How Do I Invest in Real Estate?


The most common type of real estate investment is a primary residence, purchased with a mortgage and gradually built up over time through monthly payments. Investing in a primary residence can be an excellent way to build wealth in the long run, but the average annual return is lower than most investors expect. From 1994 to 2019, the average annual appreciation for homes was 3.9%. However, a home can be a great investment if you can cash out the equity before it dries up.

Investing in real estate

Real estate is a great way to diversify your portfolio. In addition to rental properties, investing in real estate can also provide solid income. Single-family homes are a good option because you can collect rent while owning them, or you can turn around and sell them for a profit. In some cases, you can also invest in small strip malls that you can rent out to businesses. There are many options available when it comes to real estate investing.

Common strategies

There are several common strategies for investing in real estate, including buying and flipping rental properties. For the hands-off investor, a Rental Trade-Up Plan (RTO) is the best choice. Unlike other real estate investing strategies, this one allows you to build real estate wealth and income by moving from smaller to larger properties. The RTO typically involves using a 1031 taxfree exchange to invest in properties with higher price tags.



Investing in real estate offers investors a steady stream of income, but it also can come with hefty tax bills, especially when selling your property. Learn how to defer and mitigate capital gains tax in real estate investment transactions. You will benefit from lower ordinary income tax rates and favorable changes in tax brackets from 2018 to 2025, which will make the tax implications of buying and selling rental properties less of a burden. Tax planning should be a top priority for owners of rental properties, though, and more time must be spent on it.

Buying a home at a discount

One way to buy a home at a discount is to use a lease option. This method is a tried and true method of purchasing investment real estate without the use of money. Under this method, you will pay higher rent payments and the excess of these payments will be channeled towards the purchase price. With a lease option, you are able to buy a home for a discount, while maintaining control over the payments.

Investing through a crowdfunding platform

Investing in real estate through a crowdsourcing platform has several advantages over traditional real estate investment vehicles. One of the main advantages of this method of investing is that it involves investing with a third-party operator or developer, and as a result, you don’t have to manage or maintain the property yourself. The downside is that the rewards are also higher, but that doesn’t mean it’s not worth the risk.

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