How to Invest in Real Estate: Your Simple Guide for 2025

Real estate investing has long been a popular choice for individuals seeking to grow their wealth. With its potential for steady income, price appreciation, and tax benefits, it's no wonder that many people are drawn to this asset class. A 2022 Bankrate survey revealed that real estate was the preferred investment choice for 29% of Americans with a longer-term investment horizon of 10 years or more. If you're considering how to invest in real estate, this guide will provide you with a solid foundation to start your journey. 

Table of Contents

What is Real Estate Investing?

Why Invest in Real Estate in 2025

Pros and Cons of Real Estate Investing

How to Invest in Real Estate

• Crowdfunding / Online Real Estate Platforms
• REITs/REIGs
• Homeownership
• Rental Properties
• Real Estate Funds

Funding Your Real Estate Investment

Real Estate Taxation

Tips to Get the Most Out of Your Investment

Is Real Estate a Good Investment for the Future?

FAQs

What is Real Estate Investing?

Real estate investing means investing in residential or commercial real estate either directly or through a fund. Traditional real estate investing means you buy a piece of property and either fix and flip it or keep it and rent it out, collecting rent as monthly cash flow.

Today there are many indirect ways to invest in real estate too. For example, if you want real estate exposure but don't want the stress of property management, finding tenants, and maintaining the property, real estate investment trusts, or exchange-traded funds may be a good option.

No matter which way you invest in real estate, you have the chance to earn cash flow from interest earned, rental property income received, and capital appreciation when you or the developer sells the property.

Why Invest in Real Estate in 2025

You might wonder, especially after the housing crisis of 2008, why you would be a real estate investor. If property values can fall in the blink of an eye, why take a chance?

‍Here's why: ‍Real estate crashes aren't as common as stock market crashes. Also, unlike the stock market, real estate hedges against inflation. If inflation increases, so do rental property prices, interest rates, and overall profits for real estate investors. This means more profits for real estate investors instead of less.

Real estate investments have many faces too. You can invest directly in real estate, having the tangible properties in front of you to manage. Some investors prefer this, knowing they have passive income from renters and control how much they charge and/or make.

If you prefer an indirect way to invest in real estate, you can invest in real estate investment trusts. These are shares of a company that manages real estate investments, typically commercial real estate.

Whether you choose direct or indirect real estate investments, the potential to build wealth remains high. You can earn steady monthly cash flow from rental income, along with capital appreciation when you sell the property for a nice profit. 

To learn more about the current trends and opportunities in real estate investing, check out this article: Why Invest in Property: Is It Still Worth It?

Pros and Cons of Real Estate Investing 

‍Like any investment, there are pros and cons of real estate investing. Understanding both sides can help you determine if it's right for you.

Pros

• Appreciation: Real estate appreciates, and you, the investor, gain from it. If you invest yourself, you earn 100% of the appreciation. However, if you invest in a fund through a real estate company, you still get to participate in the appreciation at a prorated level of your investment.

• Tax benefits: If you invest directly in real estate, you can write off certain expenses, like you would if you owned a business. For example, interest expenses, real estate taxes, expenses to maintain or repair the home, and other business expenses are often deductible.

• Diversifies your investment portfolio: Putting all your eggs in one basket can be detrimental to your net worth. If you invest all of your money in stocks, for example, and the market crashes, you could lose everything. Instead, a common strategy is to diversify your funds across stocks, bonds, and real estate to offset the losses of any particular stocks or other investments.

• You can invest long term or short term: There are many ways to invest in real estate that can work within your timeline. New investors often buy real estate and hold it, enjoying the monthly cash flow. But if holding onto real estate or managing a single-family home or multi-family unit feels like too much, you can fix and flip property instead, making money in 6 months versus many years.

• Cash flow: Whether direct or indirect, most real estate investments pay monthly or quarterly dividends. Rental property income and interest payments are the most common.

Cons

• ‍Can seem overwhelming: Investing in real estate can feel like a lot, especially for new investors. 

• Requires a lot of capital (for direct investments): If you invest directly in real estate, you need a lot of capital and/or the ability to get approved for financing. While you can leverage your investment by taking advantage of mortgage financing, you're still responsible for the payments.

• No guarantee of profits: While investing in real estate is less risky than the stock market in most cases, there's never a guarantee of profits. There are costs involved, the potential for tenants to stop paying, or the risk that the market could crash.

‍How to Invest in Real Estate

‍Like we said above, there are many ways to take advantage of real estate investing. Here are the top ways.

Crowdfunding / Online Real Estate Platforms

Real estate crowdfunding is one of the best indirect ways to invest in real estate. Real estate crowdfunding platforms pool the funds from all investors to reach the end result, whether buying a single-family home, commercial property or apartment building.

Additionally, many online platforms bring a new level of convenience and accessibility to the world of property investment. As technology continues to evolve, platforms like Concreit are making it easier for everyday investors to participate in real estate, democratizing the investment landscape and offering opportunities that were once only available to the wealthy elite.

Pros:

• You can invest in one or more real estate investments, spreading your funds out
• You can invest anywhere you want since you aren't managing the property yourself

Cons:

• There could be long investment requirements with no opportunity for early liquidation
• Management fees can be high

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REITs / REIGs

Another great way to invest indirectly in real estate are REITs or REIGs. Real estate investment trusts and real estate investment groups invest in companies that buy, manage, and sell real estate properties.

Investing in REITs and REIGs allows you to invest in real estate without the hassle of running it yourself. Depending on what the asset invests in, you own a portion of the debt or equity and earn a prorated amount of the earnings, whether interest payments, rental property income, or capital appreciation.

Pros:

• You don't have the stress of owning the property directly
• Often pays dividends

Cons:

• Has management fees
• You aren't in control of which properties are bought

Homeownership

Owning a home to live in is another great way to invest in real estate. While it's not an investment property, so to speak, you still earn the capital appreciation on the property.

Let's say, for example, you bought the property for $200,000 and financed $100,000 of it. You kept the property for five years and sold it for $400,000, and owed $50,000 on the mortgage still. You'd walk away with $150,000 in profit just for holding onto the real estate, even though you lived in it.

Pros:

• You earn capital appreciation while having a place to live
• You can exclude up to $500,000 in capital gains on your primary residence if you're married filing jointly

Cons:

• You're responsible for all maintenance and repairs, which eats at your profits
• There's no cash flow

Rental Properties

Owning rental properties is a great way to increase your monthly cash flow. As the landlord, you collect rent, maintain the property and earn its capital appreciation.  However, as the landlord, you're on call 24/7, and you're in charge of the lease agreements, the rent charged, and all aspects of owning the home or building unless you hire a property management company to do the work for you.

‍The rental property market is evolving, and one of the fastest-growing segments is the short-term rental industry. With demand expected to grow by 11%, the short-term rental market is projected to reach over $81 billion by 2033. 

Pros:

• Your tenants make you money by paying rent
• You collect the capital appreciation when you sell the house even though you didn't live there

Cons:

• Managing tenants can be challenging and exhausting, and a property manager costs money
• There's a high risk of vacancies

Related article: What You Need to Know About Vacation Rental Properties

House Flipping 

If holding onto real estate doesn't seem like a good fit, you can fix and flip real estate. This lucrative way to invest in real estate is more short-term than other options because your goal is to improve and flip the property within six months.

The key to successful fix and flip properties is to know how to find undervalued properties. When you purchase an undervalued property and fix it up, you increase the capital appreciation and your profits for your time and effort, and you don't have to act as a landlord.

Pros:

• You can invest in more real estate options since the investments are short term
• Finding an undervalued property can net you a decent profit

Cons:

• You must know how to find properties, understand their costs, and how to renovate them and still make a profit
• It can take a lot of time and data to find the right properties

Real Estate Funds

Real estate funds are an increasingly popular investment option that provides an opportunity to invest in a diversified portfolio of real estate assets without the need for direct ownership or hands-on management. These funds typically pool capital from multiple investors and invest in a variety of properties, including residential, commercial, and industrial real estate. There are two main types of real estate funds: REITs and private real estate funds.

One of the biggest advantages of real estate funds is the ability to diversify your investment across a wide range of properties and geographic locations. This reduces the risk associated with any single property or market downturn.

Pros

• Allows you to spread your capital across a variety of properties
• Allows investors to benefit from their expertise without having to deal with day-to-day tasks

Cons

• Real estate funds, particularly private funds, charge management fees that can reduce your overall returns
• You have no say in the properties selected or the management decisions made by the fund’s managers

Funding Your Real Estate Investment

Here are the top considerations to come up with the funds needed for your investments.

‍1. Credit cards - Credit cards can be a way to fund your investment in real estate, but only if you can pay the balance off in full right away. Most investments don't have a return on investment higher than the high APRs credit cards charge, so be careful.

‍2. Personal loans and lines of credit - You can leverage lines of credit on your primary residence or personal loans you qualify for to invest in real estate with only a little money. Ensure you know the total cost of the interest payments and how you'll pay it off, so you don't get in over your head in debt.

‍3. Seller/owner financing - Sellers provide the funds to buy the house at the terms they require. Instead of paying a bank, you pay the seller with the intention of either selling the property before loan maturity or being able to refinance it with a standard loan.

‍4. Government programs - You can use conventional loan financing to buy an investment property, but if you're using government financing, like FHA or VA loans, the property must be a primary residence.

Real Estate Taxation 

Something to consider before you put your money in real estate is taxation. You'll pay taxes on any profits like you would with any other investments, including stocks or other options.

Capital Gains

You'll pay taxes on your capital gains on any properties that aren't your primary residence. If you have lived in a property for at least two of the last five years, though, you can take advantage of the capital gains exemption and enjoy your nice profits tax-free or at least some of them.

Rental Income Taxes

Rental income must be reported on your taxes. However, since it's business income, you can offset the income with your expenses which might lower your out-of-pocket costs.

Tips to Get the Most Out of Your Investment

To maximize your real estate investment, it’s crucial to calculate your return on investment (ROI) before committing. Analyze expenses, the required capital, time commitments, and the property’s past performance in the area. Not all real estate investments are equal, and careful evaluation ensures the property fits your financial goals. 

Diversification is another key strategy. By spreading your investments across different sectors or industries, you can offset potential losses and create a balanced portfolio. Additionally, be prepared for risks, as no investment is without the possibility of setbacks or a total loss. Even high-value properties can underperform, so thorough research and a well-thought-out backup plan are essential to protect your investment. 

Is Real Estate a Good Investment for the Future?

Real estate has long been considered a stable and profitable investment, and as we look to the future, it remains a solid choice for building wealth. With its ability to hedge against inflation, generate regular income, and appreciate over time, real estate continues to offer substantial opportunities. Whether you choose direct property ownership, real estate funds, or crowdfunding platforms, there are multiple ways on how to invest in real estate in 2025. As the real estate landscape evolves, staying informed and finding the right real estate investment strategy is crucial to securing your financial future. Click here to check out Concreit's website and explore how you can start investing in real estate today!

FAQs

What are the types of real estate?

The main property types of real estate include residential, such as single-family homes and apartments; commercial, which involves office buildings, retail spaces, and warehouses; industrial; land; and mixed-use, combining both residential and commercial spaces in one development. Each type offers different investment opportunities, with varying risks and potential returns.

What is direct vs. indirect real estate investing?

Direct real estate investing involves purchasing and owning physical properties, such as a rental home or commercial building, giving individual investors full control but requiring more time and effort for property management. In contrast, indirect real estate investing involves investing in real estate through vehicles like Real Estate Investment Trusts (REITs) or real estate funds, which pool money from multiple investors to manage real estate assets.

What is the minimum investment required for real estate?

For direct property ownership, you typically need a down payment, which can range from 10-20% of the property’s price. For individual REITs, the minimum investment can be much lower, starting around $500 to $1,000, and for online real estate platforms, you can begin investing with as little as $100, making it accessible to a wider range of investors.