Do you want to work in real estate someday?
There are two primary career paths in real estate. In this guide, we’ll tackle the difference between a real estate investor vs agent.
The real estate business is a great choice if you’re sociable and like to buy and sell properties. Real estate is a lucrative industry, considering Americans move at least 11 times in their life. Depending on the circumstances in your state, business can be quite good.
Keep reading below to learn whether you should follow the path of a real estate agent or investor.
1. Employment Status
The first big difference in the real estate business is the employment status of agents and investors. In technical terms, the real estate agent is an employee. Agents work for another party, company, or individual.
Even real estate agents who consider themselves self-employed still work for others. They do the negotiations for their clients. They act as middlemen between potential buyers and the property owners or sellers.
Real estate investors have different employment statuses. Unlike agents, investors buy and sell properties for themselves. Because they’re the boss of themselves, they hold the status of true self-employment.
One similarity between the two careers is that they often stick to specific cities or states. Often, they’ll sell properties located within or near the same city they live in. Knowledge of the climate and closest landmarks is vital when selling property.
Since they’re also locals, their knowledge of these things helps them sell with more ease. They also understand that the vast majority (65%) of moves occur within the country. Only 4% of moves involve people going abroad.
2. One Needs a License While the Other Doesn’t
The next difference between an agent and an investor is the licensing requirements. You can’t become a real estate agent without the proper licenses.
Having a license shows your clients that you’ve had the proper training. It’s also a way of ensuring that you’re offering safe business to your clients as a real estate agent. If you act in an immoral or unprofessional way, the client could report you and make you lose your license.
A real estate license is necessary if you’ll represent someone else in the business. Agents represent their agencies or other persons in their line of work, so they need a license.
Since they don’t represent anyone else, real estate investors can work without a license.
3. On the Topic of Earning from Commissions
Only real estate agents earn from commissions. These commissions can range from 1% to 5% of their deals. Sometimes, they can get more than 5%, depending on the property.
In contrast, a real estate investor will not get a commission. Instead, he or she will earn money from the difference between the buying price and sale price of a property. You can also earn by selling, flipping, and creating rent-to-own options.
Since you buy and sell properties using your name or personal info, you can even pledge them to a bank for extra cash. Compared to a real estate agent, you have more options at earning from the properties you get as an investor. However, for real estate agents, it’s somewhat easier to earn money from commission.
4. Strategies and Knowledge Used by a Real Estate Investor vs Agent
Finally, we reach the strategies used by a real estate investor vs agent. While the work of both careers involves selling properties, they use varying strategies.
How Real Estate Agents Earn
For example, a real estate agent banks on his or her experience to earn. Property buyers tend to gravitate towards real estate agents who hold more experience. Many see having years of experience in selling properties as a mark of reliability and trust.
Real estate agents must also dedicate more hours to the job to earn more. The more time and effort they put in their work, the more money will come through for them. The reason is that they can find more referrals and do more on the marketing side.
In marketing, mailing lists can help real estate investors find property to buy. For real estate agents, they can use the same strategy and a wide array of other marketing strategies.
The key is to promote oneself by building rapport with clients and letting people know about you. That may include the use of flyers, digital ads, a website, and more.
Finally, real estate agents often have a “property specialty.” This is the specialization in selling a specific type of property. Some property specialty examples include commercial and residential property.
How Investors Make Money
Real estate investors focus on their investment strategy rather than their marketing strategies. They have to look for positive cash flow strategies before investing in a property for the long term. They can also get short-term gains from a fix-and-flip strategy.
Real estate investors also focus on property specialties. For example, commercial properties generate more money, but they involve more risks. In contrast, residential properties are less lucrative, but investing in them is safer.
One type of strategy used by investors is the rental strategy. This may include using platforms like Airbnb or the traditional rental/transient methods. An investor’s real estate strategy will play a huge role in determining how much money he or she makes.
Certain factors also affect the rental strategy. They include factors like location, demand, and type of investment property.
Real Estate Investor vs Agent: Which Career Is for You?
We hope this guide on what separates a real estate investor vs agent helped you understand the two better. Remember that real estate is a fickle business. There will be times when you’ll have little to no sales, and others when you earn a lot. Be wiser and keener, especially since you’re in real estate. Do you want to learn more about real estate brokers? Check out our other guides on real estate now for more guides like this one.