Whenever you hear anyone describe themselves as a “real estate investor,” this can mean any number of things. In the literal sense, it describes someone who buys houses (or other type of real estate), expecting some kind of return. There are, however, many different ways in which people who buy houses invest. In this guide we’ll go over the many different types of real estate investors and their role in the market.
Essentially, real estate speculators need to act almost as a kind of fortune teller when it comes to the real estate market. They tend to have a keen sense of market trends and have a good idea on what to do when housing prices change.
Typically, speculators will sell a house when prices go up, and buy a house when prices go down. Their end goal is to make money from the difference in prices as they wait anywhere from 6 months all the way up to a year or perhaps more.
A landlord will typically own more than one property and will have invested quite a bit of money into them. They pay for it, as well as make a profit, by renting their property out to other people in the form of apartments, communities, and so on.
The biggest benefit that landlords enjoy is the massive profits gained by renting as opposed to going through a bank. It tends to be fairly lucrative depending on how much property the landlord owns.
Realtors are the same thing as “real estate agent.” The main goal of a Realtors is to act as the middleman between the seller of a house and the buyer. They’ll go out of their way to find a really good deal, and if they find something, they’ll have both parties sign a contract to seal the deal. They tend to make money by buying a house at a low price, then selling it with a little bit added to the top.
You can think of birddogs as a simplified version of wholesalers. They, too, act as a middleman, but instead of dealing with contracts or investing so much in property, they simply offer solid advice on the current situation of the real estate market and make the necessary connections happen. Due to this, they make money mainly by a nominal fee.
Flippers, to put it simply, “flip” the purchase of a house at a low price straight into selling it at a higher price. They are not usually interested in making any changes to the house, and will sell the property as-is to anyone who will buy it. This means that they can work fairly quickly and generate profits at a rapid pace since they’re selling at a higher price.
All of the investors mentioned so far work pretty hard at what they do, but one that puts forth more effort than most others are rehabbers. Rehabbers are in the business of remodeling and renovating homes, and then selling them at a higher price due to the now-increased property value. The better of a remodeling job that they do, the better their prospects are in getting a sale. Their job is to improve the property and make it more attractive to potential buyers.
Perhaps the hardest-working people in real estate are developers. Rather than buying houses, they buy empty bits of land and build houses and communities from the ground up. Obviously this requires quite a bit of initial investment, but in return they have complete control over how they’ll profit from it as well as how valuable the property should be. Typically they will build facilities and complexes that are quite large and luxurious, allowing them to set a fairly high price.