5 Top Real Estate Investment Strategies With Highest Success Rates In 2025

The numbers don’t lie: According to CBRE’s latest industry survey, nearly three-quarters of commercial real estate investors plan to increase their asset purchases in 2025 compared to last year. This surge shows investors are jumping back in with both feet.

From our experience, the most successful wealth-builders don’t just follow the crowd; they strategically choose the right investment strategies based on their goals and resources.

That’s why understanding the top real estate investment strategies has never been more critical, especially as the Federal Reserve policies continue to shape lending conditions.

This article breaks down the five most successful approaches that are actually working right now, their typical returns, and how to choose the one that fits your financial situation.

Looking for guidance after you’ve made your investment? Our incoming comprehensive guide on exit strategy planning for different commercial real estate market conditions provides the perfect next step.

It builds upon the foundation of commercial real estate exit strategies covered in our main resource hub. But first, let’s focus on getting you into the right properties with strategies that have been proven to work in today’s market.

Read on!

Short Summary

• Real estate investing remains a smart financial move in 2025, offering stability compared to stock market volatility
• Buy and hold rental properties consistently deliver 6-10% annual returns through both cash flow and appreciation
• Commercial real estate investments provide higher potential returns (6-12%) but require more expertise
• Real estate investment trusts (REITs) offer accessible entry to real estate with 8-12% average annual returns
• House hacking helps first-time investors reduce housing costs while building equity
• Real estate crowdfunding platforms allow investors to pool resources for previously inaccessible opportunities

Why Real Estate Investing Remains A Smart Financial Move

Wondering where to put your money in today’s crazy economy? Let’s chat about why brick-and-mortar investments still make so much sense in 2025. Our team has seen countless investment decisions play out over market cycles, and real estate continues to shine.

Weathering Market Storms

While the stock market can swing sharply with each title, realty has shown more stability. For example, during the late 2024 tech sell-off, the Nasdaq Composite dropped about 10.4% in a quarter, and major tech stocks fell between 13% and 45% from their highs over several weeks. 

In contrast, property values in most U.S. metro areas continued to rise, with only a small minority (18 out of 384) seeing year-over-year price declines, the largest being 4.9%. Nationally, home prices increased by about 5.4% in 2024.

One investor held both stocks and a small apartment building. Guess which one let him sleep at night?

Tax Benefits You Can’t Ignore

The IRS practically asks you to invest in real estate. Property taxes, mortgage interest, and depreciation all create write-offs that other investments simply don’t offer.

For instance, a $500,000 investment property might generate $18,000 in paper losses through depreciation alone, offsetting your taxable income from other sources. Pretty sweet deal!

Building Wealth Through Multiple Paths

Real estate investing works because it builds wealth in three ways simultaneously: rental income, loan paydown, and capital appreciation.

One of our favorite examples: a duplex purchased for $350,000 that generated $200 monthly rent profit while appreciating 4% annually. After five years, the owner had gained nearly $100,000 in equity while enjoying stable income.

Making Smart Moves In 2025

The Federal Reserve has finally stabilized rates, making this an excellent time to jump in. The most successful real estate investors we know aren’t waiting; they’re choosing from these five proven strategies:

1. Buy-and-hold rental properties (single-family homes)
2. Commercial real estate acquisitions (small office buildings)
3. Real estate investment trusts (REITs) for passive participation
4. House hacking to eliminate personal housing costs
5. Real estate crowdfunding platforms for fractional ownership

Each approach offers different levels of involvement and potential returns. The right choice depends on your goals, timeline, and appetite for management.

Top Real Estate Investment Strategies With Highest Success Rates

Let’s get into the strategies that consistently deliver results for investors. These five approaches have proven track records across different market conditions, each with unique advantages for different types of investors.

Our team has vetted these based on long-term performance data and real-world outcomes.

Strategy #1: Buy And Hold Rental Properties

The “boring” strategy that creates millionaires! Buy and hold remains the gold standard in real estate investing because it simply works. Many real estate investors who stick with this approach for 10+ years report meeting or exceeding their financial goals.

In fact, the S&P/Case-Shiller U.S. National Home Price Index shows a strong upward trend over most 10-year periods.

Single family rental property investments typically yield 6-10% annual returns when factoring in both rental income and appreciation. These properties tend to have lower vacancy rates and attract longer-term tenants.

A classic example: a three-bedroom home in a growing suburb purchased for $275,000 generating $2,000 in monthly rent.

Multifamily property investments scale these benefits. A fourplex might cost $650,000 but produces four rental income streams totaling $4,800 monthly. The math gets compelling quickly!

The process follows these steps:

• Research locations with strong population growth and job opportunities
• Connect with a knowledgeable real estate agent familiar with investment properties
• Secure conventional loans with competitive rates (typically 20-25% down payment)
• Calculate all expenses including property taxes, insurance, maintenance, and vacancies
• Ensure positive cash flow after mortgage payments

Properties in the $200,000-$400,000 range often hit the sweet spot for balancing purchase price, management complexity, and returns. Often, properties requiring modest renovations outperform turnkey properties by 2-3% annually in total returns.

Most successful investors eventually hire a property manager (typically 8-10% of rent collection), which transforms this into more passive income.

This strategy works because it combines steady cash flow, loan paydown, tax advantages, and capital appreciation in one package.

Strategy #2: Commercial Real Estate Investments

Commercial real estate offers higher potential returns but requires more expertise. Average annual returns range from 6-12%, with successful investors reporting even higher figures in growing markets.

Unlike residential properties, commercial properties operate on different metrics:

• Valued based on income produced rather than comparable sales
• Lease terms typically span 3-10 years (versus annual for residential)
• Triple-net leases often pass expenses to tenants
• Higher entry costs but potentially greater stable income

Office buildings and retail spaces perform differently depending on location and economic trends. Since the pandemic, suburban office buildings with flexible configurations have outperformed traditional downtown spaces.

Consider a small medical office complex: with specialized tenants who rarely move, these can provide remarkable stability.

Also, don’t underestimate the benefits of working with specialized commercial real estate brokers. The right advisor helps navigate complex valuation models and identifies properties with upside potential.

A standard approach is to look for properties with current returns of 5-6% that have vacancy or management issues you can improve.

The tax advantages here are substantial. Cost segregation studies can accelerate depreciation, creating significant tax benefits in the early years of ownership.

This strategy works best for investors with higher net worth who can leverage relationships with lenders for favorable financing terms.

Strategy #3: Real Estate Investment Trusts

Real estate investment trusts (REITs) offer an elegant way to participate in large-scale real estate without the headaches of direct ownership. These securities allow investors to own portions of real estate portfolios managed by professionals.

Publicly traded REITs deliver average annual returns between 8-12% long-term, combining steady income (through required dividend distributions) with growth potential. They trade on major exchanges, providing liquidity that physical property can’t match.

REITs fall into several categories:

• Equity REITs (own and operate income-producing real estate)
• Mortgage REITs (finance real estate)
• Hybrid REITs (combine both approaches)

Each sector performs differently through economic cycles. Healthcare REITs, for example, provided remarkable stability during the pandemic while hotel REITs struggled.

Unlike physical real estate, REIT investments can be started with as little as $100 through mutual funds or ETFs, making them accessible entry points. They also eliminate the need for securing financing or managing properties.

During market volatility, REITs typically fall between stocks and bonds in performance. They’ve historically provided excellent inflation protection while offering better liquidity than physical property.

For passive income seekers, REITs must distribute 90% of taxable income to shareholders, resulting in attractive dividend yields averaging 4-6% currently.

House Hacking For First-Time Investors (Strategy #4)

House hacking has revolutionized entry-level investing, with success rates above 90% for committed practitioners. The concept is brilliantly simple: purchase a property, live in one portion, and rent the others to offset your housing costs.

A classic approach involves buying a duplex, living in one unit and renting the other. For example, a $350,000 duplex might have a $2,100 monthly mortgage, while the second unit rents for $1,800. Result? You live for $300 monthly while building equity.

The financial advantages are substantial:

• Lower down payment requirements (as low as 3.5% with FHA loans)
• Reduced personal finance strain through rental offsets
• Building equity through tenant-assisted payments
• Learning property management firsthand

The most successful house hacking investors use the strategy as a stepping stone. After living in the property for 1-2 years, they often execute a cash out refinance to extract equity for the next property, creating a repeatable wealth-building system.

The strategy works exceptionally well for properties that offer clear separation between units. Duplexes, homes with basement apartments, and small multifamily buildings (2-4 units) deliver the best results and minimize tenant friction.

Strategy #5: Real Estate Crowdfunding Platforms

Real estate crowdfunding platforms represent the newest entry on our list, allowing multiple investors to pool resources for real estate projects previously available only to institutions or the wealthy.

These platforms connect investors with developers needing capital for specific projects. Returns vary widely based on risk profile:

• Debt investments: 7-12% annual returns, lower risk
• Equity investments: 10-20%+ potential returns with higher risk

For accredited investors (those meeting SEC wealth requirements), the options are extensive. Many platforms now offer options for non-accredited investors as well, though with more limitations.

The minimum investments typically range from $500-$25,000 depending on the platform and project type. Popular real estate projects include:

• Multifamily renovations
• Self-storage facilities
• Commercial properties development
• Residential fix-and-flips

Technology has dramatically improved due diligence capabilities, with sophisticated platforms offering 3D virtual tours, comprehensive market analysis, and transparent developer track records.

This has pushed success rates higher, with the top platforms reporting 93-97% of projects meeting or exceeding projected returns.

The key advantage here is accessing real estate sectors that would otherwise be out of reach for individual investors. A recent industrial property project, for instance, delivered 22% annualized returns over three years – performance typically reserved for institutional investors.

How To Choose The Right Strategy For Your Financial Situation

Not all real estate strategies suit every investor. The key is matching your resources, goals, and lifestyle to the right approach.

We’ve seen remarkable success stories across all five strategies, but the happiest investors are those who selected approaches aligned with their unique circumstances.

Align With Your Financial Goals

Start by clarifying what you want to achieve:

• Building long-term wealth? Buy and hold strategy typically works best
• Need immediate regular income? Consider REITs or cash-flowing rentals
• Want to minimize taxes? Physical real estate offers the most write-offs
• Looking to diversify an existing portfolio? REITs or crowdfunding platforms can complement stocks

Your personal finance situation dramatically influences which strategy makes sense. Investors with under $50,000 to invest might start with REITs or crowdfunding, while those with $100,000+ can explore single family rental property or house hacking opportunities.

Timeline Considerations

Be realistic about your time horizon. Real estate investing rewards patience differently across strategies:

• REITs can be bought/sold daily but perform best over 5+ year holds
• Rental properties typically need 5-7 years to overcome transaction costs
• Commercial real estate investments often target 7-10 year holding periods
• House hacking might involve 1-2 years living in the property before repeating

A client approaching retirement chose REITs for their liquidity, while a 30-year-old selected rental properties for maximum long-term growth potential. Both made the right choice for their situation.

Professional Guidance

Working with a financial advisor experienced in real estate can optimize your results. They can help with:

• Tax planning strategies specific to real estate
• Structuring ownership to maximize liability protection
• Balancing real estate holdings with other investments
• Guidance on 1031 exchanges to defer capital gains tax

Your tolerance for management responsibilities matters too. If you hate the thought of 2 AM maintenance calls, direct ownership might create more stress than wealth.

The most successful investors we know match their strategy not just to their financial goals but also to their temperament and interests.

Final Thoughts

Ready to jump into real estate? Start small, learn constantly, and expand gradually. Many investors make the mistake of analysis paralysis when they should be taking that first step into the market.

The strategy you choose matters less than simply beginning your journey. Remember, every real estate millionaire started with a single property or investment! Act this week—research one local neighborhood’s rental rates or download a REIT investing app.

Just a little disclaimer, we might have been a little bit too positive in this guid. After all, if real estate were easy, everyone would be successful doing it. 

That said, real estate is actually quite accessible and is a good way towards financial freedom.

Check out our homepage for free downloadable property analysis worksheets that make evaluating your first potential investment simple and straightforward.