Real estate investing requires patience, timing, and a willingness to get creative.
Investing in real estate is a solid way to build generational wealth. Here are 17 ways you can make money investing in real estate—plus eight ways to get started with less money than you think.
7 Most Common Types of Real Estate Investments
1. Buying a Home
It seems pretty straightforward, but buying your own home is the first piece of property you should invest in. If you buy with an eye toward getting the most out of your home’s value, this one property could be the start of a diverse and expansive real estate portfolio.
2. House Flipping
You might buy a distressed property and plan to live in it as you rehab and flip it. The profits on this first flip may not provide a full-time salary, but the process will help you gain valuable experience and set you up for your next move.
Remember, the cost of selling a home eats into your profits, so make sure to account for that as you budget your flip.
3. Airbnb/Vacation Home Rentals
Some people begin real estate investing by renting out some or all of their own home on Airbnb or other vacation rental platforms. This is a great idea to start building cash if you live in a popular area such as a major metropolitan area or near a vacation destination.
4. Long-Term Rentals
Long-term rentals provide perhaps the most traditional path to real estate investment. Becoming a landlord by renting a new property to long-term (a year or more) renters can be a stable way to build equity. There are pitfalls to this investment, but if you find the right tenants, it can be an easy way to get started.
5. Commercial Property Rentals
Compared to residential properties, commercial property rentals generally require more money to start up, but they can be quite lucrative in the long-term. It is critical to understand everything from property values to foot traffic when getting into this type of investment.
6. Rent-to-Own a Home
While not quite as straightforward as buying your own home outright, a rent-to-own situation is a good way to enter into real estate investment if cash is scarce and your credit isn’t great.
And on the other side of that, offering seller financing when you sell a property not only returns the favor for cash-poor investors but also adds to your profits in the long run.
7. Short Sales
Short sales are a way to purchase a distressed property at a much lower cost than its value. A homeowner who is unable to pay the mortgage can ask the bank to accept a short sale—a sale for less than the mortgage. This has been a highly competitive arena since the recession in 2008, but there are still good deals to be found. Some short sales may be in bad shape, but others might need only cosmetic improvements.
10 Less Common, But Still Profitable, Real Estate Investments
1. Buying and Selling Land
“Flipping” land is less common (and less understood, even by seasoned investors), but it can be an incredibly lucrative process. The main advantage of this investment? Since fewer investors understand how it works, there are fewer competitors—and there’s more money to be made.
2. Short-Term Rentals
Many investors shun short-term rentals because of the risk involved with so many tenants. But there are many ways to make this a safer and more profitable bet, including:
- Renting furnished properties for higher prices.
- Partnering with an online service that caters to corporate clients or travel nurses.
- Screening tenants carefully.
- Setting up a minimum stay (e.g., 60 or 90 days).
3. Nursing Homes
The U.S. population is aging, and seniors are experiencing a housing crunch as they look to downsize or move into assisted living facilities. Consider investing in a nursing home community with different levels of care, from completely hands off to end-of-life care.
4. Contract Flipping
Contract flipping brings distressed sellers together with interested buyers. This type of flipping is also referred to as wholesaling. The investor locates a distressed property with a motivated seller, makes a below-market offer, and signs a contract. The investor then finds a buyer at a higher price before closing and “flips” their rights to the home. It’s a little more work to locate a vacant, distressed home and a buyer who’s all in, but it minimizes the financial risk for you.
5. Student Housing
Student housing in vibrant college towns can be a reliable source of income, especially if you partner with the university itself to find qualified students.
6. Parking Lots
Parking lots are low-maintenance, low-risk investments. Beyond shoveling snow and collecting parking fees (a process that can be entirely automated), this type of investment is largely hands off.
7. Real Estate Investment Trusts (REITs)
Real estate investment trusts (REITs) work in the same way that a mutual fund does. REITs focus on a specific type of real estate and are publicly traded on the stock exchange, making them a good way for beginning investors to increase the power of a smaller investment.
8. Real Estate Limited Partnerships (RELPs)
Real Estate Limited Partnerships (RELPs) are similar to REITs. They differ in that they are a private investment that occurs when investors pool their money to purchase a more diverse set of properties. These purchases are generally held for a defined period of time (usually five to 10 years). During this time, the group buys and sells properties with an eye to turning a profit during that time instead of planning to hold and manage them indefinitely.
9. Storage Spaces
One of the most common (and least discussed) moving expenses is storage space. Nearly 40% of people in the U.S. use storage space, and that trend does not seem to be going away any time soon.
10. Medical Office Buildings
Those same aging seniors who need housing also need more medical care, and medical office space is a solid investment. It’s important to note that this type of investment has specific zoning codes.
How Much Money Do You Need for Real Estate Investing?
Some potential investors are stalled at the gate because they cannot figure out how to scrape together the capital to get started.
Although having wads of cash ready to go is always helpful, you can get started in real estate investing with relatively little capital. Some of the most common ways investors build wealth from the ground up include:
- Asking for seller financing.Raising capital by trading or selling fixed assets (e.g., cars, jewelry, etc.)
- Assuming a distressed seller’s mortgage payments.Partnering with another investor.
- Using a home equity line of credit.
- Borrowing money at a higher interest rate.
- Getting involved with a peer‑to‑peer lending network.
These alternative ways of acquiring cash are a great way to generate $10,000 to invest, a good starting point for building wealth in real estate.
You can make money investing in real estate. Real estate investing requires patience, timing, and a willingness to get creative. With just a little capital, you can start building your investment portfolio today.
Luke Babich is the co-founder of Clever Real Estate, a real estate education platform committed to helping homebuyers, sellers, and investors make smarter financial decisions. Babich is a licensed real estate agent in the state of Missouri. His research and insights have been featured on BiggerPockets, Inman, the LA Times, and other online and media outlets. Babich earned a bachelor’s degree in political science, with honors, from Stanford University.