But homeownership has its own troubles, like a hefty price tag — and for LaZette, the responsibility of maintaining a place on her own at age 87.

Instead, LaZette found a way to avoid both apartments and ownership. She rented a brand-new house that was specifically built not for sale, but for tenants like her.

“I share no walls with anybody, and it’s like having my own private little house that I just rent,” LaZette said.

About 7% of new single-family houses hitting the market are now for rent, not sale. More than 10 times as many “build-to-rent” homes were completed in the U.S. in 2024 as compared with a decade earlier.

Many of these are being constructed by firms that specialize in build-to-rent housing, like NexMetro, which develops and owns single-family rental homes in the Sun Belt, a hot market for these properties. That’s where populations are growing and there’s plenty of land. Ohio and Utah have also seen a boom.

When NexMetro CEO Josh Hartmann started building these houses in 2009, in the aftermath of the financial crisis, he expected to get homeowners who had faced foreclosure and could no longer afford owning but still wanted the same home lifestyle.

Instead, Hartmann said most of his residents have been young professionals, who were more likely to be pet owners than parents. Many wanted to live in a single-family home but either were not ready or were uninterested in homeownership.

“It’s just a lifestyle choice,” said Hartmann. “They’re kind of figuring out where they want to live. They don’t want to buy a house yet.”

Others are older residents unwilling to buy and maintain a house late in life.

Supporters like Hartmann say these new constructions help make both renting and buying more affordable. They drive down housing costs for both by boosting housing supply.

“Homeownership has gotten so far out of the reach of most people,” said LaZette, who rents a NexMetro home. “This trend, I think, is a godsend .”

A bigger supply of available homes

The U.S. is in a housing affordability crisis. An American family needs to make $110,000 a year to own a typical home, according to the real estate broker Redfin. That’s about 29% higher than what the median household makes.

The biggest problem with the American housing market is a lack of supply, said Laurie Goodman, founder of the Housing Finance Policy Center at the Urban Institute. New U.S. households are forming faster than new units — from apartments to houses — are being built, according to realtor.com, which estimated the overall housing shortfall at just over 4 million in 2025.

While speaking at the World Economic Forum in January, President Trump said that the U.S. will not become a “nation of renters” and called for Congress to ban large investors from buying up single-family homes and turning them into rentals. But his own executive order restricting those purchases has language to ensure that investors can keep developing new build-to-rent homes.

Last week, the average rate for a 30-year, fixed-rate mortgage dipped below 6% for the first time since 2022, which could make buying more affordable for some home-seekers. But if more buyers enter the housing market without an uptick in supply, prices could shoot up and erase any affordability gains, according to a recent report from realtor.com.

That is why Goodman believes build-to-rent is a boon, since these houses would have otherwise not been built. More supply — be it for rent or buying — lowers housing prices for both groups.

“Build-to-rent is a win-win all around,” Goodman said.

Build-to-rent can turn “not in my backyard” into a “yes”

Homeownership has long been a central part of American culture; it’s a way to put down roots in a community. and one of the main ways people build wealth.

But that may be changing as more people embrace long-term renting. A recent survey of 1,000 Americans renting single-family homes conducted by the Center for Generational Kinetics, a research center studying the different mindsets between generations, found that only 8% of those renters defined the American dream as owning a home.

Still, the real estate world is short on supply for renters too. In 2024, the U.S. had about 800,000 fewer single-family houses for rent compared with a decade earlier, according to the National Association of Realtors. Some of that is due to investors selling off their rental houses to homebuyers.

“ Do we need more homes for sale? Absolutely,” said Jay Parsons, a rental housing economist and independent consultant. “ But that shouldn’t come at the expense of renters. We need more rental homes too.”

One of the biggest barriers to building more rental units can be local opposition to apartment construction.

“Everyone wants attainable housing, just not near their house,” said Hartmann.

Hartmann said residents often push back on a company’s plans, fearing the company will build tall apartment buildings that they worry will ruin the charm of their neighborhood. But the homes NexMetro builds are stand-alone, each a single story and half the size of a traditional home. Hartmann calls them “cottages.” He said a lot of worries go away when neighbors come to local meetings and see the plans.

“They see our little homes, our cottages, and they’re like, ‘Oh, yeah. I like that,'” Hartmann said.

Homebuying builds equity, but for tenants, choosing not to buy isn’t necessarily a bad financial move.

In fact, renting is cheaper than owning in the country’s 100 largest metros, according to LendingTree. Renters who invest what they save on housing can also build wealth.

Plus, some like Mona Gass just prefer the ease of renting. She has the money to own, but why? She has rented for half her life and enjoys being able to just call maintenance.

“Am I throwing my money away? Maybe,” said Gass. “But I don’t have to fix anything.”

She’s currently renting a three-bedroom NexMetro home — brand-new when she got the key in 2019 — with her mother in Mesa, Arizona. In a way, renting has become part of her identity.

“I’m gonna rent,” Gass said. “That’s what I do.”

Spring is usually when the U.S. housing market heats up, as potential buyers start shopping ahead of desired summer move-ins. But the 2026 housing market has gotten off to a rough start, as affordability concerns continue to weigh down activity and disrupt the industry’s seasonal rhythm.

Defying historical norms, home sales fell last month, according to data published Monday by the National Association of Realtors (NAR). Existing home sales for March dipped 3.6% compared with February, and were down 1% from a year prior. The drop—which pulled the annualized sales pace below 4 million for the first time since June—suggests high mortgage rates and weakening sentiment among homebuyers are already bleeding into spring.

“March home sales remained sluggish and below last year’s pace,” Lawrence Yun, NAR’s chief economist, said in a statement, attributing the falling numbers to shrinking consumer confidence and a lower job creation rate.

The traditionally hot spring buying season has coincided with a souring economic environment impacting the decisions of many homebuyers. Mortgage rates, which nationally are averaging between 6% and 6.5%, remain the biggest obstacle, according to NAR, and might be unlikely to fall significantly this year. An uneven jobs landscape and disrupted energy markets owing to the war in the Middle East has made the Federal Reserve more sensitive to inflation in recent months, resulting in a pause on rate cuts.

Mischa Fisher, chief economist at Zillow, put it similarly in an analysis last month, arguing that higher unemployment and persistently high mortgage rates were likely to act as a “slight drag on the spring season.” Zillow’s outlook for 2026 changed drastically depending on how long high rates and unemployment weigh down the housing market. If the numbers normalize by May, home sales for the year would rise 3.48%, a percentage point less than Zillow’s previous estimate. But if the same conditions persist for the whole year, home sale numbers are more likely to decline compared with 2025, a significant signal pointing to an economic slowdown.

Besides high loan rates, prospective buyers are saddled with exorbitant home prices. NAR’s Yun noted that housing stock in the U.S. remains limited, with demand outstripping supply in part because the vast majority of homeowners still hold relatively low rates and have decided to stay put rather than put their house on the market. The shortage means the median home price last month was $408,800, a record high for March. The environment for prospective homebuyers was stark enough for NAR to revise its expectations for home sales growth this year to 4%, down from its earlier projection of 14% released last fall.

The regional picture is mixed. The Midwest and parts of the northeastern U.S. have seen modest activity gains, while affordability constraints have been most acute in Western states. Yun said that adding between 300,000 and 500,000 homes for sale would help return the market “closer to normal conditions.”

But because many homeowners are unwilling to swap out their relatively low rates, that shift might not happen this spring. Recent research has already pointed out how the housing market’s traditional seasonality has become an outdated norm since the pandemic. Factors like remote work and improved online real estate offerings have made it easier for prospective homebuyers to enter the market year-round. With mortgage rates stubbornly high and affordability still top of mind for shoppers, the traditional sweet spot for homebuying might be losing the last of its seasonal charm.

The real estate industry is known to be quite conservative and slow when it comes to adapting to technological changes in the market. Integrating new technologies requires a cultural shift that embraces knowledge gaps and other transitional challenges.

So far, generative AI has established itself well in real estate marketing. It facilitates customer journeys like never before, improves content creation and changes customer relationships. However, there is a different kind of artificial intelligence that is also making powerful strides in the real estate industry: predictive AI. It utilizes historical data and algorithms to predict market trends and accurately forecast property values.

AI is already showing signs of making significant progress in real estate. The industry is still in the early stages of adoption, yet the potential for improvement is vast, particularly in areas of market prediction accuracy and personalized property recommendations. At this pace, there will be no better time to take action than now. Early adopters are already gaining a competitive edge, and the technology is only becoming more sophisticated.

How Does it Work? The Foundation of AI-Powered Predictive Analytics

At its core, AI-powered predictive analytics in real estate relies on vast amounts of data and complex algorithms to identify patterns and make forecasts. The system analyzes historical sales data, demographic information, economic indicators and unstructured data like social media trends or news articles.

We use machine learning algorithms, including supervised, unsupervised, and reinforcement learning models, in real estate predictive analytics. These algorithms learn from past data to make predictions about future outcomes. We can already see major companies like Compass and Zillow taking advantage of this and experimenting with AI tools.

For example, Compass, a tech-forward real estate brokerage, implemented these AI tools to help agents identify sellers before their homes were even listed. The company launched a machine learning-driven recommendation system called “Likely to Sell” in 2020 that helped real estate agents connect with the right contacts. While it’s still going to take some time to observe the results of this system better, there is the potential for it to help agents with their productivity.

On the Compass Q2 2024 earnings conference call, found and CEO Robert Reffkin reported that the company’s AI model, which currently accurately describes 7% of the market, is already used for real estate market forecasting and offers a foundation for further market extrapolation.

AI In Real Estate Predicting Market Trends

One of the most powerful applications of AI in real estate is its remarkable accuracy in predicting market trends. A prime example would be how AI models were able to foresee the post-pandemic suburban boom.

Zillow, a real estate marketplace, used its AI models along with data from the U.S. Census Bureau to identify a significant trend. The models predicted that the rise of remote work would enable many urban renters to purchase homes in suburban areas, an effect of no longer having to go to city centers. This insight proved itself valuable, as the real estate market indeed saw a surge in suburban home purchases following the 2019 pandemic.

Beyond identifying large-scale shifts, AI has the power to forecast price fluctuations and market cycles. By analyzing factors like interest rates, employment data and construction starts, AI models can predict how home prices might be affected in specific neighborhoods or cities. This detailed level of insight can be crucial for investors, developers and homebuyers.

AI In Real Estate Improves Property Valuation Accuracy

Artificial intelligence can also play a significant role when it comes to determining property valuation by helping human insights with accurate data analysis and predictive modeling. While automated valuation models use machine learning algorithms to estimate a property’s value based on its comparable sales, property characteristics and market trends, they also use data patterns hidden from human perception, entirely beyond human reach.

The following is a real-life example that illustrates the power of AI-driven property valuation. We recently led a project for a real estate organization seeking to automate property estimation to identify attractive offers and observe market trends. We created a deep learning model capable of predicting property prices when given real-time market data, discovering the factors that affect prices. The trend analysis dashboard allowed the organization to identify undervalued properties and make data-backed decisions.

Challenges And Limitations Of Implementing AI In Real Estate

While AI brings many benefits to real estate, it has its own challenges to bear in mind. Data quality and availability can be a significant hindrance, as AI models are only as good as the data they’re trained on. In some projects, we spend considerable time sourcing, cleaning and structuring data before we can even begin building models.

Another significant challenge we encounter is the lack of expertise in AI in real estate organizations. This is why we often recommend creating a role for a chief AI officer or bringing in dedicated AI experts. These specialists can bridge the gap between technology and business needs, ensuring that AI implementations deliver real value.

The Next Generation Of Possibilities

As AI technology continues to evolve, the impact of AI in real estate will grow, along with other technologies, such as blockchain, for secure and transparent transactions.

Technologies evolve, and complexity grows; therefore, successful implementation of AI in real estate requires more than just acquiring AI tools. It demands the experience and guidance of AI specialists. The challenges are real, but so are the rewards. AI-powered predictive analytics is not just the future of real estate—it’s increasingly the present. The real estate professionals who can effectively harness the power of AI will be best positioned to thrive in the years to come.

“If it’s 1%, then it really makes sense for me to buy that property,” he told Business Insider. “If it’s 0.6% or 0.7%, it doesn’t make sense.”

In real estate, that rule of thumb is known as the 1% rule. It suggests a property’s monthly rent should equal at least 1% of its purchase price to have a good shot at generating positive cash flow. If it falls short, Afzal keeps looking.

He began investing in real estate in 2019 to create an additional revenue stream. As a freelance film composer and singer-songwriter, his monthly income fluctuates.

Over the past seven years, he’s built a portfolio of four investment properties in Monroe, a town in New York about 50 miles north of the city. Business Insider verified his property ownership by reviewing copies of his mortgage interest statements.

The 1% rule in practice

The first property Afzal bought cost about $200,000 and rented for $1,975 a month, giving it a rent-to-price ratio of 0.98%. His second cost $211,000 and rented for $2,100, or 0.99%. His third beat the benchmark by a more comfortable margin, at 1.125%.

So far, the rule has worked for Afzal. Each property he has purchased has cash-flowed immediately.

As of April 2026, Afzal said his properties generate roughly $5,300 a month in cash flow. His most profitable rental, which he bought outright and therefore has no mortgage, brings in nearly $1,800 a month.

The rule isn’t perfect. Interest rates, HOA fees, insurance, maintenance, and other expenses all shape whether a property will actually be profitable. Still, Afzal said it remains one of his main filters.

“As long as I’m able to be close to the 1%, I’m willing to buy that property,” he said.

The 1% rule is meant to evaluate a property at the time of purchase, but Afzal still checks the ratio against current values on properties he already owns. By that measure, some have slipped below 1% over the last few years because home values rose faster than rents. Two years ago, for example, he said his first property was worth about $350,000 and rented for $2,650 a month, putting the ratio at 0.76%.

He said he largely stopped buying over the last few years because high home prices made it harder to find deals that met the rule. He spent that time saving, tracking prices, and waiting for the market to improve. Now, he said, the numbers are starting to look better and getting closer to the 1% sweet spot.

Cash flow is one of his top priorities, not only because it creates additional monthly income, but because it can help him qualify for future loans. Showing positive cash flow on his tax returns gives underwriters confidence that his rentals aren’t losing money, he said, “so it helps me buy more properties.”

This article will explore proven strategies and how to look for timely opportunities, as well as alternative investment options such as REITs, MBSs, and REIGs.

Understanding Property Appreciation and Value Growth

When real estate appreciates, it increases in value. Investors commonly earn a profit when they sell. However, property owners can increase their return on investment on a property by refinancing the loan at lower interest. This will lower the cost basis for the property, thus increasing the amount that they clear from it.

The appreciation for undeveloped land is achieved by developing it. Once developers build houses or commercial buildings, it raises the value. Appreciation in land can also come from discoveries of valuable minerals or other commodities—provided that the buyer holds the rights to them. Commercial property gains value for the same reasons as raw land and residential real estate: location, development, and improvements.

For residential properties, location is often the biggest factor in appreciation. As the neighborhood around a home evolves, adding transit routes, schools, shopping centers, playgrounds, and more, these changes cause the home’s value to climb. Of course, this trend can also work in reverse, with home values falling as a neighborhood decays. Home improvements, such as adding an extra bathroom or remodeling a kitchen, may increase the value of a home.

Income Streams From Real Estate Investments

• Raw Land Income: Companies may pay real estate owners royalties for any discoveries or regular payments for any structures they add. This may include pump jacks, pipelines, gravel pits, access roads, and cell towers. Raw land can also be rented for agricultural production.
• Residential Rent: Residential property income comes as rent where tenants pay a fixed monthly rate. A desirable location is critical for owners to secure tenants easily.
• Commercial Property Income: Commercial properties also earn income through rental payments. Many commercial tenants may also pay fees for contractual options like the right of first refusal on the office next door. Tenants pay a premium to hold these options, whether they exercise them or not.

Effective Strategies for Buying and Selling Real Estate

• Buy and Hold: Many real estate investors buy a single-family home and rent it out or buy a multifamily home and live in one of the units while renting the others to cover the mortgage. Buyers can choose to manage the property or hire a management company.
• Flipping: Property flippers specialize in adding high-return fixes to houses in a short time and then selling them. Flipping can be lucrative for those who find the right properties to fix.
• Vacation Rentals: When there is demand for home-away-from-home rentals, homeowners can earn income by renting out a house or even just a room on a short-term basis, especially if the property is in an area that’s a well-known tourist destination. Local bylaws commonly dictate the rules for listing a property on Airbnb, Vrbo, or HomeAway.

Exploring Alternative Income Sources in Real Estate

• REITs: Real estate investment trusts (REITs) allow investors to buy shares of a fund of multiple commercial properties with the rental income shared as a distribution. The REIT is the landlord for the tenants, but the owners of the REIT record income once the expenses of operating the buildings and the REIT are taken out. There’s a special method for assessing a REIT.
• Mortgage Investment Corporations (MICs), real estate investment groups (REIGs), and mortgage-backed securities (MBSs): These invest in private mortgages rather than the underlying properties. MICs differ from MBSs in that they hold entire mortgages and pass on the interest from payments to investors. REIGs are usually private investments with a unique structuring, offering investors equity investments or partnership servicing.

Exploring Real Estate Investment Alternatives

An informal residential real estate option requires investors to pay a fee, or premium, to have the right to buy a house for a specified period for an agreed-upon price. The premium is essentially a finder’s fee for matching a person looking for an investment with a person looking to sell.

Short sales involve purchasing a home from a lender when the mortgagee is behind on payments. Short sales can be a time-consuming and complicated proposition. Lease options allow investors to lease with an option to buy. Contract flipping involves the transfer of the rights of a purchase contract to another buyer and pairing distressed sellers with motivated buyers.

Is Real Estate Investment Always Profitable?

Real estate investment is not a sure bet. The real estate market has boom and bust cycles, and real estate investors can lose and make money.

What Is a Common Way to Profit in Real Estate?

The most common way to make money in real estate is through appreciation—an increase in the property’s value realized when they sell.

How Do Investors Find Properties for Sale?

A realtor or real estate professional can help investors find properties. Online sites such as Zillow or Redfin also list properties for sale.

The Bottom Line

There are several proven strategies for making money in real estate. Appreciation and rental income rank high, but several alternative real estate investments exist. REITs, MICs, REIGs, and real estate crowdfunding are potential options.

Real estate investors should consider the costs and risks associated with buying properties, as well as location, market conditions, and potential pitfalls like inflation. Real estate investment is not always guaranteed to be profitable, given the market’s boom-and-bust cycles.

I got my start with real estate investing in 2016 with the purchase of a run-down 1970s split level with four bedrooms. My W-2 income was less than $23,000 at the time. I lived with a rotating cast of three other short and long-term renters for years while slowly renovating it. Deals like that are much harder to find today, but that doesn’t mean you’re shut out of the market entirely if you’re in the same income bracket I was.

Here are five proven ways to invest in real estate, ranging from hands-off approaches that take minutes and minimal funds to set up, to more involved strategies that could become your full-time occupation.

1. Real Estate Investment Trusts (REITs)

What they are: REITs (Real Estate Investment Trusts) are companies that own, operate or finance income-producing real estate across various sectors like shopping malls, apartment buildings, offices, warehouses and hotels. They work similarly to mutual funds, allowing you to invest in real estate without actually buying or managing physical properties.

If you’re looking to invest in real estate immediately with limited funds at risk, REITs offer the most accessible entry point.

REITs are required by law to distribute at least 90% of their taxable income to shareholders as dividends, which typically makes them excellent income-generating investments. Many REITs pay higher dividend yields than what you’ll find with many stocks. Keep in mind that dividends from a REIT will be taxed at your income tax rate, not the lower capital gains tax rate you’d get with other investments, so you’ll need to prepare for a larger tax bill or hold them in a tax-advantaged account.

The beauty of REITs lies in their simplicity. You don’t have to worry about finding tenants, fixing toilets or dealing with property taxes as the REIT management team handles all those headaches. You just invest your money and collect dividends when they do well.

How to get started: You can buy shares of publicly traded REITs through any brokerage account, just like you would purchase stocks. If you’re new to investing or don’t have much capital, many investing apps like Robinhood, M1 Finance and Stash offer fractional shares of REIT ETFs (Exchange-Traded Funds), allowing you to start with as little as $5.

Expert tip: Consider diversifying across different types of REITs. Residential, commercial, healthcare and mortgage REITs each respond differently to economic changes, providing better portfolio protection. Since REITs pay through dividends, holding your REITs in a tax-advantaged account like a Roth IRA or Health Savings Account is a smart money move.

2. Crowdfunding Real Estate Platforms

What they are: Crowdfunding real estate platforms are online services that connect investors with real estate developers seeking funding for specific projects. Rather than investing in diversified portfolios of several properties like REITs, these platforms let you select individual properties or development projects to invest in.

For investors who want more control over their real estate investments without the hassle of direct property ownership, crowdfunding platforms offer an intriguing middle ground.

These platforms typically fund commercial or residential developments, apartment renovations or other real estate projects. The returns can potentially be higher than REITs, but so is the risk since you’re often investing in a single property rather than a diversified portfolio.

Consider that most crowdfunding investments lock up your money for several years. While some platforms offer early withdrawal options, they typically come with penalties or depend on another investor buying your shares.

How to get started: Popular platforms include Fundrise (which allows investments starting around $10) and CrowdStreet (which focuses on commercial real estate but typically requires larger minimum investments, often over $25,000). Be aware that some platforms only accept accredited investors—individuals with a net worth over $1 million (excluding primary residence) or annual income exceeding $200,000.

Expert tip: While crowdfunding is increasing in popularity, I don’t recommend it for beginners. The fees are substantially higher and less transparent, plus they aren’t diversified enough for people new to the industry. A REIT is a much better starting point until you better understand real estate investments.

3. Invest in Your Own Home

What is it: Perhaps the most common real estate investment most people make is purchasing a primary residence. By making mortgage payments, you gradually build equity in your home while potentially benefiting from property appreciation.

If you continue to slowly climb the property ladder during your working years and then downsize in retirement, you’re likely to benefit from a stable place to stay and a large check at the end of it.

However, the financial returns might be less impressive than you’d expect. Even with the wild market recently, home prices have only averaged a 4.29% increase in value annually since 1987, according to data from the Federal Reserve.

By comparison, REITs have historically delivered average annual returns around 11.28%, according to Nareit, while even a basic S&P 500 index fund has averaged roughly 10% returns long-term.

That doesn’t mean buying a home is a bad investment, it just means you should think of it as both a lifestyle choice and a financial one. Government programs for homebuyers, along with favorable mortgage terms, make homes much more accessible than other real estate investments.

You can even follow my playbook and rent rooms out while living in your home for extra cash flow for renovations, to build equity faster or to reduce your housing expenses.

How to get started: If you’re considering buying a home, first assess whether you plan to stay in one location for at least three to five years (to offset transaction costs). Research first-time homebuyer programs in your area, which might offer down payment assistance or reduced interest rates. Make sure your monthly mortgage payment is well within your budget, as you’ll be on the hook for maintenance as well as regularly increasing property taxes and insurance premiums.

Expert tip: Don’t rush to pay off a low-interest mortgage if you can earn higher returns by investing that extra money elsewhere. While a paid-off mortgage is an emotional win, it’s rarely the smartest money move. Let’s say you have room in your budget and can either pay off your 3% mortgage earlier or invest more in your 401(k) and you’re in a 30% total tax bracket. Paying off your mortgage saves you 3% in interest, but investing in your 401(k) will give you an immediate 30% tax savings, and grow at an average rate of roughly 10% a year if investing in something like an S&P 500 index fund.

4. Invest in Rental Properties

What is it: Purchasing residential or commercial property to rent out to tenants is perhaps the most traditional form of real estate investing. This approach can provide both ongoing income and potential appreciation.

Rental properties come in two main varieties:

• Long-term rentals: These properties are typically leased for at least a year, providing consistent monthly income (assuming reliable tenants). Options range from single-family homes to multi-unit properties.
• Short-term rentals: These cater to travelers and temporary residents through platforms like Airbnb and VRBO. While they typically generate higher nightly rates, they also require more active management and face more volatile seasonal and economic fluctuations.

The appeal of rental properties lies in their wealth-building potential. A well-chosen rental property can provide monthly cash flow while it potentially appreciates, and your tenants essentially help pay down your mortgage.

The downside? Becoming a landlord involves significant work. Finding tenants, handling maintenance, addressing emergencies and dealing with potential vacancies. Additionally, financing investment properties typically requires larger down payments and comes with higher interest rates than primary residences.

I’ve been a landlord for most of the last nine years, generally living with or near my tenants. The vast majority of my tenants have been fantastic people, but the few bad ones were so bad that I stopped renting out my house entirely. Carefully consider if you have the stomach to deal with a nightmare scenario before you start investing in rental properties.

How to get started: Research rental rates and property values in your target market. Many successful investors start with a small, manageable property like a duplex or condo. Consider “house hacking” by living in one unit of a multi-unit property while renting out the others, which can qualify you for better financing terms.

Expert tip: Factor in at least one to two months of vacancy per year when calculating potential returns, along with setting aside 1% to 2% of the property value annually for maintenance and repairs. Many new landlords underestimate these costs and overestimate their cash flow.

5. Flip Properties for Profit

What is it: Property flipping involves purchasing homes or buildings, renovating them and selling them at a higher price. This strategy can deliver significant returns but requires substantial knowledge, capital, risk tolerance and ability (if you DIY your renovations).

Despite what you might see on HGTV, flipping houses isn’t a guaranteed path to quick profits. It requires identifying undervalued properties, accurately estimating renovation costs, managing contractors (or doing the work yourself) and understanding local market trends.

The financial risks are considerable. Renovation costs frequently exceed initial estimates, permits can cause unexpected delays and market conditions might shift while your money is tied up in the project. Most flippers need to account for financing costs, realtor commissions, closing costs and capital gains taxes, all of which eat into profits.

For those with construction experience or strong contractor relationships, flipping can be highly profitable. The key is buying properties at a sufficient discount to cover all expenses while leaving room for profit.

How to get started: Before diving in, spend time learning your local market: attend open houses, track property values and build relationships with realtors specializing in distressed properties. Consider partnering with an experienced flipper on your first project to learn the ropes.

Expert tip: Use the 70% rule as a starting point: Never pay more than 70% of a property’s After Repair Value (ARV) minus renovation costs. For example, if a renovated home would sell for $300,000 and needs $50,000 in repairs, you shouldn’t pay more than $160,000 ($300,000 × 0.7 – $50,000).

Which Real Estate Investment Strategy Is Right for You?

The best approach depends on your financial goals, risk tolerance, available capital and desired level of involvement:

• For passive income with minimal effort: REITs or real estate crowdfunding
• For building equity while meeting a basic need: Your primary residence
• For ongoing income plus appreciation: Rental properties
• For active income requiring significant effort: Property flipping

Real estate investing can provide portfolio diversification, potential tax advantages and protection against inflation. But physical properties also come with illiquidity risks. You can’t sell a house as quickly as you can sell a stock.

For most investors, a balanced approach works best. Start with REITs to gain exposure to real estate while learning more about the market. As your knowledge and capital grow, you might consider adding a rental property or exploring more active strategies.

Whatever approach you choose, remember that real estate—like any investment—requires research, patience and a clear-eyed assessment of both potential returns and risks. Talk with a financial advisor about how real estate fits into your overall investment strategy before making any major decisions.

The path to real estate wealth is rarely a sprint; it’s a marathon. But for those willing to put in the effort and make informed choices, it remains one of the most reliable routes to long-term financial security.

• Generative versus agentic AI. Today’s first wave of AI tools are predominantly generative applications (GenAI). GenAI can create content (text, media, or code) in response to a prompt. GenAI produces outputs using machine learning models trained on content sourced broadly from the internet (public web data) or narrowly on proprietary datasets selected by the application developer (internal company applications). Use cases include customer service chatbots, software development, routine administrative tasks or paperwork, research.

• Agentic AI picks up where GenAI leaves off. It can plan and act with minimal prompting, running continuous processes with limited supervision. Use cases for agentic AI include analyzing information to provide predictive analytics, executing financial market trades, recommending health treatments, managing inventories, and blocking malware.

Adoption of AI

Real estate firms are in the initial stages of exploring how AI could improve internal operations, typically in administrative or recurring tasks with consistent deliverables. Many larger real estate firms, however, have moved toward using AI for higher-value internal tasks and property operations.

As AI use expands further into research, underwriting, and reporting tasks, it is becoming a larger threat to hiring, particularly for entry-level roles. Increased adoption of these technologies has reduced entry-level employment across industries in the most exposed occupations by 13 percent, according to 2025 research from Stanford University, while employment for more experienced workers in the same roles has been stable or growing. The most exposed occupations include computer programmers, financial managers, accountants, and sales representatives.

While saturation on the scale where AI tools replace workers is rare in the real estate industry, it is occurring. Real estate use cases include data analytics,  leasing and investment recommendations, and price modeling. Real estate firms with operationally intensive property holdings, such as residential and health care–related assets, are using AI to improve customer services elements of their properties.

Job replacement and real estate demand

Our interviewees expect that tenant demand will be impacted by the increased adoption of AI tools, although these workforce impacts will take time to evolve. Analysis of AI adoption today shows a mix of impacts on existing employment from eliminating jobs or tasks to creating new forms of work. In this early stage (limited adoption in most firms and saturation at a few large firms), job transformation is more common than AI replacing employees.

However, entry-level positions are at risk of AI replacement today. Employment declines for entry-level workers are tied to automation rather than task augmentation alongside employees. Young college graduates in 2025 face a more difficult job market. The Burning Glass Institute reports that unemployment rates for young adults, (20 to 24 years old) are rising for those with a bachelor’s degree or higher, while unemployment in the same age group with less education is falling. Separately, AI adoption to replace entry-level tasks is keeping more experienced employees in their roles, who themselves are using AI to gain new efficiencies around mundane tasks.

Nearly half of the skills in a typical U.S. job posting are poised to undergo a “hybrid transformation” due to AI adoption. Hybrid transformation means that human oversight remains critical to the work. AI applications are primarily changing administrative tasks for roles requiring in-person services, while more tasks can be automated in technical roles. Skill replacement by generative AI in 2025 remains small, at 0.7 percent of 2,900 skills analyzed, which is significant growth from zero skills replaced one year prior.

Consider the potential applications in nursing versus software development. GenAI creates efficiencies in both roles but is less transformative in nursing. Software development is among the roles most exposed to generative AI because the core skills are technical and routine. These tasks can be replicated by GenAI with humans directing work and providing quality control. In nursing, the opposite is true with core skills requiring a physical presence and real-time problem solving with technical and routine tasks required, but less central to the role. Both roles are transformed by the adoption of AI tools with different employment impacts. AI can reduce administrative tasks for nurses and shrink the software team.

perating efficiency

Residential owners and operators are diving into AI tools for resident services to create efficiencies, while improving customer service. These use cases include providing tech-savvy renters with services delivered in a way they prefer, and health-tracking applications in assisted living or memory care facilities to improve emergency response times.

For traditional multifamily operators, the consolidation of onsite services under a dedicated chatbot for residents allows staff to serve multiple properties from a single office. Practitioners applying this use case find fewer staff members are required on site, but overall staffing has not changed due to the software team tasked with developing and updating the chatbot application. These multifamily operators also find their young adult residents prefer renting properties using a chatbot for basic communications over those with an onsite manager.

The most advanced operators in this space are developing fully AI-enabled properties—automated tours, leasing, and resident services—with fewer or no onsite amenities to provide high-quality rental units at a discount to comparable units in properties with full onsite amenities.

Overall, artificial intelligence adoption is in preliminary stages and showing promise in automating routine tasks, some of which reduce the need for full time employees. On the flip-side, the use of AI tools in company and property operations requires new skill sets, which could support more hiring. The real estate industry has much to consider when adopting AI tools and setting property strategy in the years to come. There may be fog, but once this clears, technology will continue to change the way we work.

Investing in real estate is a long-established strategy to potentially help build wealth and generate income, and there’s more than one way to go about it.

You can invest in real estate directly by purchasing property yourself, or indirectly through pooled investment vehicles. These types of real estate investment strategies are not for everyone, however.

Here are five common real estate investment strategies to consider:

1. Publicly traded real estate investment trusts (REITs)

Traded REITs are public companies that invest in commercial real estate. Shares of these companies can be bought and sold on an exchange similar to other stocks. With REITs, you can earn a share of the income produced through commercial properties — such as apartments, office buildings, industrial warehouses or shopping centers — without purchasing the real estate yourself.

However, there are some potential downsides to be aware of, such as the potential for market volatility. Because these investments are publicly traded, they are more closely correlated with stock market fluctuations.

2. Private real estate funds

Investors may also consider pooled investment vehicles that buy and sell commercial real estate. These funds encompass a variety of strategies, and investment decisions are made by professional third-party investment managers. Fund structures may include non-traded REITs, non-traded closed end funds and private LPs or LLCs.

These investments may deliver a durable income stream and may exhibit pricing resilience relative to publicly traded REITs. This may be appealing for those investors who are seeking steady income, asset appreciation and portfolio diversification.

However, private real estate is a long-term investment with limited liquidity and is not an appropriate option for all investors, nor are they available to all investors as they are generally private placement offerings and only open to accredited investors.

3. Long-term rental properties

Perhaps the most traditional way to earn income with real estate is purchasing a property and renting it out to tenants on a long-term basis. By setting the rent at a price point that covers your expenses and allows for a profit, you can create a stream of passive income while also potentially building equity. In time, you may be able to borrow against the equity gained from one property to finance another.

Long-term rental properties are not a hands-off investment, however. In addition to fronting a down payment and other fees to purchase the property, maintaining it can require ongoing time, money and effort. Among a landlord’s many responsibilities include vetting and securing tenants, rent collection, property repairs and maintenance. Some investors take on these responsibilities themselves to maximize their returns, while others outsource these duties to a property management company.

4. Short-term rental properties

Short-term rental properties, also known as vacation rentals, are residential properties that are rented out on a temporary basis — often for 30 days or less. In recent years, the use of short-term rental properties to generate income has become an increasingly popular strategy as online marketplaces for rentals have been adopted by the public on a large scale.

Like long-term rental properties, this strategy requires a direct investment by purchasing the property, which requires a down payment and other closing fees. However, compared to their longer-term counterparts, short-term rentals have a higher potential for fluctuating cash flow and may require more ongoing attention. There also may be added costs and responsibilities. For example, you may need to furnish the property and have plans for customer service, maintenance, security and cleaning.

5. Purchasing, renovating and selling houses

If you have the time, resources and experience to renovate homes, house flipping may be a good strategy. It involves buying a home, renovating it to increase its value and then selling it for a profit — ideally within a short period.

However, flipping a home isn’t for the hands-off or risk-adverse investor. It requires the investor to have a strong understanding of the local real estate market, as well as solid project management skills and construction experience. Time is also a critical factor in earning a return: You’ll have to pay the mortgage and interest, property taxes, homeowners’ insurance and other holding costs for each month the project lasts.

This notion is reinforced by the recently launched PropTech 2033 Whitepaper, published by the Dubai PropTech Hub, which is a part of the Dubai Financial International Centre (DIFC) and Dubai Land Department (DLD). As per the Whitepaper, Dubai’s prop-tech sector could generate more than AED 53 billion annually for the economy and address critical challenges in sustainability, data transparency, rapid build-outs, and urban living.

According to Sandeep Jadwani, Head of Investment Advisory, H Capital Limited, “PropTech is one of the most direct applications of new-age tech to a real-world problem in Dubai”. Jadwani noted that PropTech operates at the intersection of regulatory vision through strategies such as the Dubai Economic Agenda (D33), Dubai Real Estate Sector Strategy 2033, and Dubai 2040 Urban Master Plan, promising solutions and increasing investible capital.

A natural evolution for a digital city

According to Rakesh Mavath, Co-founder at Takeem, “PropTech in Dubai covers everything from property marketplaces and investment platforms to construction analytics, CRM software, and now AI-driven valuation tools and blockchain-based ownership models (tokenised assets).” His start-up, Takeem, itself, tries to solve a critical problem in Dubai’s big rental market: that of building trust between landlords and tenants, simplifying and monetising rent agreements, and providing a rental guarantee.

The first wave of prop-tech in Dubai focused on digitising property listings and marketing. These platforms, such as Bayut, Dubbizle, and Property Finder, aggregated listings, provided market analytics, and connected buyers with brokers. Today, these tools are evolving into fully digital ecosystems that include virtual tours, automated lead generation, smart search algorithms, and financing solutions.

According to Patrick Caulfield, CEO at Propspace, “AI (artificial intelligence) is increasingly being used to predict property prices, analyse buyer behaviour, and identify investment opportunities.” His company, Propspace, is a MENA-dedicated CRM platform that uses AI to process large volumes of real estate data, from transaction records, lead optimisation, and behavioural matching, to generate insights that would take weeks if done manually. The agentic use of AI for marketing and sales is also a growing area.

The third category of prop-tech solutions that have drawn global attention is fractional ownership and tokenisation. According to Adam Popat, CEO of SettleMint, “Dubai is an ideal ground for real-world asset (RWA) tokenisation in real estate. The Dubai Land Department (DLD) real estate tokenization experiment with Prypco Mint was the first of its kind, where blockchain technology was used to issue digital title deeds for fractional ownership. The project is now entering its second phase, in which tokens can be sold on secondary markets, increasing liquidity and transparency.”

If scaled properly, fractional ownership and tokenisation of RWAs could democratise the investor base and reduce risks of capital flight in Dubai’s real estate sector.

Prop-tech is also transforming how buildings are constructed and managed. Technologies such as IoT sensors, AI-driven energy management systems, and digital twins or virtual replicas of physical buildings are helping developers reduce costs and improve efficiency.

Government support and facilitation ecosystem

According to Mavath, “the innovation ecosystem in Dubai is very progressive at the access and regulation levels. The regulators have a high awareness of tech solutions and are willing to engage in new products.” Caulfield identifies three players in this eco-system: Dubai Land Department, prop-tech hubs and accelerators, and incubators and sandboxes.

Mavath noted that the first step for anyone wanting to enter the prop-tech space in Dubai should be the Dubai Land Department, the “tech-savvy” regulator. It has launched initiatives such as the Real Estate Evolution Space (REES) and works closely with regulators and start-ups to experiment with new models.

Dubai is also building a dedicated proptech innovation ecosystem through initiatives such as the Dubai PropTech Hub, created by the DIFC Innovation Hub and the Dubai Land Department. This institutional push is also being supported by regulatory experimentation. Under Sandbox Dubai, Dubai Future Foundation, and Dubai Land Department have partnered to help accelerate PropTech innovation and shape frameworks for real-world testing and deployment.

Accelerators and Incubators are also important pillars of this space. Mavath’s Takeem recently secured funding from REACH MENA, a prop-tech accelerator launched in Dubai to provide mentorship, market access, and investment opportunities for early-stage companies.

As per Caulfield, who has worked in global locations, he has not seen such a harmonised ecosystem as the DIFC Innovation Centre, which offers subsidised office space, networking events, and investor access. For Mavath, access to Dubai Silicon Oasis serves a similar purpose.

For Jadwani, the appeal of prop-tech firms is also starting to be appreciated by the Family Offices that he manages. He says that there are two rationales here: “First, a diversification from pure-play real estate, which is illiquid, to technology solutions like tokenisation, fractional ownership, etc., that can deliver returns while remaining in the space.”

“And second is investment in solutions that solve their operational issues, such as use of automation or AI to manage real estate portfolios, off-plan value discovery, and facility management,” Jadwani added.

The opportunities ahead

For Jadwani, with “the regulatory clarity and sandboxes” established by authorities such as VARA, talent being attracted by schemes such as Golden Visa, and a property market with a TAM of billions of dollars, prop-tech space will heat up.

Mavath and Caulfield highlight that the best way to take advantage of these opportunities is to create value through products, build local relationships, understand regional market dynamics, and have a clear entry strategy.

One of the most promising corridors of prop-tech innovation is India–Dubai. With Indians emerging as the top foreign buyers in Dubai’s property market, companies such as Magicbricks, Vertex Group, and Square Yards are offering cross-border discovery, investment, and property-management services using AI, digital tools, and fintech solutions.

Other regional markets are also on the agenda. As Caulfield says, the next step for Propspace is tapping other regional markets, echoing the ambition “to build in Dubai and scale to the region”.

As per international property consultancy Knight Frank, here is a list of five of Europe’s most influential luxury real estate hubs for 2026.

Check them below:

Lisbon, Portugal

Lisbon in Portugal is Europe’s fastest-rising luxury housing market. In the last few years, the capital city has experienced strong demand from international buyers seeking private residence and long-term investment. As per the Prime Global Cities Index published by Knight Frank, Lisbon recorded around 5.7% annual growth in prime residential prices. Some prominent neighbourhoods here include Chiado, Príncipe Real, and Avenida da Liberdade. These are the places where you’ll find restored heritage buildings, high-end apartments and penthouses, among others.

Monaco

When it comes to luxury real estate, Monaco tops the chart. This small Mediterranean country has long been a magnet for billionaires. The place attracts international celebrities and investors seeking silence, privacy and luxury private residences. The reason behind is scarcity of land and a government’s favourable tax policy. These are the reasons why the country continues to attract worthy individuals. One iconic address here is Avenue Princesse Grace. It is noted as one of the world’s most expensive residential streets.

Madrid, Spain

Then there is Spain’s beautiful capital city Madrid. It has become Europe’s most attractive luxury real estate market for investors. The city is a perfect and rare amalgam of economic growth, culture, and competitive property prices in Europe. As per Knight Frank, Madrid’s residential prices have been rising steadily. Salamanca, Chamberí and El Viso are some historic addresses.

Milan, Italy

Milan, Italy’s fashion capital, has also been an attractive market for real estate investors. The city’s booming fashion and finance sectors are the reason behind this attraction of international buyers ahead of the 2026 Winter Olympics. Some expensive real estate districts incldue Brera, Porta Nuova and Quadrilatero della Moda, among others.

Geneva, Switzerland

Geneva is Switzerland’s financial hub and it continues to be one of Europe’s safe haven for global wealth and luxury real estate markets. Geneva attracts wealthy buyers because of its political stability and exceptional quality of life. As per Prime Global Cities Index, the city recorded over 4% annual growth in prime residential property prices. Luxury apartments overlooking Lake Geneva and villas are most sought-after among wealthy buyers.