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Okay, so here's what happened in the real estate investment world recently that makes this year particularly interesting. After challenging years of rising interest rates and market uncertainty in 2022-2023, we're seeing real stabilization and recovery recently. According to the Dow Jones U.S. Real Estate Index, the average 1-year return on real estate reached 18.5% as of November 2024.
Let me simplify this for you. Real estate has always been one of those investment vehicles that can work for almost anyone, whether you have significant capital to deploy or you're just starting out. The beauty of real estate investing is the sheer variety of entry points available. You don't have to be wealthy to start-you just need to understand which strategy fits your situation.
Real estate investment is less about picking "the best" strategy and more about choosing the right strategy for you right now. What works for a busy professional might not work for someone with more time and contractor connections. Let's explore twelve proven ways to make money in real estate, starting with traditional approaches and moving into options you might not have considered.
Real estate values tend to increase over time without you doing anything at all. This phenomenon, called appreciation, is one of the most powerful wealth-building tools available.
Appreciation happens due to inflation, population growth, and limited land supply. When an area becomes more desirable-maybe a new employer moves in, schools improve, or infrastructure gets better-property values rise naturally.
Here's how appreciation builds wealth. Say you purchase a $300,000 home with a 20% down payment of $60,000. If that property appreciates just 3% annually, that's $9,000 in value gain in year one. That's a 15% return on your $60,000 investment, not counting any rental income.
The math compounds over time:
These numbers assume you make no improvements, which brings us to forced appreciation through property improvements. Strategic renovations-kitchen remodels, bathroom updates, energy-efficient windows-can accelerate value growth significantly beyond market trends.
According to the Joint Center for Housing Studies at Harvard University, certain home improvements consistently deliver strong returns on investment. Kitchen remodels typically return 60-80% of cost in added value, while bathroom renovations often return 50-70%. The key word is "strategic." Not every renovation adds equivalent value.
At AmeriSave, we've helped thousands of homeowners tap into their property's equity through cash-out refinancing to fund value-adding improvements. When mortgage rates are competitive, this strategy lets you invest in your property's appreciation potential while potentially lowering your monthly payment or accessing better loan terms.
Buy-and-hold investing means purchasing a property, renting it to tenants, and collecting monthly cash flow while the property appreciates over time. The rental market remains strong, with the World Economic Forum reporting that households continue showing clear momentum for renting over buying due to affordability challenges.
Single-family homes or small multi-family properties rented to tenants on annual or month-to-month leases represent the bread and butter of many portfolios. Here's what this looks like:
Sample Investment Property Analysis:
If market rent is $1,800/month, you see negative cash flow of $221/month. But your tenant is paying down your mortgage principal, the property is likely appreciating, and you're getting tax benefits. You're building wealth even without positive cash flow.
The same property rented at $2,300/month delivers positive cash flow of approximately $279/month, or $3,348 annually, representing a 6.7% cash-on-cash return on your $50,000 down payment before accounting for appreciation and tax benefits.
The short-term rental market offers potentially higher returns than traditional long-term rentals, but it comes with more work and variability. According to recent industry data, well-located short-term rentals can generate 2-3 times the income of traditional long-term rentals in the same market.
A property that might rent for $2,000/month long-term could potentially generate $150-200 per night as a short-term rental. At 70% occupancy (21 nights/month), that same property could gross $3,150-4,200 monthly, though expenses will be proportionally higher.
Raw land doesn't immediately come to mind for most investors, but it represents an interesting opportunity. Land rental applications include storage for RVs, boats, or equipment; agricultural leases for farming or livestock; cell tower leases; solar farm agreements; or parking for commercial vehicles. The cash flow may not match improved properties, but maintenance costs and management intensity are significantly lower.
Commercial properties-office buildings, retail spaces, industrial warehouses-operate under different dynamics than residential rentals. Commercial real estate is showing signs of recovery after challenging years, with deal activity picking up and fundamentals remaining healthy.
Industrial properties and low-rise apartment buildings currently show the strongest performance, with 1-year returns of 9.5% and 9.0% respectively according to industry data.
Flipping houses—buying distressed properties, renovating them, and selling for profit—remains viable. According to recent data, the national average ROI for a flipped house is 38.7%, with nationwide flips averaging $121,325 in profit.
Those averages hide significant variability. Successful flipping requires market knowledge, accurate cost estimation, and speed. Carrying costs accumulate daily. A flip that takes 6 months instead of 3 months can easily eat half your profit.
Here's a realistic flip scenario:
Purchase price: $150,000 (distressed property) Renovation costs: $60,000 Carrying costs (4 months): $6,000 Closing costs and fees: $12,000 Total investment: $228,000
After-repair value: $290,000 Sale price: $285,000 Net profit: $57,000 (25% return over 4 months)
According to WealthBuilders research, home buyers are increasingly favoring move-in-ready homes over fixer-uppers, which supports the flip market but also means buyers are discerning about quality.
Sometimes investors sell investment properties prematurely with tenants still in place. When you buy a turnkey property, you start collecting rent from day one without the vacancy period that typically follows a purchase.
The advantage is immediate cash flow and an existing track record of what the property actually generates. The downside is you typically pay a premium for that convenience, and you're inheriting the existing tenant and lease terms.
Due diligence becomes critical with turnkey properties. You need to understand why the owner is selling, the real condition of the property, tenant reliability, and actual operating expenses.
REITs provide a solution for those who don't want to be landlords or tie up capital in physical real estate. You can invest in real estate through publicly traded companies that own and operate income-producing properties.
According to recent industry data, REITs have a total equity market capitalization of approximately $1.43 trillion as of mid-2025, with over 150 million Americans holding REIT shares directly or indirectly. The average annual return for REITs over the past 25 years is 12.3%, outperforming the stock market's 10.2% average return over the same period.
Federal law requires REITs to distribute at least 90% of their taxable income to shareholders as dividends. This makes them attractive for income-focused investors, with average dividend yields around 3.9% for U.S. equity REITs.
Different REIT types focus on different property sectors:
You can buy and sell REIT shares as easily as stocks, providing liquidity that direct real estate ownership lacks. According to Cohen & Steers, listed REITs returned 4.9% in 2024 following 11% returns in 2023.
For someone just starting out, REITs offer an excellent way to gain real estate exposure with minimal capital-you can start with a few hundred dollars rather than tens of thousands.
Real estate crowdfunding represents a newer pathway that's gained significant traction. Through online platforms, investors pool their money to invest in larger real estate projects-commercial developments, apartment complexes, or residential subdivisions-that would be inaccessible to individual investors.
Think of it like this: instead of needing $500,000 to invest in a commercial property, you might contribute $5,000-$10,000 alongside hundreds of other investors. You receive a proportional share of the rental income, property appreciation, or development profits.
Crowdfunding investments typically fall into two categories:
Returns can be attractive-platforms often target 8-12% annual returns for equity investments and 7-10% for debt investments-but these are projections, not guarantees.
The real trade-off with crowdfunding is liquidity. Unlike REITs that trade daily, crowdfunding investments typically lock up your capital for 3-7 years depending on the project.
For investors who want real estate exposure but prefer the mutual fund or ETF structure over individual REITs, real estate-focused funds offer another option. These funds invest in multiple REITs or real estate companies, providing instant diversification across property types and geographic markets.
Real estate ETFs trade like stocks throughout the day and typically have lower expense ratios than actively managed mutual funds. The key benefit is professional management and diversification. Instead of researching individual REITs, you're delegating that work to professional fund managers.
REIGs are organizations of private investors who pool resources and expertise to invest in real estate together. As a group, you might decide to invest in residential rentals, commercial properties, or fix-and-flip projects.
The advantages include greater purchasing power, shared expertise, and diversification. However, group investing requires compatibility, clear operating agreements, and trust among members. It's critical to have explicit written agreements covering decision-making processes, profit distribution, capital call procedures, and exit strategies before investing together.
Wholesaling occupies a unique niche-you're a middleman who finds discounted properties and connects them with buyers, typically other investors. The wholesaler puts a property under contract at below-market price, then assigns that contract to an end buyer for a fee.
Here's a typical wholesaling transaction:
You don't need a lot of money to wholesale because you're not actually buying the property. However, you do need to know a lot about the market, be able to negotiate well, and have a network of buyers. To lower risk and carrying costs, successful wholesalers usually sell properties within 30 days.
When you buy a mortgage note, you are buying the debt that is backed by a piece of property. In a way, you become the lender. Instead of a regular bank, the homeowner or investor pays their mortgage to you.
Mortgage notes are bought and sold on the secondary market, where they often sell for less than their face value. For instance, you could buy a $200,000 note for $160,000 if the loan isn't working out or the seller needs cash right away.
The math can be appealing: if you buy a $200,000 note with 7% interest for $160,000 and the borrower starts making payments again, you're earning 7% on your $160,000 investment while also owning an asset worth $200,000.
But investing in notes is hard. You're taking on the risk of credit, property, legal issues, and service. This strategy is best for investors who know the law and have systems in place to deal with the problems that come up.
If you have money but don't want to deal with the day-to-day tasks of owning property, becoming a private lender is a different option. You lend money to people who want to buy a home or invest in real estate, set your own rates and terms, and collect mortgage payments.
Hard-money loans, which are short-term loans backed by real estate, are what private lenders usually look for. These loans are usually for fix-and-flip projects or bridge financing. Interest rates are usually higher than those on regular mortgages, which can be anywhere from 8% to 12%.
If you lend a flipper $200,000 at 10% interest for 12 months, That gives you $20,000 in interest income, which is a 10% return on your investment. The loan is backed by a property that could be worth $350,000 after repairs, which gives you a strong loan-to-value ratio for safety.
The risks are that the borrower will default, the property's value will go down, and there won't be enough money available. You are also in charge of all lending compliance, paperwork, and collection tasks.
When homeowners owe more on their mortgage than their home is worth, they can do a short sale. This means they work out a deal with their lender to pay off the loan in full with less than the full amount. This gives investors chances to buy properties at big discounts.
A homeowner might owe $250,000 on a house that is now worth $200,000. If the homeowner is having trouble paying their bills or is about to lose their home, their lender might agree to a short sale for $195,000 instead of going through the costly foreclosure process. You buy the property for $195,000, which is $5,000 less than its current market value. This means that it could go up in value.
There is a lot of paperwork involved in short sales, and it can take months to close while you wait for the lender's approval. But you have less competition than in regular sales because a lot of buyers don't want the stress and delays.
One benefit of investing in real estate that people often forget about is how it affects inflation. Property values and rental rates usually go up when the dollar's buying power goes down. This protects and even increases your wealth.
The Federal Reserve says that inflation has gone up and down a lot in the past few years, which makes inflation hedges very useful. If you own rental property, you can raise rents when the lease is up for renewal to keep up with inflation. Your mortgage payment stays the same even though rents go up because of inflation.
Consider this scenario:
Year 1:
Year 5 (assuming 3% annual inflation):
Your cash flow increased 75% while your mortgage stayed constant. This is the inflation hedge in action.
Refinancing investment properties can help you improve your cash flow, get access to equity, or change the way you pay off your debt. Refinancing can be a good idea when interest rates go down or your property has gone up a lot in value.
Freddie Mac's Primary Mortgage Market Survey says that mortgage rates go up and down depending on the economy, the Federal Reserve's policies, and market conditions. Investors can make the best refinancing decisions by keeping an eye on rate trends.
With cash-out refinancing, you can use the equity you've built up and possibly get better loan terms. If your property has gone up in value from $300,000 to $375,000 and you owe $200,000, you could refinance for $280,000. This would pay off your current loan of $200,000 and give you $80,000 in cash to invest in other things.
Rate-and-term refinancing is all about lowering your interest rate or changing the length of your loan without taking out cash. A rate cut of just 0.5% to 1.0% can have a big effect on cash flow. If you lower your interest rate from 7.5% to 6.5% on a $300,000 loan, you will save about $192 a month or $2,304 a year.
How do you choose between twelve different ways to get rich in real estate? The answer depends on your situation, such as how much money you have, how much time you can spend, how much risk you're willing to take, and what skills you have.
Here's a decision framework to make things easier for you:
The book says to use a mix of strategies, but in real life, most successful investors learn one or two strategies really well before moving on to others. It's better to know one strategy inside and out than to only know a few.
If you look at it this way, 2026 will be a good year for investors who know how the market works, have realistic expectations, and make smart investments instead of just guessing. To be successful now, you need to think more carefully and do things better than you did when money was easy to get in the last decade.
There are many ways to get rich by investing in real estate. You could, for instance, own real estate investment trusts (REITs) that don't need any work or manage your own properties. The best plan for you will depend on your money, time, skills, and personal preferences.
AmeriSave helps people who want to buy, refinance, or fix up real estate get good loans. You can upload documents from your phone, see how things are going in real time, and talk directly with loan officers who know a lot about financing investment properties on our digital platform.
If you're buying your first rental property, refinancing to improve your cash flow, or using equity to make your next investment, AmeriSave can help you understand your options and find competitive rates that will help you build your wealth. Fill out your application today and see how much easier it is to work with a lender who knows a lot about investing in real estate.
The amount of money you need depends a lot on the plan you choose. If you have a brokerage account, you can start investing in REITs with as little as $500 to $1,000. Most of the time, you need to put in at least $5,000 to $10,000 to crowdfund real estate. People say you should put down 20% to 25% on properties you want to rent out. That would be about $50,000 to $75,000 for a property worth $250,000 to $300,000. You can get FHA loans with down payments as low as 3.5% if you own a home with more than one family living in it. In other words, a house worth $250,000 will cost less than $10,000. You don't need a lot of money to be a wholesaler because you don't buy properties; you just sign contracts. Don't say, "How much do I need?" Instead, say, "With the money I have right now, which strategy works best?" Don't let not having enough money stop you from getting started.
Investing in real estate can lead to a lot of other problems besides the obvious ones with money that new investors might not see coming. Owning real estate is riskier in terms of liquidity because you can't sell it as quickly as you can stocks. Tenants can cause more trouble than just being late on their rent. They can also mean stress, damage to the property, breaking the lease, and getting kicked out. Taking care of property almost always brings surprises. The roof inspection said it would last five years, but it breaks down after two years, and you have to pay $15,000 that you didn't expect to have to pay. Everyone takes a chance when they try to time the market. People who are new to investing might not be ready for all the rules and taxes that come with it. People don't always know how much time property owners and managers have to spend on running things. Owners still need to keep an eye on things and make big decisions, even though they have property managers. You should know these things before you buy a house. Don't just think about how much money you could make without doing anything.
You can still make money flipping houses, but it's harder and takes more skill than it did when the market was at its best. According to iProperty Management, the average return on investment (ROI) for flipped houses in the US is 38.7%, and the average profit per flip is about $121,325. But those averages don't tell the whole story. The market is more professional now because established flipping companies do more research and get things done faster. To be successful, you need to be able to accurately estimate costs with 20–25% extra money, act quickly because carrying costs affect profits, know what buyers want in certain neighborhoods, and have good relationships with contractors who can do work on time and within budget. WealthBuilders' research shows that people who want to buy a house are more likely to choose one that is ready to move into than one that needs work. This is good for the flip market, but it means that the work has to be done right. In 2026, flipping houses could be a good way to make money, but only for people who know how to fix things up, know the local market well, have a good network of contractors, and have enough money.
Your money goals, how much time you have, and how well you get along with other people are the three main things that will help you decide. Active property management, or owning and managing rental properties directly, can make more money than passive investments, but it takes a lot of time and the ability to handle stress. Even when you're on vacation, you have to deal with calls from tenants, maintenance emergencies, late rent, and a hundred other things. A lot of people really enjoy being a part of this. Some people don't find it interesting. You don't have to do much more than check your portfolio every now and then if you put money into passive things like REITs, crowdfunding, or ETFs. Returns are usually lower than those of successful active investments, but you don't have to spend a lot of time on them. People who are good at it often see that the numbers show that active investing is a better way to make money. A good rental portfolio could bring in 8–12% a year from cash flow and property value growth. Passive REITs have made about 6–8% a year in the past. But that only works if the management is good. If you take care of a property yourself, it's like running a small business. When you passively invest, it's like having a stake in someone else's business. A lot of investors who do well use more than one strategy.
There are a lot of big tax benefits to investing in real estate that can make your returns after taxes much better than those of stocks or bonds. Even though properties usually go up in value, depreciation lets you take off part of your property's value every year. The IRS says that the value of a rental home goes down over 27.5 years. This means that a building worth $275,000 can lose about $10,000 in value each year. You can write off all the interest on your mortgage if you own an investment property. You can write off the costs of utilities, property taxes, insurance, repairs, maintenance, property management fees, and advertising for tenants. You can put off paying capital gains taxes for as long as you want if you buy a new investment property with the money from the sale of an old one within a certain amount of time. The IRS says you have 45 days to find new properties after you sell and 180 days to finish the exchange. When you finally sell and don't do a 1031 exchange, the capital gains tax rates, not the regular income tax rates, apply. The basis step-up at death is very strong. When you die, your heirs will get your property at its current market value. This means that you won't have to pay capital gains tax on any value that goes up while you're still alive. You should talk to a tax expert who knows a lot about real estate investing to make sure you get the most out of these benefits.
In 2026, the real estate market will be very different from what it is now. These changes have made people invest in different ways. The most obvious change is the interest rates. Mortgage rates were below 4% in the 2010s, but now they are between 6% and 7%. This has a big impact on how much homes are worth and how easy they are to buy. Freddie Mac's data shows that this rate environment has stayed high, even though it has become a little more stable. Property values rose at an unsustainable fast rate from 2020 to 2022. But the growth rate has slowed down now. The National Association of REALTORS® (NAR) now thinks that 2–3% growth per year will be more stable in 2026. This means that the market's basic conditions are getting better. Remote work will change things forever. The office market is still having trouble because there are so many empty spaces. The residential market has changed the way people move because workers are moving to areas with lower costs. Industrial and logistics properties are now some of the best investments because e-commerce has grown, especially during the pandemic. The rental market is doing much better now that it's harder to buy a house. There are still problems with the number of homes that are for sale. The World Economic Forum (WEF) says that major developed economies need about 6.5 million more homes than they have. People are using technology much faster than they used to. The market will reward careful analysis, realistic expectations, and strategic execution more in 2026 than it did in 2019.
The biggest mistake new investors make is thinking they will make more money than they really will and not knowing how much things will cost. This can lead to bad surprises that make you worry about money. First-time home buyers look at the price, guess how much the mortgage will cost, and maybe even add in the costs of property taxes and insurance. Next, they check the market rent to see how those prices compare. On paper, the numbers look good. The truth comes out after that. After they buy the property, they leave it empty for two months to get it ready and find renters. Repairs and maintenance always go above and beyond what is expected. Property management fees take 8–10% of the gross rents if the owners don't take care of their own property. Big purchases, like roofs, need capital expenditures every once in a while. People thought that the average time between tenants was 1–2 weeks, but it's really 4–6 weeks. People usually say to set aside 1% of the property's value each year for maintenance, 8–10% of the rent each year for vacancy reserves, $150–$250 a month for capital expenditures, and a few months' worth of reserves for problems that come up. New investors often make these mistakes because they don't fully understand the costs: they buy in markets they don't know, skip thorough inspections, buy too many properties too quickly and go over budget, don't set up proper business structures, underestimate the time commitment, and make decisions based on feelings instead of facts. The bottom line is that you can definitely make money in real estate, but it's better for investors who are realistic about it than those who are hopeful.
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