What Is A Real Estate Investor: The Ultimate Guide

In the early 2000s, the real estate industry was booming. An estimated 100,000 new real estate investors flocked to the sector, attracted to the potential profits of the booming housing market. As the financial crisis hit and the housing market crashed, many real estate investors found that the industry they had so enthusiastically entered was not as lucrative as they had thought.

As a result, the industry has turned its back on potential investors as the market has cooled. The good news is, the real estate industry is still growing. The bad news is that there are also many people looking to get in on the action. Real estate is a highly competitive market, with a small percentage of investors capturing the majority of the profits.

In this article you'll learn all about real estate investors! 

What Is A Real Estate Investor?

A real estate investor is a person or company that acquires, owns, and manages real estate to make a profit. It can include single-family residential homes, apartment buildings, shopping centers, commercial property, and other buildings.

The most common way for investors to make money is by renting out space in buildings. However, some investors also invest in property loans or pursue other forms of investment such as venture capital.

What Do Real Estate Investors Do?

Real estate investors purchase properties below market value to sell them for a higher price in the future. They also may take out a loan to buy a property and then rent it out to tenants.

Real estate investors do the following tasks:

1) Research the market:

Look at the prices of homes in the area, how long they are staying on the market, and how much people pay for them.

2) Analyze their financial situation:

Figure out how much money they have to put down, their monthly budget, and their return on investment goals.

3) Look for a property:

Once they have determined what kind of property they are looking for, real estate investors start to look for deals. They might go to open houses, look at listings online, or talk to agents.

4) Make an offer:

Once they find a property they want, real estate investors make an offer. This offer can be below or above the asking price, depending on their goals and how strong a deal they think it is.

5) Negotiate:

If the offer is accepted, the investor begins to negotiate with the seller. It might include negotiating the purchase price, getting Seller Financing, or adding other incentives.

6) Close on the property:

Once all of the negotiations are complete, the investor closes on the property. This includes signing all the paperwork and handing over any money owed.

Why Become A Real Estate Investor?

There are many reasons why becoming a real estate investor is a great idea. The most important reason is that real estate is one of the best ways to generate passive income. By owning and investing in real estate, you can earn a stable source of income. In the long term, real estate continues to be one of the best investments.

Another reason to invest in real estate is that it offers stability and security. Unlike other investments, real estate is relatively stable and tends to hold its value over time. It makes it a safe investment for your money.

Investing in real estate also provides opportunities for wealth creation. As the value of property continues to increase, so too does the value of your investment. If you're patient and wise with your assets, you can create significant wealth through real estate ownership.

Real Estate Investing Strategies

The best approach to becoming a successful real estate investor is to choose a plan that best suits your needs. There are many other real estates investing strategies. Here are some of the most common methods:

1) Cash-on-Cash:

This strategy is the simplest and most common way to invest in real estate. With this approach, you purchase a property and use the cash flow from the property to pay for the mortgage. It is an excellent way to start real estate investing because you don't need a lot of money to get started.

2) Fix and Flip: 

With this strategy, you purchase a property that needs repair, fix it up, and then sell it for a profit. It can be a risky strategy, but it can also be very profitable if done correctly.

3) Buy and Hold: 

With this strategy, you purchase a property and hold onto it long-term. It can be a safe and profitable approach to investing in real estate.

4) Lease Option: 

With this strategy, you lease a property from someone else and then have the option to buy it later on. It can be a great way to start real estate investing with little money down.

How to Become A Real Estate Investor

There is no easy answer for becoming a successful real estate investor. However, here are tips that will help you on your way:

1) Educate yourself about the market.

Before investing in any real estate, it's essential to learn as much as you can about the market conditions and trends. Study the neighborhoods where you're interested in buying property, and educate yourself on the value of different types of properties in those areas. Familiarize yourself with concepts like cap rates, cash flow, and depreciation. The more educated you are as an investor, the better equipped you'll be to make sound decisions.

2) Build a strong team of professionals.

Like any other business venture, investing in real estate requires a good team of professionals to help you succeed. It includes attorneys, accountants, brokers, and others who can help you with every process – from finding properties to getting them financed and leased up. It's essential to find people you trust and who have your best interests at heart. Did you know you can find these types of professionals directly within the SetSchedule application? 

3) Have a plan and be patient.

It's essential to have a clear plan in mind before jumping into real estate investing. What are your goals? What kind of properties do you want to buy? What's your budget? How will you find deals? Taking the time to answer these questions can help you stay focused and patient as you work towards reaching your goals.

4) Save Up some Money

Investing in real estate can be a very profitable venture, but it does require some up-front capital. You'll need money to cover closing costs, repairs, and other expenses associated with buying and managing property. It's an excellent idea to save as much money as possible before beginning your investing journey.

5) Be prepared for some risks.

Real estate investment isn't without risk – there's always the potential for losses, especially in a downturned market. But by doing your homework and understanding the risks involved, you can minimize your chances of experiencing a major failure.

6) Get comfortable being a landlord.

Owning investment property means you'll also be responsible for being a landlord. It can include screening tenants, dealing with repairs, and collecting rent. If you're not comfortable with these responsibilities, hiring a property management company may be wise.

7) Have sufficient funds to cover repairs and vacancies.

Rental property repairs and vacancies can be costly, so it's essential to have enough cash to cover these unexpected costs. Ideally, you should have at least six months of cash reserves to cover these expenses.

8) Have a solid exit strategy in place.

Investing in real estate is a long-term venture, so it's vital to have an exit strategy before buying. Know what you plan to do with the property when you eventually sell it – will you rent it out again, or will you sell it? By having a solid plan in place, you can avoid any surprises down the road.

The Benefits Of Becoming A Real Estate Investor

The benefits of becoming a real estate investor are limitless. Owning rental property can provide you with a consistent and reliable source of income. It'sIt's also a great way to build wealth by owning real estate.

There are many benefits of becoming a real estate investor. These include:

- Passive Income

- Easy to Start

- Stable and Secure Investment

- Build Wealth

- Improve your Credit Score

- Insurance Protection

Best Real Estate Apps For Investors

1) SetSchedule 

As noted above, the SetSchedule platform is ideal for real estate investors because it allows you to begin building connections with the necessary professionals you'll work with regularly when investing. Create an account here! SetValue is another useful tool for investors as well - submit inquiries on specific properties you're interested in, and you can also use the "Maximize this Value" tool to see what renovations will give you the most return on investment. Visit SetValue here.

2) Realtor.com

This app is another excellent resource for investors looking for properties to buy or rent. It provides access to millions of listings from real estate agents all over the country.

3) Zillow

Zillow is a popular app for finding homes for sale, rent, or mortgage information. It offers detailed information on properties, including photos, maps, and school ratings.

4) Trulia

This app is similar to Zillow, but it specializes in helping users find apartments and rentals. It also offers features like community information and crime data.

5) Redfin

This app is perfect for investors who want to be up-to-date on the latest real estate news and trends. It also offers users the ability to search for homes, get notified of new listings, and connect with agents.

Real Estate Investor Salary

There is no definitive answer to this question. Salary for a Real Estate Investor varies depending on location, experience, and other factors.

However, as of Mar 2022, the average annual pay for a Real Estate Investor in the United States is $123,937. This amounts to approximately $59.59 an hour or $2,383/week.

ZipRecruiter reports that annual salaries for Real Estate Investors can range from $47,000 to $261,500. The majority of earners make between $100,000 and $150,000 annually. However, the most successful professionals earn up to $190,000 per year. The average pay range for a Real Estate Investor varies greatly (by as much as $50,000), which indicates that advancement and increased pay are possible based on skill level, location, and years of experience.

Final Thought

What is a real estate investor? It is a question that may have crossed your mind at some point or another. If you're curious about the world of real estate investing, or if you're thinking about dipping your toes into the market, then this is the guide for you. Learn about other professionals you'll work with as a real estate investor in these articles - mortgage broker vs. mortgage lender | independent contractor vs. general contractor.