Property Investing vs Real Estate Investing: What's the Difference?

“Property” and “real estate” are two terms that are often used interchangeably, and if someone says they’re investing in one or the other, it’s not always apparent what they mean. 

While these terms really can be used to describe any sort of venture that involves putting money into property, there can be subtle differences between them.

This article will discuss how to differentiate between property investing and real estate investing, with definitions of both terms and what sets them apart. 

Real Estate Investing

Real estate investing is usually used to describe corporate and institutional investment opportunities. It generally involves acquiring portfolios and is on the highest level of property investing. 

Within this umbrella, Real Estate Investment Trusts (REITs) exist. These typically have diversified portfolios and can be used by investors to own and access property access indirectly.

Property Investing

Property investing is more often used to describe the “accessible to all” investment in real estate that’s made by individuals and professional investors. Usually, this type of investment involves the purchase of a single property or unit, which is either flipped or rented out for profit. 

Moreover, individual property investors can fund their ventures with non-conventional methods (i.e. not traditional mortgages) to allow for more flexibility in their investment choices. Arizona lending services offer hard money loans, bridging loans, and other short-term loans that are a more appealing choice for investors due to their quick turnarounds and lack of focus on credit scores. 

Key Differences Between Property & Real Estate Investing

As mentioned in the introduction to this article, “property” and “real estate” are often used interchangeably to describe any sort of investment venture in this industry. You’re unlikely to experience issues by using one over the other, but these terms do often differ when it comes to describing the level of the investment. 

Some of the differences between property and real estate investing include: 

• Capital: Real estate investing often involves a greater amount of capital investedI 

• Risk: Property investing typically focuses on smaller residential purchases with lower risk to the investor.  

• Type of investor: Real estate investments are typically made by institutional investors, while property investments are usually made by individual and retail investors. 

• Yield & ROI (return on investment): This depends on the opportunity, but generally, real estate investments have the potential to make a larger return than individual residential property investments. 

Takeaway

Although there are some differences between property and real estate investing, there’s really no need to worry about using the terms incorrectly. One term might be used more commonly in your region to describe the type of investing you do, and in that case, you may as well use it, too. 

Whether you use the phrasing “property” or “ real estate” the investment opportunities within this umbrella are varied and vast, with bundles of potential. Make sure you’re aware of all the options available to you, including the financing solutions, so you can make the right choice that aligns with your budget and goals.