Investing in real estate is a proven way to earn great returns, se for retirement, and pursue financial freedom. Accessing the many benefits of real estate investing is not difficult, but it does require a bit more planning and work than with other types of investments. You can’t just open an app and buy a property with a single click. However, the process doesn’t need to be complex or stressful.
This guide will provide you with an overview of how you can get started as a real estate investor, in less time and with less effort than you might think.
Before discussing the logistics of how to purchase and operate a real estate investment, let’s discuss why you should consider this asset class in the first place. If real estate investing is more work than some other asset classes, why do it? What advantages does private real estate ownership offer that other investments do not?
Here are six benefits to consider.
Cash flowCash flow is the profit you generate from your real estate business after you subtract all expenses. It’s typically earned monthly, and it can be used to reinvest into your portfolio, invest in other assets, or fund your lifestyle. While other asset classes like dividend stocks and bonds offer cash flow opportunities, the potential profits are much higher in real estate. Over time, many real estate investors are able to completely replace the income from their job with cash flow from real estate.
AppreciationOn erage, home prices in the United States increase in value by about 3.5% per year. In fact, home prices nationwide were up 4.1% year-over-year in January 2025. As a property owner, this can drive large returns—especially when using leverage (using a mortgage to purchase your property). Appreciation is taxed at a lower rate than ordinary income, and if the appreciation occurs on your primary residence, it is often not taxed at all.
Value-addThis is a huge opportunity for profit that is rather unique to real estate. When you buy an older property as an investment, you can renovate and improve it, thereby increasing the value of the home. This will help drive a bigger profit at sale but can also increase what tenants are willing to pay in rent—and subsequently increase your cash flow. You he no such option when buying stocks, bonds, or cryptocurrency.
AmortizationThis is just a fancy word for paying down your mortgage using income that your business generates from rent. While it may not sound like much, it can add between 2% to 4% annualized returns, just from paying your mortgage on time.
Tax benefitsThe U.S. government has enacted several laws that encourage homeownership and property investing. For example, you can use depreciation to offset the tax burden of rental cash flow, pull equity from a property tax-free using a cash-out refinance, or use a 1031 exchange to trade up to a bigger property without paying capital gains tax.
Low volatilityCompared to the frequent highs and lows of equities and cryptocurrency markets, real estate is a remarkably stable asset class, hing experienced only one real “crash” in the last 60+ years. There is still risk in real estate investing, as with every investment, but the risk-adjusted returns are excellent.
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Get prequalified Investment typesReal estate investing is a broad category, meaning there are several ways to invest. Each strategy has its own strengths and weaknesses, and it’s up to you to decide what approach best suits your goals.
Here are four of the most common ways you can get into real estate investing.
Rental propertiesRental properties are the most common type of real estate investment, and a relatively simple business. An investor buys a property and then leases out the space to long-term tenants they find on Redfin or other listing platforms.
Rental properties are generally considered low risk, but still offer great long-term upside. It is a stable, proven business model that can work in almost any market in the United States, particularly if you’re willing to try a very beneficial owner-occupied strategy called house hacking.
Short-term rentalsShort-term rentals are both a real estate investment and a hospitality business. This strategy entails buying a property, furnishing it, and then renting it to guests who use the property for a limited time (after finding it on Airbnb, VRBO, or similar websites). This strategy offers the potential to generate significant revenue but does require a more active approach to managing the investment.
House flippingFlipping is when an investor purchases a property that is not up to its highest and best use, and then improves it. This strategy can be highly lucrative when done well, but it is time-consuming and comes with a considerable level of risk. Much can go wrong with a home renovation, but the upside is considerable if you can pull it off.
Advanced strategiesReal estate development and commercial real estate can be great assets to invest in but are typically best reserved for investors who he tried their hand at some of the simpler strategies and want to scale their portfolios.
Other considerationsIn addition to picking an investment strategy, there are a few other questions you should consider before finding and investing in your first property. There are no right answers—just a few considerations for you to think through ahead of an investment.
EffortYou may hear real estate described as a passive income opportunity—and that is mostly true. Generating income from real estate is generally less involved than a full-time job or starting a business, but it still requires work. The amount of work you put in is largely up to you.
Buying a property that is in great shape will require less of your attention but will likely earn lower returns. But if you’re willing to put in a lot of time, you can really maximize your returns.
RiskAlthough the national housing market tends to be stable, regional markets and individual properties each carry their own level of risk. Think hard about how much risk you’re comfortable taking and what level of risk is responsible, given your financial situation. Never invest or risk money that you need to cover basic expenses or money that you may need to access quickly. Real estate is a relatively illiquid asset—meaning it will take weeks or months to sell a property if you need to access your capital.
Property managementWho will manage your property day to day? Many investors who invest locally choose to do their own property management, as it helps to maximize returns and typically only requires a few hours a month.
For busy folks or those investing in a market further away, make sure to find a great property manager who takes your tenants’ safety and satisfaction seriously, as well as your business interests. If you go this route, make sure to budget for a property manager (usually 8% to 10% of revenue) when analyzing deals.
Getting started as a real estate investor doesn’t need to be complex, but it does take some forethought and planning. Here are five steps you can follow to land your first real estate investment.
Develop a visionThink about the amount of capital you want to invest, the type of investment you want to make, and the level of risk you are comfortable with. There are tons of exciting ways to invest in real estate—which one is best aligned with your personal preferences and vision for the future? You can use the investment strategies and considerations listed here as a starting point for developing a vision.
Pick a marketMost investors choose to get started by investing in their own city or town—but you don’t he to. Every real estate market is different. Some are more expensive and offer great appreciation but little cash flow. Others offer strong cash flow and are affordable. Identify a market that’s well-aligned with your vision and suits your investing preferences.
Build your teamIt may not seem like it, but real estate is a relationship business. All investors need to surround themselves with an investor-friendly agent, a lender, reliable contractors, and, for some, a property manager.
Interview several candidates before selecting a team that you feel confident can help you operate your investments successfully. Once you’ve found your agent, ask them to start sending you potential properties to review.
Analyze dealsNow it’s time to do some math. Not every property makes a strong investment, and it’s up to you, the investor, to figure out what properties can deliver you the returns you’re looking for. This requires digging into the property values, rent potential, and erage expenses in your area to figure out how your deal is likely to perform.
If this sounds hard, don’t worry! Analyzing deals is not difficult, and there are resources like the BiggerPockets investment calculators that can help you crunch the numbers in no time.
Jump inEven after you run the numbers and see how good a deal you’ve found, jumping in and making your first investment can be daunting. But once you’ve built a great team and analyzed your deals accurately, you’ll find your confidence.
Investing in real estate is a big decision, and if you need some external feedback on your deal or some assurances on your decision-making, reach out to local investors or members of BiggerPockets on the BiggerPockets forums, who can help you on your journey. You’ll be surprised how helpful real estate investors are to one another.
Get prequalified for your dream homeOur partner Rocket Mortgage® delivers award-winning service, fast pre-approvals, and seamless closings. * Rocket Mortgage is an affiliate of Redfin. You aren’t required to use its lending services. Learn more at redfin.com/afba.
Continue Getting started in real estate: Final thoughtsReal estate is a stable, profitable asset class that can be customized around your individual goals and preferences. And best of all, it’s not very difficult to get started. Taking some time to develop a vision, consider your strategic options, and follow the steps listed here, you can realistically own your first real estate investment and be on your way to financial independence in the next 90 days. If you need help on your real estate investing journey, head over to BiggerPockets and join a welcoming community of over 3 million people helping one another achieve financial freedom through real estate investing.
If you are represented by an agent, this is not a solicitation of your business. This article is for informational purposes only, and is not a substitute for professional advice from a medical provider, licensed attorney, financial advisor, or tax professional. Consumers should independently verify any agency or service mentioned will meet their needs. Learn more about ourEditorial Guidelines here.
De MeyerDe Meyer, Head of Real Estate Investing at BiggerPockets, helps investors make informed decisions through housing data analysis and economic trends. He shares his findings as the Host of the BiggerPockets Real Estate Podcast, the On The Market podcast, and across BiggerPockets’ various media channels. He is the Author Of Real Estate by the Numbers, Start with Strategy, and The Real Estate Strategy Planner. With 15 years of experience in real estate investing and data analytics, De is passionate about making analytical investing simple and approachable. He is an expert on the residential housing market, investment analysis, and portfolio strategy. De currently lives in Amsterdam Netherlands, and loves to ski, trel, and eat sandwiches.
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Allie DrinkwardAllie is a Marketing Program Specialist at Redfin and resides in beautiful North Idaho. When she’s not working, she enjoys walking her dog at the lake, spending quality time with her family, and cheering on the Red Sox. Her dream home is a ranch-style farmhouse on acreage in the Idaho countryside.
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