Are You a Landlord or a Real Estate Investor? Here Are the Differences
Updated: Sep 25, 2020
Are you wondering what's the difference between a landlord and a real estate investor? Is there actually a difference?
Find out here.
What Do Landlords and Real Estate Investors Have in Common?
Both of these terms are often used interchangeably because they have one thing in common: both own real estate. However, that is where the similarities end.
When it comes to landlords vs real estate investors, they both have their own unique approach to making money. It is actually the way that each individual decides to run their business that makes all the difference.
What Does a Landlord Do?
A landlord trades their time for money. They do a lot of the property management and other tasks related to real estate investing themselves. They are often a one-man team.
While there is nothing wrong with this, it means that the business solely depends on you. Your success completely depends on how competent you are in running your business. Worse, there is no one there to tell you if you're doing things the right way or the wrong way.
The bottom line? If you go down, so does your business.
What Is a Real Estate Investor?
On the other hand a real estate investor is someone who has a team. They are trading cost for time. To real estate investors, time is more valuable than money. These people leverage the work of contractors, real estate agents, property management companies, and more to get the job done.
Instead of taking a call to attend to the latest maintenance issue, they spend their days working on their businesses thinking about how they can grow it, independently of their own efforts, to become more successful.
With the ability to envision the growth of the business over the long-term, real estate investors generally see more success because they can plan for the future without interruption. A real estate investor also creates a blueprint so that the business can continue to run without them.
Should You Become a Real Estate Investor or a Landlord?
The problem with being a landlord is that it's not scalable. There are only 24 hours in a day and if you aren't using your time as efficiently as possible, it's not possible to grow your business beyond the lowest level of success.
Furthermore, it's a lot easier to mess up because you have to figure out where you went wrong in your strategy rather than simply replacing the failed contractors or other parties that are not performing up to par.
While you might feel comfortable being a landlord, understand that there are limitations to what you can do. Make sure that you are creating policies and procedures that will allow you to eventually expand your business.
The biggest hurdle to breaking out of your role as a landlord is that you end up with no time to do anything other than what you already do day to day. This is something that no one will be able help you fix unless you put a plan in place now.