Real estate has long been a staple of U.S. wealth. Many people still see it as the gateway to the American Dream. Some want to own a home as a residence while others see property as a lucrative financial opportunity. 

A recent study by the Institute for New Economic Thinking suggests the historical rate of return on real estate has been higher than stocks and bonds. Real estate investing used to require a significant amount of capital and extensive knowledge of the market, but the rise of REITs and investment platforms make chasing the American Dream easier than ever. 

Ready to go after real estate? Take a look at our guide for real estate investing for beginners and get started today.

Why Invest in Real Estate?

Real estate is widely considered a powerful tool for building wealth over the long term for several reasons. 

You can earn passive income from the cash flow a rental property generates. Your property may also increase in value over time, boosting your net worth. You can also manage costs and lower your tax bill by deducting mortgage interest, property taxes, operating expenses and depreciation on your rental properties from your taxes. Finally, real estate can diversify your investment portfolio.

Types of real estate investments could include buying single-family homes or a multiplex to rent out, purchasing an undervalued home and fixing it up to resell for a profit, pooling your money with others to buy a large, income-generating property or investing in a real estate investment trust (REIT).

Simple Real Estate Investments for Beginners

There are many ways to get started on investing in real estate. Here are a few simple strategies.

1. Real Estate Crowdfunding Platforms

Crowdfunding is a good option for beginning real estate investors because it can get you started without all the responsibilities of managing a whole property, and its low barrier to entry allows you to participate in large real estate projects you might not be able to afford on your own.

You can invest in crowdfunding platforms Fundrise (for as little as $10) and Arrived (for as little as $100). Clients on Fundrise have shown an average annual income return of 7.74%, and those on Arrived have seen 3% to 5%.

2. REITs

REITs can be another good way for beginners to dip their toes into real estate investing. When you buy into a REIT, you get a share of a company that owns, operates or funds residential and commercial properties that generate income. The company pays 90% of its profits as quarterly or annual dividends, and you don’t have the hassle of managing a property.

Publicly traded REITs delivered a reported average return of 3.7% in 2024 and an average annual return of 12.3% over the last 25 years.

3. Rental Properties

Owning rental properties can require more hands-on management, such as finding tenants, maintenance and repairs, and rent collection. However, this is often how real estate investors get started. You can begin with a single-family home or a multiplex (such as a duplex or triplex), rent it out and learn to be a landlord. If you want to be a little less hands on, you could hire a property manager, but that can cut into potential profits.

A rental property can generate a passive income stream, allow you to build equity as you pay down the mortgage, provide tax deductions, appreciate over time, diversify your investments and hedge against inflation.

Two other strategies to consider are house hacking and flipping. Hacking entails buying a single-family home or multiplex, living on the property and renting a room or one of the other units.   

Tips for Getting Started in Real Estate Investing 

Real estate investing doesn’t have to be daunting. Follow these beginner real estate tips to feel more comfortable getting started:

• Educate yourself: Learn real estate investing basics (we’ll show you some great tools and resources below).
• Set goals: Your road map can help you stay on track.
• Evaluate your finances: Assess how financially prepared you are to invest.
• Choose an investment strategy: Decide on the method to begin investing.
• Conduct market research: Learn about locations and the market.
• Start small: Consider buying and renting one property to begin.

Common Mistakes Beginners Should Avoid

One of the most common and costly mistakes to avoid is overlooking due diligence and failing to understand the importance of thorough research. Falling short on these requirements for investing can lead to several other errors:

• Underestimating costs
• Failing to analyze the location
• Choosing the wrong financing
• Allowing your emotions to get involved
• Ignoring market trends
• Skipping inspections

Avoiding all these pitfalls starts with thorough research to understand market trends and financial planning to budget for the price of a property, closing costs, insurance, maintenance, taxes, and potential vacancies and repairs.

When developing a strategy and setting goals, decide whether you’re going to pursue rental income, long-term appreciation or both. Conduct thorough due diligence on the property and understand local zoning laws and regulations. Seek the advice of professionals, such as real estate agents and financial advisors, if you need help.

Tools and Resources for Beginner Real Estate Investors

The following tools and resources can help you shorten the learning curve of real estate investing for beginners. Kick off your journey with apps, calculators and guidance to help reach your target.

BiggerPockets provides investment calculators for rental property, fix-and-flip and other real estate strategies. It also has a real estate investing podcast. You could also try The Real Estate Guys Radio Show or Epic Real Estate Investing. 

You can get the fundamentals of real estate investing from the book “Rich Dad, Poor Dad” by Robert Kiyosaki. For deal analysis, try Mashvisor, or gain insights or crunch data on short-term rentals through AirDNA. Fundrise is the go-to app for beginning real estate investors.

Frequently Asked Questions