Many think real estate investing requires becoming a landlord or investing in complex “deals” or syndications. But here’s the reality: there are multiple ways to invest in real estate, and some are far easier than others. You don’t need to be a landlord, take on massive debt, or manage complex partnerships to benefit from the fantastic potential rewards real estate offers.
Here are seven ways you can invest in real estate—each with pros and cons.
1. Public REITs – The Stock Market’s Real Estate Shortcut
If you’ve ever bought a stock, you can invest in a Real Estate Investment Trust (REIT). These publicly traded funds own income-generating properties like apartment buildings, shopping centers, or office spaces. You can invest anything from $1 to $10 million, or more, while maintaining total liquidity and transparency. A REIT mutual fund offers the easiest, most accessible way to get exposure to real estate profits without owning physical property. And they’re a tried and tested approach.
The downside? You have no say in how the properties are managed, and REITs tend to move with the stock market, meaning you don’t get the same stability as owning direct real estate. Plus, you miss out on some of real estate’s significant tax benefits.
2. Buying Your Own Home – The Accidental Real Estate Investment
For most people, their home is their biggest asset—and for good reason. Homeownership forces saving, builds leveraged equity over time, and serves as a hedge against rising rent costs. Many people have built significant wealth simply by being their own landlords, especially in the high-growth areas where frum families tend to settle.
However, buying more house than you need or upgrading it into a white elephant can backfire financially. The key is buying wisely—not counting on quick, sharp appreciation, but still benefiting from the ability to finance a home with low down payments and long-term fixed-rate loans, which are also tax deductible.
3. Renting Out Single-Family Homes – The Classic Landlord Model
Renting out a home, or even just part of it, is most people’s first step into direct real estate investing. The idea is simple: let the tenant cover the mortgage while the property appreciates over years and decades. You can enjoy all the leverage and tax benefits offered by syndications and commercial real estate—often in a far more straightforward and cost-effective way.
If you’re trading up from a “starter home,” consider converting it into a rental property instead of selling it. You already know the house, neighborhood, and potential issues. And you avoid significant brokerage fees and capital gains taxes by holding it as a long-term investment.
However, real estate requires active management, and not everyone is cut out to be a landlord. Hiring a property manager can help, but maintenance issues and bad tenants can wipe out profits and your peace of mind. There’s no shame in deciding you’ll only landlord via passive approaches like REITs or syndications.
4. Buying Your Business Property – Locking In Stability
Owning your commercial space can be a wise move if you run a business. Instead of paying rent forever, build equity while controlling your business’s costs.
Many business owners have built massive wealth by simply buying their storefronts, office spaces, or warehouses, which have appreciated over time. Property owners also benefit from tax-advantaged status in real estate, enabling accelerated depreciation, etc.
Another key advantage of owner-occupied real estate is Small Business Authority (SBA) loans. Mortgages are government-subsidized, enabling excellent interest rates and terms.
However, real estate ties up capital that could otherwise go toward business growth, and moving or expanding your business becomes much more complicated. And, of course, if you make a mistake and overpay for the building or mismanage it, you can’t just pick up and go as a tenant does.
5. Renting Out Excess Commercial Property – Higher Returns, Higher Stakes
You can think bigger—buy more building space than you need and rent out the rest. You’ll know the building well, occupying much of the space, making property management more straightforward. Renting out excess space also adds flexibility if your business space needs to ebb and flow. And you get complete control to maximize the potential growth, income, and tax benefits real estate offers.
However, don’t let the tail wag the dog—buying an inferior property to house your business just to get rentable office space can be a disaster. And vice versa. To follow this approach, you must ensure it’s both a good investment and will meet your business needs. Of course, if you don’t need the space and are moving, consider keeping the building you know best as an investment property. This can be your entry into commercial real estate investing, a super high-potential wealth builder.
6. Investing as a Limited Partner in a Syndication – Passive, But Less Control
For those who want hands-off real estate ownership of commercial real estate, syndications allow investors to pool money into large real estate projects—like apartment complexes or shopping centers—managed by professionals. This lets you benefit from real estate without dealing with tenants, repairs, or management. And, unlike REITs, syndications may offer extremely advantageous tax benefits and hand-picked value-add opportunities.
But, unlike REITs, becoming even a passive investor in complex private real estate requires extensive due diligence regularly. Syndication investing also requires significant capital investment, making diversification challenging for most.
The biggest challenge with RE partnerships is understanding and managing the myriad conflicts of interest, high fees, and lack of control inherent in most syndications. Investment success and capital safety depend on how well the General Partner (GP) manages the deal, so the trust level before getting involved is very high.
7. Running Your Real Estate Deals – The Full-Time Path
At the highest level, you’re no longer investing in real estate—you’re running a real estate business as GP for yourself and on behalf of Limited Partners (LPs). Whether developing properties, flipping houses, or structuring your own commercial real estate syndications, this level requires profound expertise, capital, and network connections.
The upside? You’re in control, taking on significant burdens of time, effort, risk, and expertise for very high potential rewards. Many GPs have become exceedingly wealthy, but it’s a highly competitive market, and you must know your stuff to succeed while maintaining professional ethics.
Real Estate Investing Isn’t One-Size-Fits-All
The point isn’t that one way is “better” than another. Real estate investing is flexible, and different approaches work for different people. The key is finding the right fit for your skills, capital, and risk tolerance.
You need to be honest with yourself and not get in over your head. On the other hand, with effort, energy, and huge siyata dishmaya, you can upgrade your skills and take real estate investing as far as you wish!
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