Investing in real estate can be one of the best ways to build long-term wealth. Property values typically rise over the long term and investors can earn a steady income from rental properties or even get a tax break for their property holdings. However, investing in real estate is a long-term commitment and it’s important to consider your risk tolerance and available investment funds before you jump in.

There are several ways to Investing in real estate, including purchasing rental properties, flipping homes or investing in REITs. Each type comes with its own risks and rewards. The key to making a successful real estate investment is research. You’ll want to find a good real estate professional to help you discover investment property opportunities, dig up off-book deals and handle the logistics of the investment.

Investing in Real Estate: Pros, Cons, and Pro Tips

Savvy real estate investors buy properties in up-and-coming neighborhoods and then wait for property values to rise. They also renovate or add value to the property to boost its potential. They can then sell the property at a higher price than what they bought it for. This is known as profit appreciation.

Another way to make money from real estate is by leasing or renting out space like storage units, parking spaces and apartments. Investors can even use their own primary residences to generate income by “hacking” the property and turning a spare room into an apartment, for example. However, owning physical property comes with a high upfront cost and is not very liquid, unlike stocks, so it’s important to consider your financial situation before making a commitment.