Is Real Estate a business or an investment opportunity?

19 Replies

Hey guys.

Do you think it is better to approach real estate as a business rather than an investment opportunity? Also what can be the the advantages and disadvantages to this approach? 

What advice would you give to someone who is new to the real estate industry and is looking to get into residential property estates and lodges/resorts? I know that I am dreaming big but I'm obviously going to start small and build slowly and steadily toward my goal. 

Thank you.

The answer to the title of this discussion is ...."Yes".  That's because it's both.

Don’t seller yourself short. Dream Big and Act Big. Go take Mass Action and Attack your big dreams with passion. All the best.

I am a newbie so take this as a grain salt... I think that after researching it extensively most successful investors approach it as a business. I think there are different opportunities that are hands off but come with higher risk than traditional investments for a slightly better return.  Best of luck and never give up on a dream! 

I would respond to your question with "What's the difference?". Would you (Could you?) invest in something that's not a business?

Real Estate can be approached either (or both) ways. You can be a passive investor in someone else's business model, or you can be an active participant in your own or someone else's. Either way, the two are very much intertwined. 

I gather the question is do you make it your full time job vs a side business/hobby. I have it as a side. But I am sure others on here do this full time.

A investment by itself is not a business however the operation and management of income properties definatly is. If you do not view income investment properties as a business you will not be in business very long.

If your investment is in real estate then they are tied together as a business venture.

@Account Closed

Unless you are a totally passive investor, it is very likely at least a small scale business for you.

@Account Closed - Personally, I'm not crazy about the whole mentor thing. I learn best by doing. But that is a personal preference and everyone has their own learning style. 

Originally posted by @Account Closed :

Thank you all for your advice, I truly appreciate it. My next question is: when I finish drafting a sound business plan do you think I should seek a mentor first before I put it into action? @Joe Villeneuve @Joe LaFleur @Juan Rango @Jeff Copeland @Sam Josh  

 That depends on who that mentor is, why you would be doing it, where you are starting form right now, and where you are looking to end up.  I would do your BP after.  How can you form a plan, if you lack the info needed to make that plan?

@Joe Villeneuve I have been to a business plan training before and from it I got a bit of knowledge as to how to go about drafting a business plan. I am currently doing my market research on real estate investing and will add it to my business plan as I go. I'd say I am starting from rock bottom as I do not have any real experience in real estate investing. Also I think I want a mentor with whom I can work for/with so that I can learn from them by doing and gain a bit experience in the process.  

@Account Closed If you invest in stock(s) you may just buy something safe and reliable, something you can kind of purchase and sit back and "collect" while you earn. You will not produce great wealth but your time is saved and spent elsewhere.

You could also invest in stock(s) and watch it closely every single day, buying and selling at specific times based on research and your gut feelings. Diversifying your portfolio and calculating percentages and allocations to maximize profits. You can likely produce great wealth but it is time consuming.

The same applies to REI and the choice is yours!

It can be both business and investment, it's up to you, I would see it as a business if you are willing to spend time to learn, analyze and be proactive in real estate.

A mentor can help but learn the basics first from a books, this great website, RE podcast, your local REIA, and anything in between, then see if a mentor is willing to help you, if not, action it's our best option, words doesn't teach, live experience does..

Best regards:

Juan.  

Originally posted by @Account Closed :

@Joe Villeneuve I have been to a business plan training before and from it I got a bit of knowledge as to how to go about drafting a business plan. I am currently doing my market research on real estate investing and will add it to my business plan as I go. I'd say I am starting from rock bottom as I do not have any real experience in real estate investing. Also I think I want a mentor with whom I can work for/with so that I can learn from them by doing and gain a bit experience in the process.  

...except that a traditional Business Plan has little to do with Real Estate Investing. REI is a completely different type of Biz Plan...but it must be treated like one.

Your training will help you appreciate the importance of one, but won't help much developing one for REI.

I happen to have both a business and investments in RE.  My business is as an investor agent.  It is a business.  I work on it every day and have customers, expenses related to them.  It is active income for tax purpsoes.  Not much different than anyone else who is in a professional services business.

By night, I am an investor.  I buy and sell properties for myself.  I manage some of them and have outsourced some to my broker, my preference.  My goal is for the investments to make more than the business.  I want to be completely passive.  My direction is towards reaching a point where I can wake up on January 1st and know that if I do not get our of bed, all my fixed expenses are covered. 

My recommendation is to keep the w2 income as long as you can, you can get better financing and health care.  This may be counter to what a lot of people on BP advocate, "just quit your job and then become a RE investor".        

Originally posted by @Steve DellaPelle :

@Aphelele Cele If you invest in stock(s) you may just buy something safe and reliable, something you can kind of purchase and sit back and "collect" while you earn. You will not produce great wealth but your time is saved and spent elsewhere.

You could also invest in stock(s) and watch it closely every single day, buying and selling at specific times based on research and your gut feelings. Diversifying your portfolio and calculating percentages and allocations to maximize profits. You can likely produce great wealth but it is time consuming.

The same applies to REI and the choice is yours!

I currently trade currencies which is a very high risk investment. I have been trading currencies for about two years now but I have not yet benefited largely from it as my trading account is quite small. It takes time to build wealth through trading, especially if you are starting out with a small account. 

@Account Closed Definitely both! There's more to real estate than investing in paper assets. That's for sure. You can't just leave it alone and expect it to manage itself. Even by hiring others to do the work, you still have to manage the people who work with you. And that takes time and work! 

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