Starting a real estate career is not a hard thing to do. However, the trickiest part is choosing which path to go with. Understand that real estate investing and real estate development are two completely different things. Therefore, it is important to get an in-depth look at each path to help you decide what real estate career is best for you.
Before we get into the details, let us say this: both investment strategies have the same objective: making money in real estate. So, really, it is not a matter of learning how to make money from real estate. Rather, it is a matter of choosing the strategy that fits more with your perspective of making money. So, here are the main differences between both real estate career paths:
What is a Real Estate Developer?
A real estate developer is someone who buys land and builds a real estate property on it. Or, it could be someone who buys a real estate property that is in a very distressed condition and needs major renovations.
They then apply these renovations and sells the property to a real estate investor. This might be the easiest way to explain what a real estate developer is. Basically, they develop a property from, almost, scratch.
What Does a Real Estate Developer Do?
In short, a real estate developer handles the project all the way from the beginning to the end. In other words, he/she is responsible for planning, designing the project, financing it, and bringing in a team of associates who are going to execute the plan.
So, whether it is buying raw land and developing a building/project or buying the distressed property, the real estate developer’s job is to handle the project from point zero all the way to the end in order to get a share of profit.
There are a few fields that are available for developers in real estate. The most common ones are residential real estate development and commercial real estate development.
Both are, of course, very rewarding financial-wise. However, becoming a commercial real estate developer requires more resources than becoming a residential real estate developer. The reason behind that is commercial development holds more risks to it, thus, making it even more rewarding. All in all, it takes some careful planning to figure out what field fits best with your objectives.
What is a Real Estate Investor?
A real estate investor, on the other hand, is the one who purchases the already established property. Of course, that is after evaluating the real estate market in order to choose what property is best for generating money.
What Does a Real Estate Investor Do?
A real estate investor is the one who buys the property from the real estate developer. Therefore, in most cases, the investor purchases it in a condition that allows for immediate investing.
They take charge of managing the property in a way that generates income. In reality, the real estate investing path starts from a real estate developer and ends at the hands of a real estate investor.
How to Become a Real Estate Developer
The process of becoming a real estate developer is a bit precise. Unlike becoming a real estate investor, to become a real estate developer you must start with education. Yes, this time we are talking about a college degree. After that, it is a matter of taking the right steps towards building a real estate career as a developer. Here are the most important tips that we could give you for becoming a successful real estate developer:
Work with the right associates:
Real estate development is much like a puzzle; unless you have all the right pieces, the puzzle is never complete. Therefore, working with the right people will always compensate for the areas where you lack.
For example, if you are not familiar with the legalities, then it would be a better idea to hire a real estate attorney instead of risking your business. In such types of real estate business, you must not over-estimate your abilities. That is the only way you can make sure you are operating at a successful level.
Financial planning:
In terms of finances, there are two things you must keep in mind:
- You WILL get into debt to finance your property. That is, in fact, what multi-billionaire real estate developers do as well by getting loans.
- Property development takes time to bring about gain. Take into account the financing process, finding the land, developing a property, and, finally, selling it for a profit.
In this case, your financial planning skills have to compliment your career and personal goals. Make sure to plan a year ahead. Moreover, set a living budget as well as a business budget for that period of time.
It is about your mindset:
At the end of the day, it all comes down to the right mindset. One fact we can tell you about real estate development: it is a tough business. You must expect to encounter situations that will require instant solutions. Resourcefulness and resilience are key qualities to achieve your dreams and therefore the financial independence you dream of.
How to Become a Real Estate Investor
Becoming a real estate investor also requires a level of education. However, unlike a real estate developer, you won’t need to obtain a degree in college. It is very basic in a sense that you can get it sitting at home, sipping a cup of coffee, and reading a few blogs on the internet. Thus, there is easier access to the business.
The next step to becoming a real estate investor is choosing your niche and investment strategy. Whether it is residential, commercial or even industrial investing/properties, make sure it fits within your plans.
Next comes the process of finding a real estate property that is profitable for the business. You can do that in many different ways, of course. A real estate agent would be a better idea, though, if you are a beginner investor. Whatever method you choose, make sure the property has a high investment potential (high return on investment).
Now comes the financing aspect. Investing in real estate properties requires financing. But, we do not mean that you should put up your own money for this. We mean it in the sense that you need to get external financing. Get started with the mortgage/loan shopping process. Find the best deals and find out what mortgage lenders require to finance a business.
Marketing your property is a key to profit. Therefore, regardless of the investment method, make sure your property is exposed to as many clients as possible.
Finally,
Once you have done all that, it is time you get paid. As this is the final stage of becoming a real estate developer/investor, a successful one would repeat the same process with other properties. This is how you grow your business gradually. Moreover, it is a guaranteed way to manifest wealth through real estate in no time.