Getting in the world of real estate is challenging. Due to the wide range of career choices, you might find yourself wondering what to do and how to start. However, one of the most asked questions is whether to become a real estate investor or a career as a real estate developer is better.
Well, to answer that question, first, you need to understand both real estate investment and real estate development. Therefore, we are going to talk about being a real estate investor as well as being a real estate developer, what each of them means, and what are the pros and cons of each are. At the end, we are going to tell you, what, we on Mashvisor, think on the matter.
Related: How Do You Become a Real Estate Developer?
First: What is a real estate investor?
A real estate investor is someone who buys real estate properties and either rents them or sells them. It does not matter though what kind of investment strategy a real estate investor goes with, as long as he/she is dealing with an already established property. It is a matter of putting his/her money into a property that will generate income in the long term or even in the short term.
Second: What is a real estate developer?
A real estate developer is someone who invests a large amount of money in building a real estate property from the ground up and then selling it. This means that, unlike real estate investors, real estate developers are the ones who construct the property and sell it either to investors or ordinary home owners.
Third: What are the pros and cons of each real estate career?
In order for you to be able to choose whether to become a real estate investor or a real estate developer, you have to know what the pros and cons of each of them are. Therefore, here are some comparison aspects to consider:
Education
No matter what career you decide on whether in real estate or not, you have to have some education. However, what kind of education do you need to obtain for each of the career choices above?
When becoming a real estate investor, a degree in a related subject is optional. By that we mean that you can learn what you want to know about real estate by yourself. You can be a doctor who has a couple of rental properties in his/her investment portfolio. After all, there are plenty of sources from which you can learn about real estate investing. You can read books and blogs or even attend classroom or online courses related to the matter.
On the other hand, when we are talking about becoming a real estate developer, we are talking about mandatory education. You have to have a degree in some related field. You have to have knowledge of business management, law, business administration, or any other related subject. Sometimes it is even better to obtain a master’s degree before getting into real estate development.
Related: How Much and What Real Estate Education Do You Need to Become an Investor?
Experience
Sure enough, both real estate career choices require experience. Moreover, you can gain this experience along the way in both choices. However, if you choose to become a real estate investor, you can start from having zero experience and develop it along the way. You can be a college student majoring in an unrelated subject and still start your real estate investing career. Therefore, you can develop your experience along the way.
On the contrary, becoming a real estate developer requires a minimum of five-year experience in the field! Yes, five years. You can gain this experience through internships or a working experience with real estate development firms. Otherwise, you are not qualified to be a real estate developer.
Capital
To become a real estate investor, you do not have to have a lot of money on hand. You might not even have any at all. Of course, if you do have the cash, then it is great for you. However, if you don’t, then there are many financing options from which you can benefit. You can choose a mortgage or an owner financing program. You can even co-invest and still benefit. After all, it does not require huge amounts of money to become a real estate investor.
Becoming a real estate developer, however, is more challenging. Of course, you can apply for loans and other financing methods. Yet, you have to know that it takes huge amounts of money. Remember that you are constructing a whole new property in order to sell it.
Return on investment
Both real estate career choices are lucrative. But keep in mind that real estate investing, unlike real estate developing, is a long-term strategy. You make money in the long term. Though there are real estate investment strategies that you can benefit from in the short term, becoming a real estate developer means that you are working with short-term investments. You construct the real estate property and sell it afterwards for a profit.
The main difference here is the return on investment. In real estate investment, you make less money than in real estate development considering the amount of money invested. But keep in mind that you will be making money in a longer term than with real estate development.
Related: How to Have a Positive Cash Flow Income Property
Risks
Sure enough, both real estate careers are associated with risks. The thing with becoming a real estate investor is that your risk is less than the risk associated with becoming a real estate developer. That is after considering the capital invested in the business. As a real estate developer, you have to expect more risks because you are investing huge amounts of money at once which means you have to do the right calculations before getting started.
Commitment
Commitment is a huge part of becoming a real estate developer. It means that you will have to fully dedicate your time and energy to this real estate career. However, becoming a real estate investor is more flexible. While you can’t become a part-time real estate developer, you can become a part-time real estate investor. Buying an investment property is not so hard even if you are working another two jobs. You can always hire a professional property management firm that will take care of your investment properties for you.
Forth: Mashvisor
Here on Mashvisor, after considering all the above, we think that becoming a real estate investor is the best career for you. You do not need much education, experience, or even capital in order to start making money in real estate. Even though becoming a real estate developer is a lucrative path, becoming a real estate investor offers you more options. You can either indulge in active investments or even in passive investments through real estate investment partnerships. At the end, it is all up to you. However, considering the above comparison, starting as a real estate investor is the best career for anyone.