Many people confuse the difference between real estate development and real estate investment, although each is a completely different path in terms of role, risk, and responsibility; it is the first step for anyone considering entering the real estate field, whether as an investor looking for a return, or an entrepreneur who wants to build a long-term project.
In this article, we explain the differences in a practical way that will help you choose the most suitable route for you.
Continue reading!
What is real estate development?
Real estate development is an integrated process that starts with:
1) Purchase of land
2) Market and Feasibility Study
3) Project design
4) Implementation and management
5) Marketing and sales
A real estate developer does not buy a ready-made property, but creates value from scratch and takes responsibility for the entire project.
For more, check out Real Estate Development Projects
What is real estate investing?
Real estate investment depends on:
1) Buy a ready-made property
2) Realize a return on rent or resale
3) Limited management compared to development
The real estate investor is focused on the return, not the construction of the project itself.
What’s the difference in risk?
When comparing the difference between real estate development and real estate investment:
1) Real estate development: Higher risk due to execution, market, financing
2) Real estate investment: Relatively less risky if the right choice is made
In other words, the greater the control over the project, the greater the risk and responsibility.
What is the difference in required capital?
1) Real estate development needs large capital or strong partnerships
2) Real estate investment can be started with less capital
Choosing a path is all about your finances and stamina.
What is the difference in expected return?
1) Real estate development: Higher return in the medium and long term
2) Real estate investment: Stable, slower return
The return is always proportional to the risk.
What is the managerial role of each party?
in real estate development:
1) Manage teams
2) Making strategic decisions
3) Dealing with Market Challenges and Execution
in real estate investment:
1) Follow the yield
2) Unit or asset management
3) Less complicated decisions
For those who want to make a successful real estate investment, experience and credibility are key. You can benefit from the experience of of Mohammed Awaja Real Estate Developer to achieve sound management and a stable long-term return.
Which one is right for you?
Your choice between real estate development and real estate investment depends on:
1) Industry experience
2) Capital Size
3) Your ability to manage risk
4) Goal of entering the market
There is no absolute best option, just one that works best for each person.
Understanding the difference between real estate development and real estate investment protects you from wrong decisions that could cost you time and money.
Real estate development is suitable for those with vision, experience, and the ability to manage.
While real estate investing is a viable option for those looking for a stable return and lower risk.
The important thing is to choose the path that suits you, not the one that looks the most glamorous.
Contact us now to book a free consultation through this link
