Advertiser Disclosure

advertising disclaimer
Skip to main content
real estate investing options.jpg

How to Invest in Real Estate: 10 Ways to Build Wealth

There are numerous ways to start real estate investing. Find out which one best fits you.

[Updated: Sep 28, 2021 ] Oct 31, 2019 by Tyler Crowe

Get our 43-Page Guide to Real Estate Investing Today!

Real estate has long been the go-to investment for those looking to build long-term wealth for generations. Let us help you navigate this asset class by signing up for our comprehensive real estate investing guide.

Matt defines 'real estate investing.'
Passive Real Estate Investment Strategies Active Real Estate Investment Strategies
REITs Rental properties (short- and long-term)
Mortgage debt Flipping houses
Stocks, mutual funds, and ETFs Land (developing)
Crowdfunded real estate Foreclosures and REO properties
Land (speculative buying and selling) Commercial real estate
*Millionacres philosophy: Debt is a powerful tool in real estate and there are ways to invest in real estate with less money upfront, but always remember to use debt as a tool to enhance returns -- not to overextend your finances to make a deal happen.
Investment Category Recommended Minimum Investment Time Horizon
REITs, real estate stocks, mutual funds, and ETFs 2 to 3 years
Mortgage notes and debt 5 to 10 years
Rental properties (short- and long-term) 5 to 7 years
House Flipping Less than 6 months (time can be your enemy)
Land Depends on development strategy
Crowdfunded real estate and eREITs 5 years
Commercial real estate 10+ years
Real Estate Investment Options Suggested Capital Needed to Invest
REITS, real estate stocks, mutual funds, ETFs, and eREITs $0 to $100,000
Mortgage notes and debt More than $10,000 per investment
Rental properties (short and long term) 25% down plus capital reserves
Flipping houses Down payment plus 20%-33% of after repair value for renovations
Land Wide range depending upon ultimate outcome
Foreclosures and REO properties 25% down and much more for contingencies
Crowdfunded real estate (for accredited investors) $25,000 minimums in a single asset
Commercial real estate hundreds of thousands into a single asset
Type of Investment Pros Cons
Real estate investment trusts +Low-cost entry point +Liquid market for shorter time horizons -Modest returns  -Subject to stock market volatility
Real estate stocks, mutual funds, and ETFs +Low-cost entry point +Liquid market for shorter time horizons -Modest returns  -Subject to stock market volatility
Mortgage notes and debt +Multiple outcomes for various strategies +Modest price point for entry -Acquiring mortgage notes is challenging -Typically lower returns than an equity position
Long-term rental property +Good returns from cash flow and price appreciation +Tax-advantaged asset +Can use leverage -Active management of a property (or paying someone else) -Still requires significant upfront and contingency capital
Short-term and vacation rental property +Same as long-term rentals, but the potential for higher cash flow -Requires much more active management -Only suitable for certain locations
Flipping houses +High rates of return +No need for long-term holdings -Requires lots of upfront and contingency capital -Several things can go wrong for inexperienced flippers
Land investing +Lower upfront capital costs +Multiple exit strategies -Highly speculative -Development capital costs can be extensive
Real estate owned (REO) and foreclosures +Potential for higher returns on rental property rentals -Complex legal aspects  -High risk of things going wrong
Real estate crowdfunding +Access to institutional-quality commercial real estate at lower entry points +Best effort to rate of return ratio in real estate -Most crowdfunded deals still require accredited investor status -Can create some tax headaches
Commercial real estate +High rates of return +Multiple types of real estate to invest in -Immensely complex and shouldn't be done alone -Very high capital costs

Got $1,000? The 10 Top Investments We’d Make Right Now

Our team of analysts agrees. These 10 real estate plays are the best ways to invest in real estate right now. By signing up to be a member of Real Estate Winners, you’ll get access to our 10 best ideas and new investment ideas every month. Find out how you can get started with Real Estate Winners by clicking here.