management and time requirements associated with each career choice?
A career as a real estate developer will require you to work full time. You will always need to be ahead of your investment, planning your next move, and making sure you finish developing your real estate property as fast as you can at the lowest cost in order to generate the largest amount of income. You will also need to invest a lot of time into building relationships and learning new things about the real estate market that you’re competing in.
As for a real estate investor, this could be done as a part-time job. You get to decide on the amount of time that you’re willing to put in your investment, and whether you’re going to manage your investment property personally or by hiring a professional property management company. You will need to be more personal and more social, and you will need to be up to date on all the ongoing real estate trends and factors affecting the local housing market. The more time you’re willing to invest in your rental property, the more rental income that you can expect it would generate.
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Related: How to Manage Multiple Investment Properties on Your Own?
The bottom line is…
A career as a real estate developer will more often than not mean that you will need to become a professional money-making machine that is always thriving to expand its knowledge and experience through higher education, degrees, internships, and every other means available in order to build a golden empire. You will need the drive to go big or go home. This is the nature of this career choice due to the high-risk, high-reward nature of it. And although real estate development investments are considered more short term, they will require more time invested and more years of preparation before you can be as successful as you would like to be.
As for a career as a real estate investor, you will have more freedom to decide on the amount of time, effort, and money that you’re willing to invest in your rental property, which will proportionally decide on the amount of risk associated with your investment.
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This real estate investing tool will provide you with the data and market analysis needed to make your real estate investment decisions. With a simple detailed search, you can pin-point the exact types of real estate properties that you are looking to invest in, in whichever neighborhood, at whichever price, etc. Invest a couple of minutes to check it out, and it might save you hours and hours of future work.