“Real estate investing” and “real estate investor” are quite general terms. They
encompass several other types of investing strategies and investors. Do you think you know what type of real estate investor you are?
Answer the next 5 questions to find out!
Related: What Are the Different Types of Investors in the Real Estate Market?
What is your purpose for investing in real estate?
- To make a quick profit
- To make a profit in the long run
- I’m investing to live in the property
- Making some extra money at the end of the month
How do you treat real estate?
- I take it very seriously, I can’t slack or waste time
- I take it very seriously, it’s my full-time job
- I invested in property because, in the long run, it’s better than renting
- It’s not my primary job, but it’s a good way to cash some extra money
How do you make money in real estate?
- I sell property quite often after I run renovations
- I usually rent property out to either short-term or long-term tenants
- I don’t really “make money” in real estate, but I assume my property will appreciate in value over time
- By renting out a property, but real estate is not my main source of income
How often do you renovate?
- Pretty often, it’s part of the job
- Occasionally, in between tenants usually
- Not often, when I feel like the property requires a few fixes here and there
- Every now and then, if I do have tenants or guests staying at the property. I usually leave it to my property manager though.
Thoughts on investing in an Airbnb rental property?
- I think it’s a great investment, but I can’t really do it within my line of investing
- I’ve invested in an Airbnb property, it’s a great investment
- I’ve considered renting out a room in my property
- I’m more likely to consider it since it’s more of a short-term investment
It’s the moment of truth – what type of real estate investor are you?
If you got mostly 1s: You’re a flipper
You’re a real estate flipper, meaning you follow a fix and flip strategy. You buy investment properties at low prices, fix and renovate, and resell them for a quick profit. Real estate flipping is no easy investing strategy. It requires a lot of planning, taking quick action, and tolerance for risk. If you’re a flipper, you’re a risk taker, but you take calculated risks. You capitalize on forced appreciation through renovation and repairs to make a profit.
Related: The Best Cities to Flip Houses and Make a Profit in 2019
If you got mostly 2s: You’re a long-term traditional/Airbnb investor
You’re in this for the profit, but you’re also in this for the long run. You’re most likely to invest in long-term residential rental properties, Airbnb properties, or commercial rental properties to generate cash flow. You use long-term investment strategies like buy-and-hold. And in addition to rental income, you capitalize on natural property appreciation. The long-term investment strategy is the usually the most common among real estate investors.
Looking for long-term rental property? Click here to start your search.
If you got mostly 3s: You’re an end user
You’re investing in real estate with the purpose of residing in the property, which makes you an end user of real estate. You’re not necessarily looking to make money in real estate. However, you may end up making a profit by selling your property when you move or change your residence.
If you got mostly 4s: You’re a short-term real estate investor
You’ve taken real estate as a part-time investment, or a short-time gig. You may have a property that you rent out occasionally, but it’s not your main source of income. You may also have an extra room that you’ve listed (or considered listing) on Airbnb. If real estate investing is your part-time job, you may have also considered, or have, hired professional property management to help you out.
Related: When Should Real Estate Investors Hire Professional Property Management?
Bonus question: How would you describe your degree of involvement when investing?
- I prefer to do things on my own; I like to be involved
- I am more likely to hire someone to help me; I don’t have enough time
We posed this bonus question to determine the degree of control and involvement you have or would like to have as a real estate investor.
If you answered 1: You’re an active real estate investor
You prefer to take care of the day-to-day activities on your own. Even if you can’t do it yourself (like fix a plumbing issue), you still like to be there to make sure all is well with the investment property and the tenant/guest. This also means that you have time to dedicate to your investment. In the case of Airbnb investments in specific, you may like to welcome hosts yourself, show them around the rental property, and maybe even give them a tour of the area in general. Full-time real estate investors are usually more active investors as they can dedicate more time.
If you answered 2: You’re a passive real estate investor
Passive investors are less involved in real estate. Being a passive real estate investor doesn’t mean that you’re less passionate about real estate investing. Real estate investing may be a secondary or a part-time job, or maybe you have other things going, and you do not have the time. If you have another full-time job, you may find yourself struggling to keep up with both work responsibilities. Because of this, passive investors also usually hire professional property management companies. Professional property management companies offer marketing, maintenance, financing, and general management services for the real estate investor – providing ease of work.
Related: What Are the Best Passive Income Investments in the Real Estate Market?
Essentially, you can tell passive or active investors apart by evaluating the degree of involvement and control a real estate investor has or would like to have.
What type of investor did you think you were? Did the results of our quiz match your expectations?