Real estate investing continues to attract individuals seeking a mix of income, long-term appreciation, and diversification. Whether through direct ownership, property flipping, or REITs, real estate offers multiple entry points for investors of all experience levels. While traditional investing often requires considerable upfront resources and involvement, newer platforms and strategies have made real estate more accessible than ever.
From earning rental income to leveraging tax advantages, real estate remains a versatile asset class. However, like any investment, Manny Khoshbin emphasizes that success depends on sound planning, market knowledge, and a clear understanding of personal objectives.
Understanding Real Estate Investing
Real estate investing involves purchasing property to generate a return, either through rental income, future property resale, or a combination of both. It’s a way to build wealth over time by owning physical assets that can appreciate in value or generate cash flow. Some take a hands-on approach by managing properties themselves, while others prefer a more passive approach.
Main Types
Residential properties are often the first step for many investors. These include houses, condos, and small multi-family buildings. They’re usually easier to finance and comprehend, especially for beginners. A single-family rental in a growing suburban area can provide stable income and long-term value.
Commercial real estate encompasses properties such as office buildings, strip malls, and apartment complexes. These typically require larger capital but can offer higher returns. Industrial real estate, such as warehouses or distribution centers, has gained popularity due to the rise of e-commerce and the increasing logistical needs. These properties often come with long-term leases, which can add predictability to income.
Land investment is another path, whether it’s raw land on the edge of a developing town or farmland leased to agricultural businesses. It tends to be a longer-term strategy. On the other hand, Real Estate Investment Trusts (REITs) allow individuals to invest in professionally managed real estate portfolios without owning physical property, making them a convenient option for those seeking diversification without hands-on involvement. REITs can be bought and sold like stocks, offering liquidity that traditional property investments lack.
How People Invest in Real Estate
Buying a property and renting it out remains one of the most common strategies. Rent from tenants helps cover the mortgage while building equity over time. Some investors live in one unit of a multi-family home and rent out the others, reducing their own housing costs while generating income.
Others focus on flipping properties, purchasing homes below market value, renovating them, and reselling for a profit. This approach can deliver quick returns but usually involves more risk and effort. Renovation delays or budget overruns can quickly eat into expected profits. Market timing also plays a role, as a downturn can impact resale prices even after improvements have been made.
Manny Khoshbin explains that real estate crowdfunding and REITs have opened the market to individuals who prefer not to assume the responsibilities of direct ownership. With just a few hundred dollars, someone can gain exposure to a range of properties and collect passive income from rents or dividends. These platforms often pool investments to fund large projects that would otherwise be out of reach for individual investors.
Benefits of Investing in Real Estate
One of the primary advantages of real estate is its potential to produce consistent income. Properties that are well-located and properly managed can generate monthly cash flow, making it easier for investors to cover expenses while still earning a profit.
Beyond income, property values tend to rise over time, especially in markets with strong demand and limited supply. A home bought in a growing neighborhood five years ago might now be worth significantly more, contributing to long-term wealth.
Real estate can also help balance a portfolio. Because it doesn’t always move in sync with stocks or bonds, it can act as a buffer during market downturns. Tax benefits, such as depreciation and mortgage interest deductions, further enhance returns, offering investors a more efficient way to grow their capital.
Risks and Challenges to Consider
While real estate can be rewarding, it’s not without its hurdles. Property values can decline due to economic shifts, making it more challenging to sell or refinance. A once-thriving neighborhood might decline, affecting rental demand and resale value. Local regulations and zoning changes can also impact property performance and investor returns.
Maintaining a property requires time and money. Unexpected repairs, difficult tenants, or long vacancy periods can strain cash flow and erode profits. Even with a property manager, ownership still carries responsibilities that some investors may underestimate. Insurance costs, property taxes, and HOA fees can also add up quickly.
Financing is another area to watch. Down payments, closing costs, and monthly loan obligations can be consequential. If income dips or interest rates rise, keeping up with payments becomes more challenging, especially for those with multiple properties or limited reserves.
Getting Started as a New Investor
Learning the basics of your local market is a smart first step. Understanding trends, price ranges, and tenant demand helps you make informed decisions. Some buyers begin by house hacking—living in one part of a property and renting out the other, reducing their expenses while gaining experience.
Setting clear goals keeps you focused. Whether it’s earning passive income or building a retirement fund, knowing your purpose shapes the types of investments you pursue. A modest start, paired with patience and research, often leads to more confident moves down the road.
Partnering with professionals such as real estate agents, lenders, or property managers can simplify the process and reduce costly mistakes. Even experienced investors rely on trusted advisors to navigate deals and stay updated on market changes. Building a strong support network can make each step smoother and less stressful.
