Landlord or Property Investor?
What's the difference between a property investor and a landlord?
In property circles, we often hear the terms Landlord and Property Investor. But what do they mean and what is the difference?
It should be no surprise to learn that there is no formal definition. There is also quite a fuzzy line between them. It is not cut and dry! We should also point out that, although there are differences, one is not better than the other. The biggest difference is in the mindset of the individual.
Typically a landlord has a small number of properties. Often just one. Although it is not the number of properties that makes the difference, it can dictate the behaviour.
Landlords often look after the property themselves. They advertise vacancies, meet with potential tenants and are called on when maintenance is needed. They may outsource some of the grunt work but it still falls to them to make it happen. They might call on the reach of a letting agent to do some of the advertising and arrange for a plumber to fix the dripping tap.
Ultimately, it is the landlord who deals with the needs of the property and the tenants.
A landlord is looking for income that covers the mortgage and all the bills. Hopefully, it then leaves some funding to supplement their main income. Plus, they are looking for the property value to increase as a good alternative to a traditional pension.
Often here we will find more properties. But this doesn't have to be the case. Many property investors build up portfolios of many properties but some generate lumps of cash through buying cheap, adding value and selling on.
One thing is for sure, property investors will have more systems in place. They will be less responsible for dealing with tenants or for the delivery of maintenance. The property investor will use a letting agent for the day-to-day property management. If they reach sufficient size, this function may even be an employed role.
Perhaps the biggest difference is that the property investor views their business as their main income, not a supplement to it. They may not have got to that point but it is what they will be working towards.
The investor is always looking for new opportunities and different strategies to build their business. For that is what it is to them. To the property investor, it is a full-time business whereas to the landlord it is an income stream on the side.
Which are you?
As we said at the start, one is not better than the other. Different people have different needs and different attitudes to risk, work, debt and job security.
If you are currently involved in property or thinking of embarking on a property journey, take some time to think about which you are. Is it where you want to be? Does it align with your values and your attitude?
Thinking in business is very underrated. Thinking about which you want to be and how to make that happen is time well spend.