What Do You Define as Real Estate Investing?

[Tyler Barker]

I've been listening to the podcast and talking to investors and I hear a lot of people defining themselves as real estate investors or saying they invest in real estate as a point of pride. I'm curious at what point you would start to define true real estate investing. Is it once you've done your first deal? Does the deal have to be a buy and hold or does a wholesale count? Would you count something like Fundrise or a REIT as real estate investing? Does real estate income have to be your primary income? Does it even really matter? I'm sure there are many opinions so I can't wait to hear what you have to say.

[Michael Albaum]

Hey Tyler, I guess I'd answer your question with 2 questions and that is "why do you ask?" and "why does it matter?"

Why does it matter how others define real estate investing? What matters is what you think and how you feel. If you think that investing in a REIT is real estate investing, cool. If you don't think it is, that's cool too. For me, investing in real estate means purchasing it in some form or another, and I don't really care what the vehicle is or who thinks they are or aren't investing in real estate. I actually prefer more people to simply talk a big talk, that way it leaves more deals out there for the people doing deals.

You should do what makes you happy and what serves a purpose for you. 

Best of luck!

[Tyler Barker]

@Michael Albaum

Thanks for the response. I personally agree with you that it doesn’t matter what you define it as. For myself, I think if you have any income from any real estate, then you have invested in real estate.

I ask the question because I’m simply curious what other people believe about this topic. I have a feeling some people will passionately feel a certain way, but the vast majority of people will share your opinion.

[Account Closed]

@Tyler Barker I think its as simple as putting any money into real estate. i started calling myself an investor after i finished my first duplex and rented it out but during the process i kept alluding to saying it was like a hobby. my career as a whole is in real estate but the actual investment portion of it is only a percentage of my income but i do consider myself an investor because i put time and money into real estate whether its a buy and hold, flip, or partnership investment. when someone tells me theyre a real estate investor though, my mind automatically goes to landlord or flipper.

[Tyler Barker]

@Suny Capezzuto yes I completely agree that there are different levels like a hobby or professional. I think this conversation has the potential to reveal some interesting investing strategies! It’s also good to point out working in real estate vs investing in real estate.

[Daniel Kong]

I'd agree with @Account Closed. As soon as you put money into real estate thats not your home  or place that you rent, I'd consider you an investor. Basically spending money to make money in real estate in any form would qualify you. Now if you bought your home as a house hack, or with the intention to make a profit, I guess that would qualify you as well. 

[Tyler Barker]

@Daniel Kong so you wouldn’t count someone that bought a house hoping it will appreciate in the future?

[Frank Wong]

Investing any money into real estate and wanting to get a return on it is RE investing. Could be wholesale, rentals, flipping, mortgage notes, syndication. To me, REIT is not RE investing. Yes, the underlying investment is properties but the reality is that its a stock and you are executing the purchase and sale like a stock.

To me, in the end, it doesn't really matter. I only care about one thing. Am I making money or not? 

[Tyler Barker]

@Frank Wong what about something like fundrise in your opinion? To me fundrise and REITs are very similar

[Joy Sandford]

Great query you've started here, Tyler. It seems to me the title of investor is as infinite in its connotations and denotations as being an artists, which I think Investors are anyway! In my first lil investment online course on wholesale investment we learned to declare "I am an investor!" as part of how we began to practice the dance of measuring and managing risks before taking them, the process parking money before intuiting when to pull that money out. You can be a wholesale RE investor, a stock investor, a house flipper, an angel or seed investor–all folks who put money in a thing, watch the money grow with that thing, and at some point, let that thing go (exit strategy). There's lots of ways to freak a deal, and they all seem to have those three steps in common.

A wholesale investor puts time and money in marketing and networking, watches their money grow according to the quality of the leads or deals generated by all that marketing and networking, and their exit strategy is the assignment of the contract. A house flipper (perhaps they gal to whom that wholesaler assigned said contract) parks their money in the rehabilitation of discount property. They watch their money grow as that discount property goes to rehab, gets clean, and is transformed such that it can compete with the other market favs in the area (like Princess Diaries). Their exit strategy is the retailing–or flipping–of that new-and-improved, higher valued property. 

My current fav investor, Ayesha Seldon, calls herself an investor not just because of how many doors she has, but also because of her stock savvy. She's an Investor's Investor who invests because the process is fun and exciting, not just because Warren Buffet said RE is a less volatile place to park, though he ain't lyin. 

Idk if that helps, but it was a fun question to consider. Hope it gets more philosophical and weird in the responses to come!

[Jason D.]

My definition of a "real estate investor" is someone that uses their money to purchase real estate, other than personal residence, for profit.

Flippers

Buy and hold

Syndication

I dont consider a contract assigned an investor, because real estate isnt the asset. They are a "contract investor"

[Tyler Barker]

@Joy Sandford perfect reply! Thanks for sharing.

[Tyler Barker]

@Jason D. that’s definitely an interesting angle. What about someone that invests as a limited partner in a deal? Are they investing in the asset or investing in the team of general partners?

[Michael Simolke]

@Tyler Barker sure. That’s the same as buying a stock in a company and hoping that share goes up in value. You can call it speculation but real estate goes up over time, almost a guarantee simple based on the cost of labor, materials, and the land it takes to make real estate happen.. not to mention, population growth. If your “big thing” is appreciation you should buy something slightly above the median. If it’s cash flow buy way below the median and if it’s both buy something 20k-30k below the median and put 20k into fixing it up. And never sell...... unless someone gives you a ridiculous offer.

[Jason D.]

@Tyler Barker I think that would be investing in real estate if you have an equity stake in the asset. If you dont own equity, you're simply a lender.