Your Guide to Real Estate Entrepreneurship

Is real estate entrepreneurship the right career choice for you? Buying and selling real estate can be a highly lucrative activity for the right person, but not everyone has the self-discipline, motivation and ambition it takes to be successful in this competitive field. You may be excited by the idea of being a real estate mogul, and you may see the financial possibilities of a particular real estate investment, but are you a real estate entrepreneur?

In this article, we examine what real estate entrepreneurs are, what they do, how that type of financial speculator differs from a real estate investor, and the steps you need to become one.

An individual who is considered a real estate entrepreneur is someone who buys property as a speculative investment, to generate wealth through income, appreciation and tax benefits. Depending on their long-term goals, they can make this real estate investment passively or actively. An active investor is a full participant in the investment strategy, which may include buying a property and then ‘flipping it’ (purchasing a property with the intention of reselling). A passive real estate investor loans people money so that they can fund their own real estate projects. In time, the passive investor will see a return on that investment.¹

While there are similarities between real estate investors and real estate entrepreneurs, there are some important differences, as well. You can think of real estate entrepreneurs as investors who have gone through a metamorphosis, from someone who purchases a couple of properties to diversify their investments to a savvy speculator who acquires multiple properties as their primary source of income. Entrepreneurs are full-time real estate investors.²

In addition to recognizing lucrative opportunities, real estate entrepreneurs have the special ability to move forward with these opportunities at the perfect time. It is not just a skill, but an art. Although investors have the same ambition, they’re usually less experienced, or they don’t put as much time and energy into each endeavor. It may also be that they’re too involved in the finer details, rather than seeing the bigger picture.²

Another aspect that distinguishes the two is personal character. Real estate entrepreneurs are highly ambitious risk-takers. They’re self-motivated, with grit and passion. They are the visionaries and the dreamers, with far-reaching goals.¹

If you’re just starting in real estate investment, there are some key steps you should take for a greater chance of success. You should begin by learning about real estate investing. This includes understanding important terms and definitions, in addition to financial processes and regulations. Develop a business plan, so you understand how you’ll achieve your goals. Build a strong team, which might include real estate agents, finance and tax experts, attorneys and contractors. Consider finding a mentor who can help guide you through the complex world of real estate investments. You then need to find investment opportunities and make your first real estate purchase. ^2,3,4

A real estate entrepreneur does everything that an investor does, but full-time and at a higher level. Real estate entrepreneurship involves buying and selling real estate. Depending on whether you’re an active or passive entrepreneur, you may be more or less ‘hands-on’ in terms of researching properties and the renovation process. Regardless of which you choose, you’ll also monitor your local real estate market for the best time to buy or sell, review listings and compare property values.⁴

Real estate entrepreneurship examples include:

House Flipping

Buy a house in need of repairs, accurately estimate repair costs, fix and resell.⁵

Income-Producing Property

Buy a property that is income-producing with a stable cash flow (single-family rental homes, multi-family houses).⁵

Invest for Future Profits

A ‘buy and hold’ strategy means that you invest for future appreciation to build long-term equity.⁵

Wholesale Investing

Find a motivated seller, estimate repair costs and fair market value and assign to another investor in return for a fixed profit.⁵

Crowdfunding, REITs

Collect money from many investors to buy and manage larger income-producing properties or buy shares in publicly traded Real Estate Investment Trusts (REITs), and receive a small share of cash flow and profit when the property is sold.^5,6

Other real estate entrepreneurship opportunities include real estate investment groups (REIGs), real estate limited partnerships (RELPs) and real estate mutual funds.⁷ It’s most important that you have an entrepreneurial mindset, which includes the willingness to take risks and the desire to be constantly learning, expanding your network and honing your skills.¹

As you move from real estate investor to entrepreneur, it helps to create a business strategy and develop a focus, such as residential properties or multi-unit housing. Build a large network of smart people with various skill sets and maintain strong relationships with tenants, associates, business partners and clients. Through these relationships, encourage referrals. Understand the risks and keep yourself educated with up-to-date information.^2,3

To set out on your real estate entrepreneurship path, take the following steps:

Develop a passion for learning about real estate, from the basics to real estate investment strategies, different types of financing, investment regulations and the buying, selling and reselling processes.^1,4 Formal education provides the added benefit of being able to connect with industry veterans and other important resources.

Do you want to be an active investor or do you prefer to be passive? Hands-on real estate investing includes renovating and flipping homes and buying and managing rental properties.⁵

When studying your local market for opportunities, consider property values and current market trends, the average monthly rents to determine income potential and the cost of properties.⁴

There are various ways to find the money for real estate investments. These include cash, taking out a mortgage or working with money-lenders. Those with less money available can consider using home equity, seller financing, wholesaling or entering into a partnership.⁸

Especially if you’ll be renting a property to tenants, you must educate yourself about your local housing rules and regulations. You can avoid potential legal liability by being diligent. In addition to running background checks, know your responsibilities as a landlord.⁴

A deep understanding of the real estate market is extremely important for both casual investing and real estate entrepreneurship. Entrepreneurs with the right education and expertise can lower their risks, work more successfully with lenders and make better investments.²

Now that you know how to become a real estate entrepreneur, your first step is clear: Get educated with the latest expert knowledge in the field of real estate. The Yeshiva University Sy Syms School of Business online Mitzner Master of Science in Real Estate program will give you the edge you need to hit the ground running on your way to a lucrative career as a real estate mogul. You will take a deep dive into real estate planning, development and investment, learning from industry leaders and making valuable connections that will put you ahead of the pack.

Are you ready? Contact an Admissions Advisor to learn more.