“How to make money in real estate?” is one of the most common questions asked in the field. However, to get the answer to this question, you should clearly understand “who” you want to be. Due to the wide range of career choices, you may ask yourself: “Shall I become a real estate investor or a real estate developer?”, for instance. Well, this is a tough question to answer. Nonetheless, in this blog, we will explain why becoming a real estate investor is better than being a real estate developer. Keep on reading to find out what makes being a real estate investor the better choice.
#1 Who Is the Real Estate Developer?
A real estate developer is the one who finds and purchases the land and prepares it for the construction. Moreover, a real estate developer is the one who manages the whole process of the construction. Thus, a real estate developer should be great in multi-tasking as he/she is both the owner and the manager of the whole operation process.
Additionally, the real estate developer is responsible for financing real estate investments as he/she is the owner of the whole project. However, not everyone is able to handle all the costs associated with the process. This is why the majority apply for real estate development loans.
Real estate development is a very risky business: you either make a fortune or end up with tremendous financial losses. Real estate development is considered a full-time job as you not only monitor the process but also motivate the staff in order for your project to come true. So, one of the ways of making money from real estate is to become a real estate developer. However, in order to succeed with this type of investing in real estate, you should have a good real estate education as well as experience.
#2 Who Is the Real Estate Investor?
A real estate investor is someone who is buying an investment property for the purpose of selling it or renting it out. Every real estate investor is eager to find out how to make money in real estate. There are many real estate investment strategies a real estate investor should carefully choose from in order to start making money from real estate. However, the secret of being a successful real estate investor is to be able to select low risk investments. Along with that goes choosing the optimal strategy as well as having a good real estate investment network.
Moreover, when becoming a real estate investor, you should know how and which real estate investment tools to use in order to start making money from real estate.
#3 What Is the Difference Between Becoming a Real Estate Investor and Becoming a Real Estate Developer?
When considering what career path to follow, either becoming a real estate investor or becoming a real estate developer, you should know what the major differences between the two types of professions are. Well, the main criteria is that the real estate developer starts from selecting the land when a real estate investor is dealing with already built properties. Let’s take a look at a few more differences.
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Real Estate Education
Real estate education is crucial when you are asking yourself: “How to make money in real estate?” However, there are different levels of real estate education you should consider before investing in real estate. On one hand, when becoming a real estate investor, obtaining a certain level of education is optional. What is meant by that? You choose what you want to learn as you can do it yourself. For instance, even if your main profession is a restaurant manager, you still can own a few rental properties. Moreover, there are plenty of sources which you can visit, such as Mashvisor, when planning on buying an investment property.
On the other hand, when becoming a real estate developer, you should consider a real estate education as mandatory. In order to select low risk investments and know how to avoid different risks and problems, you should have the proper knowledge. You should have a degree in a particular field such as business management, finance, and accounting or in any other related field.
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Commitment
When becoming a real estate developer, you should be prepared. This is as there is a huge dose of commitment that is waiting for you. A real estate developer will have to fully dedicate his/her time, efforts and energy in order for a project to succeed. Consequently, there is no chance you will become a part-time real estate developer.
However, with real estate investors, it is an absolutely different story. There are two options. The first one is when you are 100% committed to your business when buying an investment property. The second one is when you find and invest in the passive income investments.
So, what are those passive income investments? Basically, all you need to do is to find the money for the investment and leave the rest to professionals. They will be the ones to maintain and manage your property. You will not do much and still, you will get the income which is called a “passive income”. Passive income, in other words, is the money you make by investing your resources while others work on your property.
#4 Why Becoming a Real Estate Investor Is Better than Becoming a Real Estate Developer
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Risks
Investing in real estate is always a risky activity. However, it is less risky to become a real estate investor than a real estate developer. That is especially true when we are considering the initial capital invested in the business. A real estate developer should do the right calculation when financing real estate investments as he/she is investing huge amounts of money. Any miscalculations may lead to huge financial losses.
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Return on Investment
Both career choices are profitable when you are wondering: “How to make money in real estate.” You should remember that real estate developing is a short term strategy, unlike real estate investing. The main difference here is return on investment. With real estate investments, you make less money than with real estate development projects. But you need to consider that you have actually invested less financial assets. You should consider becoming a real estate investor as you will be making money in a longer term than with real estate development.
To learn more about all aspects of real estate investing for beginners, continue reading our blog.