Investing in Real Estate


Real Estate is a type of investment in land and any improvements permanently

attached to it like homes and buildings. Real property also includes natural

resources located on the land like flora and fauna, crops, minerals, water, etc. Real

estate is considered a hard asset and therefore offers tax benefits, cash flow, equity

buildup, competitive risk-adjusted returns, and diversification opportunities to an

investor’s portfolio.


There are several ways to invest in real estate, from purchasing and holding a

residential or commercial property to investing in real estate funds. Investing in

property requires an upfront investment, but the rewards can be substantial,

especially when done correctly. Many investors will choose to purchase properties

with the intention of renting them out, a strategy known as buy-and-hold, while

others may prefer to take advantage of market fluctuations by buying undervalued

property and reselling it at a profit, a technique called house flipping. For more info


The industry consists of multiple players, including brokers and agents, developers,

appraisers, attorneys, financiers, support staff, and other external parties. Investors

typically start with raw land and work with the municipality to get it fully entitled, or

acquire and develop existing assets until they are stabilized (typically 95%

occupied). Thereafter, they can sell, lease, or manage the property.


The most common real estate investments are homeownership, rental property, and

commercial investment properties. Other types of real estate investment include

real estate syndications, crowdfunding, and REITs. Real estate syndication involves

pooling private capital from investors to purchase and manage large multifamily or

industrial properties. Crowdfunding is a new method of raising capital for real estate

projects by offering shares in the project to investors. REITs are public companies

that own and operate real estate assets.


There are a variety of factors that impact the value of real estate, including location,

employment rates, crime rate, school quality, transportation facilities, municipal

services, and property taxes. Additionally, real estate has low- to negative

correlation with other asset classes, making it an attractive addition to a diversified



Investing in Real Estate can be an excellent way to diversify your financial portfolio,

but it is important to do your homework before making any significant

commitments. In particular, it is important to understand the local market before

committing any capital. The NerdWallet team has created a Real Estate Investment

Calculator to help you determine the best types of properties for your investment

goals. Additionally, you should always seek the advice of a qualified professional

before entering into any transaction. If you are looking for more hands-off options,

consider incorporating REITs or crowdfunding platforms into your portfolio.