This is one of the most important questions for a potential real estate investor to answer before beginning to spend any money on an investment. What may seem like a simple yes or no, actually delves right to the heart of what type of investment that you want to get involved in. Why some people fall at the first hurdle is, they take this to mean do I want to invest in real estate?
Yes, I want to be a landlord, so yes, I want to invest in real estate vs. no, I don’t want to be a landlord so I can’t invest in real estate.
It really isn’t that cut and dried.
Before we can answer the question in the title, we have to first decide what do we mean by landlord? In a nutshell, a landlord is the owner of a property that has tenants in it.
The clearest answers are yes, I want to own properties with tenants, or no, I do not.
This doesn’t mean yes I want to own property and no I don’t. There are many ways that people can own properties, make money and not have tenants. For example, house flippers. People who choose to invest in real estate through renovating houses are not landlords. The properties are vacant and the owners have the properties for short periods of time before selling them. The same can be said for those that are rehabbing properties. This is a similar process to flipping, but is more involved work-wise and takes longer. There are times that a person who is rehabbing a building could be a landlord, if part of the building is tenanted.
It’s important to remember that a landlord is the owner. This doesn’t mean that the owner is involved in the day-to-day running of the property and dealing with the tenants. For many who are just starting to invest in real estate, they are the property manager as well as the owner. Not only does this save money, it gives hands on experience in taking care of a building and dealing with tenants. Over time, it’s common for investors to hire property managers, usually when they own several properties, or they have purchased a large, more complex building. The owner is still the landlord, so the answer to the question in the title is yes.
For a lot of people, investing in real estate means buying and owning a house, a condo, a building, something tangible. Truth be told, this isn’t the only way to invest in real estate. In fact, there are at least four different ways of making money that have to do with real estate and don’t always include ownership of a property. We’re not going to go into detail about that here, but if your answer to the title is no and you also don’t want to buy a building or property of some kind, then other options to consider include real estate investing through real estate investment trusts (REITs) and getting into the lending side of things (acting as a private lender to purchasers).