How to Invest in Real Estate
4 Min Read | Last updated: March 15, 2026
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Learn how to invest in real estate, from hands-on options like house flipping to passive strategies like investment trusts and crowdfunding.
At-A-Glance
- The main types of real estate—residential, commercial, industrial, and land—can all be lucrative investments, but they’re not without risk.
- You can invest in real estate by building equity through homeownership and renting out, or by flipping homes.
- You can also invest in a professional company’s real estate portfolio or work with a real estate crowdfunding platform.
You’re finally in a place where you can start thinking about what investing could look like for you. Is it an investment fund that bundles stocks and bonds—or a retirement account that grows over time? Investing in real estate could be one option that helps put money in your pocket and diversifies your portfolio beyond stocks and bonds.
What Are the Different Types of Real Estate?
Real estate is any form of real, physical property. All real estate can be classified as income-producing or non-income-producing, but most forms of real estate can generate income.
Here are the main types of real estate:
- Commercial
These buildings are primarily for conducting business or performing professional activities that generate income—think companies paying for office, store, or gym space. - Industrial
This type of real estate is also used to generate income through business, but more in the vein of manufacturing. - Land
Undeveloped land can be bought and used for timber, livestock, or farming. It’s also considered income-producing. - Residential
These properties are solely for living in and aren’t considered income-generating investments (if you’re a landlord or seller, the income comes from your tenants or buyers, not the home itself).
How To Invest in Real Estate
You can invest in real estate out-of-pocket, through banks and lenders, or through investment companies. You can buy homes and rent them out or flip them. You can even own shares in real estate portfolios or use crowdfunding platforms to access accredited-investor-grade real estate deals.
Below, you can learn a little bit about common investment avenues. Just remember that all of them carry risk.
Home Purchase
Buying a home can be an ideal long-term investment—especially if you buy at an affordable price and build home equity over time. Home lending experts explain that when you use equity (the difference between your house’s value and your mortgage balance) for the right reasons, you can enjoy quick access to cash for reaching other financial goals.1 You may also be able to pay less each month with a mortgage than renting, and sometimes you can deduct your mortgage’s interest from your taxes.
Rental Properties
Becoming a landlord can be an attractive investment opportunity, particularly if you’d prefer not to deal with commercial real estate. Investing in single-family rental homes can pay off in the long run if your home values increase over time (building up equity). You’ll also collect rent from your tenants each month, a semi-passive form of income.
Did you know?
House hacking (buying multi-family homes or duplexes that you also live in) and room sharing (renting out a single room in your home) are two ways to blend home buying with rental income.
House Flipping
Flipping homes is potentially one way to achieve even faster profits than home ownership or renting, but it requires considerable expertise and skill. You start by finding undervalued residential real estate, buying it, renovating it, and selling it at market value. House flipping can become a livelihood for some, as long as they can accurately estimate repair costs, strategically finance home improvements, and successfully sell the house.
Real Estate Investment Trusts
Investing in a real estate investment trust (REIT) lets you own a portion of industrial or commercial real estate. REITs are companies that own and maintain income-generating properties, like offices, malls, hotels, storage facilities, warehouses, or the land required to build them. REITs don’t usually flip or resell buildings—they buy and develop them to create an investment portfolio that earns you returns.
Crowdfunding Platforms
Certain crowdfunding platforms help you invest in income-producing real estate and property development, sometimes for as little as $10 or as much as $25,000.2 Crowdfunding can also give you access to deals available only to accredited investors. Those deals can be potentially lucrative if you can vet them properly and the platform doesn’t charge you a ton of fees.
Frequently Asked Questions
Turnkey properties are houses that professional companies purchase and fully renovate. The idea is you buy the property from the company, but they’re in charge of finding tenants, collecting rent, and maintaining the property. Turnkey real estate investing may involve less risk than other options, but it also typically requires you to pay the management company a portion of your profits.
Some real estate risks relate to market volatility (if the market slumps, mortgage interest rates may rise and complicate a home sale). Other risks involve tenants skipping rent payments or paying late, which can directly impact your finances. Also, maintenance, home repairs, and zoning issues that involve legal proceedings can all eat away at your returns.
The Takeaway
Investing in real estate is one way to diversify your financial portfolio and build wealth, and you can do so by buying, flipping, or renting out a house. You can also invest with real estate investment companies and crowdfunding platforms that develop and manage properties. Whatever investment route you take, just remember that it carries risk, and researching all your options can help you choose the right path for the season of life that you’re in.
1 “What is home equity?,” Bankrate
2 “How to invest in real estate without buying property,” Bankrate
Karen Lynch is a journalist who has covered global business, technology, finance, and related public policy issues for more than 30 years.
All Credit Intel content is written by freelance authors and commissioned and paid for by American Express.
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