Definition of "Real estate investor"

Leonard Giarrano real estate agent

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Leonard Giarranoelite badge icon

RE/MAX Alliance Group

When answering the question of what is a real estate investor, several aspects should be considered.

First, a real estate investor, also known as a real estate entrepreneur, allocates money to purchase property, land, or rights above and below the land. In the term real estate, real comes from the Latin root “res” or things which refer to anything that has a physical form, is palpable and tangible and estate means property. What does a real estate investor do is that he puts money into a financial scheme and expects to get future profit.

Second, a real estate investor could also be defined as someone who evaluates the real estate market and purchases property to build wealth.

Passive or active investors

Real estate investors could be passive or active investors. An active investor purchases property, then makes improvements or repairs to increase its value and sells it later for a profit. An appreciation or depreciation in value could occur over time without a conscious implication for the investor. A passive investor hires a real estate company that finds the right investment opportunities for the real estate investor.

There are four real estate types: commercial, residential, industrial, and land.

Commercial real estate

Refers to property used for business purposes, such as office buildings, retail spaces, and hotels. These properties are often owned by real estate investors and generate income through renting or leasing to tenants.

The value and performance of commercial real estate can be influenced by location, market demand, and economic conditions.

Residential real estate

Here, we refer to buying, selling, and renting apartments, townhouses, condominiums, and other housing units intended for use as primary residences.

The market for residential real estate is a complex and dynamic industry. It is affected by various factors, including local and national economic conditions, housing supply and demand, and demographic trends.

Residential real estate transactions typically involve several players, including buyers, sellers, agents, brokers, and property management companies. Real estate agents and brokers play an essential role in buying and selling. They help clients navigate a real estate transaction's complex legal, financial, and logistical aspects.

Property management companies help property owners and renters with the day-to-day operations of a residential property. They include collecting rent, managing maintenance, and repair issues, and handling tenant relations.

Industrial real estate

Refers to the market for buying, selling, and leasing industrial properties. Some examples of such properties include warehouses, manufacturing facilities, distribution centers, and research and development facilities. These properties are typically used for business operations, storing goods, and producing goods and services.

The industrial real estate market is a complex and dynamic industry. Several factors, including economic conditions, technological advancements, and shifts in global trade patterns, influence it.

 Companies in various sectors, including transportation and logistics, manufacturing, and e-commerce, rely on industrial real estate to support their operations.


Land real estate refers to a piece of land, including any natural resources or improvements on it. This land is bought, sold, or used for various purposes such as residential, commercial, industrial, or agricultural. It refers to the ownership or use of land, including any buildings or structures built on it and any minerals, crops, or other natural resources present. Land value can vary depending on various factors. Among them, we can name location, zoning, access to utilities and transportation, and local economic conditions. Land can be bought and sold as a commodity, used as collateral for loans, and subject to property taxes and zoning regulations.

Real estate investors put money in any of the four categories mentioned for long-term gain. They expect a financial return from their investments. Investing in real estate property at an all-time low price and expecting an appreciation in the future is usually the ideal scenario for any real estate investor, but that involves speculating that the price is going up in the long term.

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