Real Estate Investing Examples: Proven Strategies for Building Wealth

Real estate investing examples range from rental properties to REITs, and each offers a distinct path to building wealth. Some investors prefer hands-on approaches like house flipping. Others want passive income without managing tenants or repairs. The good news? There’s a strategy for almost every budget and risk tolerance.

This article breaks down four popular real estate investing examples. Each section covers how the strategy works, what investors can expect, and the potential benefits and drawbacks. Whether someone has $500 or $500,000 to invest, these options provide a solid starting point for growing wealth through property.

Rental Properties

Rental properties remain one of the most common real estate investing examples. The concept is simple: buy a property, rent it out, and collect monthly income. Over time, the property may also appreciate in value, creating two potential profit streams.

Investors typically choose between single-family homes and multi-family units. Single-family rentals often attract long-term tenants, which means less turnover. Multi-family properties, like duplexes or small apartment buildings, generate more cash flow per property but require more management.

How It Works

An investor purchases a property, either with cash or a mortgage. They then find tenants and charge rent that (ideally) exceeds their monthly expenses. These expenses include mortgage payments, property taxes, insurance, maintenance, and vacancy costs.

For example, an investor buys a $200,000 home with a 20% down payment. The monthly mortgage is $1,100. They rent the property for $1,600 per month. After accounting for taxes, insurance, and maintenance, they net $200–$300 monthly. That’s passive income, plus the tenant is paying down the mortgage.

Pros and Cons

Advantages:

• Steady monthly cash flow
• Property appreciation over time
• Tax benefits like depreciation deductions
• Leverage allows investors to control valuable assets with smaller upfront capital

Disadvantages:

• Requires active management (or paying a property manager)
• Vacancy periods reduce income
• Unexpected repairs can eat into profits
• Tenant issues can be stressful

Rental properties work well for investors who want tangible assets and don’t mind some hands-on involvement. They’re a foundational real estate investing example that has built generational wealth for countless families.

House Flipping

House flipping is another popular real estate investing example, especially for those who enjoy renovation projects. The goal is straightforward: buy a distressed property, fix it up, and sell it for a profit.

This strategy gained mainstream attention through TV shows, but the reality involves more spreadsheets than dramatic reveals. Successful flippers analyze deals carefully and budget for surprises.

How It Works

Flippers look for undervalued properties, often foreclosures, estate sales, or homes that need significant repairs. They purchase below market value, renovate strategically, and sell at a higher price.

Here’s a basic example: An investor buys a dated home for $150,000. They spend $40,000 on renovations (new kitchen, bathrooms, flooring, and paint). The updated home sells for $230,000. After closing costs and holding expenses, the investor profits around $25,000–$30,000.

The key is the “70% rule.” Many experienced flippers won’t pay more than 70% of a property’s after-repair value (ARV), minus renovation costs. This buffer protects against cost overruns and market shifts.

Pros and Cons

Advantages:

• Potential for large profits in short timeframes
• No long-term tenant management
• Creative control over the project
• Builds valuable skills in real estate and renovation

Disadvantages:

• High risk if renovation costs exceed estimates
• Market downturns can trap investors with unsold inventory
• Requires significant capital or hard money loans
• Time-intensive and stressful

House flipping suits investors who can accurately estimate repair costs and have access to reliable contractors. It’s one of the more active real estate investing examples, but the payoffs can be substantial for those who master it.

Real Estate Investment Trusts (REITs)

Real Estate Investment Trusts (REITs) offer a hands-off approach to property investing. They’re companies that own, operate, or finance income-producing real estate. Investors buy shares like they would with stocks, making REITs one of the most accessible real estate investing examples.

REITs must distribute at least 90% of their taxable income as dividends, which creates attractive yields for income-focused investors.

How It Works

Investors purchase REIT shares through brokerage accounts. These shares represent ownership in a portfolio of properties, anything from shopping malls and office buildings to apartments and data centers.

For example, someone invests $10,000 in a diversified REIT with a 5% dividend yield. They receive $500 annually in dividends without buying, managing, or maintaining any property. The share price may also appreciate, adding to total returns.

There are three main types:

• Equity REITs own and operate properties
• Mortgage REITs finance real estate through loans
• Hybrid REITs combine both approaches

Pros and Cons

Advantages:

• Low barrier to entry (invest with as little as $100)
• High liquidity, shares sell quickly on exchanges
• Professional management handles all operations
• Instant diversification across multiple properties

Disadvantages:

• Dividends are taxed as ordinary income
• Less control over investment decisions
• Share prices can be volatile
• Interest rate increases often hurt REIT performance

REITs work well for investors who want real estate exposure without the responsibilities of direct ownership. They’re among the best real estate investing examples for beginners or those building diversified portfolios.

Real Estate Crowdfunding

Real estate crowdfunding has grown rapidly since regulations changed in 2012. This approach pools money from multiple investors to fund property purchases or developments. It’s one of the newer real estate investing examples that bridges the gap between REITs and direct ownership.

Platforms like Fundrise, RealtyMogul, and CrowdStreet connect investors with specific deals they couldn’t access individually.

How It Works

Investors create accounts on crowdfunding platforms and browse available deals. Each opportunity includes details about the property, projected returns, investment timeline, and minimum contribution.

Some platforms offer diversified funds that spread capital across multiple properties. Others allow investors to pick specific projects, like a new apartment complex in Austin or a commercial building in Denver.

Minimum investments range from $10 to $25,000+ depending on the platform and deal type. Returns come from rental income distributions and eventual property sales.

Pros and Cons

Advantages:

• Access to commercial and large residential deals
• Lower minimums than traditional syndications
• Diversification across property types and locations
• Passive investment with professional sponsors

Disadvantages:

• Investments are typically illiquid for 3–7 years
• Platform fees reduce returns
• Less regulatory protection than public REITs
• Some platforms have mixed track records

Real estate crowdfunding suits investors comfortable with longer holding periods who want exposure to institutional-quality deals. It’s become a legitimate real estate investing example for those seeking middle-ground options between REITs and direct purchases.