10 ways to invest in real estate

Many people dream of investing in real estate, of rolling up their sleeves to flip a fixer-upper or opening an adorable Airbnb, but aren’t sure if they have what it takes to pull it off, financially and otherwise. Though it’s true that some real estate investments demand deep pockets or serious elbow grease, many other opportunities can be pursued just fine with minimal cash, time, and expertise up front. Here’s a rundown of the most common strategies, as well as the benefits and challenges of each, so you can find the best fit.

REITs (real estate investment trusts)

REITs are companies that own income-producing real estate, such as rental homes, offices, and shopping malls. They’re one of the easiest ways to invest in real estate: You simply buy REIT shares, which are typically sold on exchanges similar to stocks.

Congress created REITs in 1960 to make real estate investing accessible to all Americans. Today, about 580,000 properties across the country are owned by REITs holding over $4 trillion in assets. REITs are legally required to distribute at least 90% of their taxable income to shareholders. Historically, REITs have posted annualized returns of 11.8% per year from May 1972 to the end of 2019—a tad higher than the S&P 500’s 10.6% average annual return over that same period.

REITs are not risk-free. Dividends and share prices fluctuate based on market conditions, so there’s no guarantee you’ll rake in reliable returns. Still, they’re a low-maintenance option if you’re seeking passive income without the pressure of owning actual property, as well as an easy way to get your foot in the real estate investment door. Learn more about REITs here.

REIGs (real estate investment groups)

REIGs are private collectives of investors who pool resources to purchase income-generating properties. Although similar to REITs, REIGs don’t have the same regulatory requirements (e.g., the 90% income distribution rule) and aren’t typically traded on stock exchanges. You’ll find REIGs via networking events like those hosted by the National Real Estate Investors Association.

Investing in REIGs usually requires $5,000 to $50,000 up front, and funds may be locked in for a set period, limiting liquidity. Average returns ranged 8%–12% in 2024. Although REIGs require a bit more capital and commitment than REITs, they can be worth it for investors seeking access to exclusive investments that could boast higher returns. Here’s more on REIGs.

Real estate crowdfunding

In 2012, the Jumpstart Our Business Startups (JOBS) Act was passed, allowing small businesses to solicit funding from the public via crowdfunding platforms. Since then, sites like Fundrise, CrowdStreet, and RealtyMogul have popped up to offer anyone with a wi-fi connection the ability to invest in real estate projects big and small. Although some require an initial outlay in the thousands, others cost as little as 10 bucks. Returns reportedly range from 5% to 15%.

Keep in mind that some sites charge fees or require a minimum balance. Liquidity can also be an issue, as some investments lock up funds for years. So make sure to research your platform and projects with care before you commit.

House hacking

Got an empty bedroom, carless garage, or other area in your home that’s not getting much use? Rent it out, and you’ve joined the leagues who “house hack.” House hacking (a term popularized by Brandon Turner of the real estate investment education site BiggerPockets) brings in income without requiring a whole separate residence. It’s particularly popular in pricey housing markets where you might struggle to pay your mortgage without a roommate or renter pitching in.

Of course, if you prefer your privacy, having a tenant this close by could wear on you, but there are plenty of arrangements that can keep awkward bump-ins to a minimum. Duplexes, guest houses, and basements or garages converted to apartments all offer the possibility of separate entrances, bathrooms, and kitchens.

Real estate wholesaling

If you love finding dirt-cheap properties but are leery of committing to fixing them up yourself, wholesaling may be a great middle ground. This is where you find distressed real estate, secure its purchase for a low price, then find someone else who’s willing to pay you more than you put up. You’re essentially a matchmaker, pairing motivated sellers with interested investors. Since wholesalers typically assign their contract to another buyer rather than taking ownership, it’s low-risk and doesn’t require much money beyond an earnest deposit of as little as $10 to $100; profits per deal range from $5,000 to $20,000.

However, success in wholesaling requires strong negotiation skills, a broad network of buyers, and a deep understanding of local markets. Some states also require wholesalers to hold a real estate license. Last but not least, finding these diamonds in the rough does take time and a lot of legwork, but it’s the perfect pursuit if you love the rush (and payoff) of buying low to sell high. Here’s a beginner’s guide to wholesaling.

Bird dogging

Bird dogs are similar to wholesalers in that they flush out cheap real estate that owners are eager to unload. The difference is that they take on even less responsibility and simply sell their leads to wholesalers, house flippers, and others who will shoulder the negotiations and contracts.

Bird dogs get paid a finder’s fee of around $250 plus a small percentage of the profits. It’s not much, but if you love the thrill of the hunt but hate paperwork, this is a low-key way to dabble and get your real estate investment feet wet.

Rental properties

Although “landlord” may have an Old World ring to it, this profession is still the most tried-and-true real estate investment out there today. In fact, 69% of US rental property is owned by individuals who earn an average of $10,000 per property per year.

The downside, of course, is that being a landlord isn’t as simple as buying a place and watching the rental checks roll in. If a pipe bursts or a roach infestation arrives, you’re on the hook for repairs and maintenance. Landlords spend an average of four hours per month managing each rental property they own, although this work can be outsourced to a management company. Another potential issue is if your tenant stops paying rent, some states have strict tenant protection laws, making eviction difficult. Still, as long as landlords budget for the unexpected, it’s a time-tested way to build long-term wealth. Check out this guide for landlords to learn more.

Short-term rentals (STRs)

Whether you own a cabin in the woods, beach house, tree house, hobbit house, windmill, or yurt, you can rent it out through sites like Airbnb and VRBO. Today, there are 2.5 million short-term rentals available in the US run by over 785,000 hosts who make an average of $26,024 per year.

Still, whether you aspire to Superhost status or not, being in the hospitality biz means that much like a hotel concierge, you’re on call 24/7 for any questions and issues, from glitchy wi-fi to noise complaints from neighbors. Plus, many popular tourist destinations are clamping down with regulations and caps on the number of short-term rentals allowed in any area, so make sure to fully understand the legal landscape before diving in with this Airbnb hosting guide.

House flipping

If you’ve got an arsenal of tools and know how to wield them, house flipping is the ultimate hands-on investment where you buy a fixer-upper, roll up your sleeves to restore it to its former glory, then make a killing when you sell. House flippers profit an average of $73,500 per flip and spend an average of 166 days to work their magic.

Though house flipping can be rewarding, brace for some back-breaking work. You’ll also need plenty of capital and a solid understanding of property valuation and renovation costs. If you’re new to flipping, start small and look for homes that need just cosmetic upgrades, such as kitchen cabinets and a fresh coat of paint rather than a new foundation and roof.

Homeownership

Although this isn’t technically an “investment property” since its primary purpose is to provide a roof over your head, it is most certainly an investment—probably the biggest one many of us will ever make.

Homes also act as a “forced saving plan,” meaning since you’re on the hook to pay your mortgage every month, you aren’t likely to squander that money on frivolous purchases. And as your equity builds over time, another benefit is that you can leverage this asset to purchase a second property.

So even if all you do in the property investment game is buy a home to call your own, you’re on the right track.