It has long been proven that the fastest and most sustainable way to build wealth is investing in real estate. Do you know that millionaires invest their money in real estate? A source uncovered that about 68% of global millionaires own at least one or two properties. And these properties they own could be a house, a rental property, or even a commercial property. This fact has always sparked the question, How does this promising way of building wealth really work? How to get started in real estate?
Before we start digging into how they work, let’s define what is actually real estate investing actually is.
To put it in simple words, real estate investing is like having a big treasure chest, but instead of gold coins, you have a building, or land, or a home. That chest can do two cool things:
- It can give you monthly gems (rent from tenants) — like you open the chest each month and pull out some coins.
- It can grow bigger over time (the value goes up) — like your treasure chest magically inflates, so when you sell it later, you get more coins.
So “real estate investing” means buying property (house, apartment block, land, commercial space) with the intention of making money from one or both of those things: rent (cash-flow) + appreciation (value increase). And bonus you might get tax perks-you can use other people’s money (like a mortgage) to boost your power, and real estate is something tangible (you can walk in it) rather than just numbers on a screen (like stocks).
In simple terms: “Owning a slice of the world’s bricks and land so that your money works while you sip your coconut by the beach.”
Let’s deep dive into different ways you can invest in real estate, the pros and cons, house flipping, and how to get started, even with little money.
Why Real Estate Can Be a Smart Investment
Amongst the broad opportunities available to invest, like the stock market and savings, why does investing in real estate sound the most exciting? Well, here are some essential reasons why:
- Tangible asset: When you invest in property, it means that you’re buying something you can touch, see and (in many cases) use. That gives many people comfort in contrast to stocks (which are shares in companies) or savings (which sit in the bank).
- Cash-flow potential: A property can generate rental income. So you don’t just hope for value to go up; you may get a regular income too.
- Leverage: You can borrow (a mortgage) to buy property, meaning your own capital can control a larger asset. That amplifies returns (and risks).
- Inflation hedge: Because property values and rents tend to rise over time (in many markets) with or above inflation, some people see it as a way to protect purchasing power.
- Diversification: If you already have stocks/savings, adding property gives you a different type of asset (real rather than financial) and a different risk profile.
- Psychological/behavioural: Many people understand “owning bricks and land” more intuitively than “owning shares”. It may feel more secure.
In real estate investing, there are terminologies you have to understand. Not just the definition, but also the concept and how it works around your investment.
- The first one is cash flow = “Money coming in minus money going out” from an investment. In the context of rental property, for example:
Money coming in = the rent you receive each month.
Money going out = mortgage payments, maintenance, taxes, insurance, vacancy periods, property management fees, etc.If rent minus all those costs is positive, you have positive cash flow (you’re ideally getting extra money in your pocket each period). If it’s negative, you have a cash flow drain (you’re paying out more than you’re receiving) until something improves.
- And then there’s equity. Equity means how much property you own. For example, you buy a house for USD 100,000, and you have a mortgage that you owe USD 70,000. Your equity in that house = USD 100,000 minus USD 70,000 = USD 30,000.
Over time, as you pay down the mortgage (so what you owe goes down) and/or the value of the property goes up, your equity rises. - Last but not least, you have leverage. Leverage is when you’re using borrowed money (like a mortgage) to buy a property.
In property: Imagine you have USD 20,000, you borrow USD 80,000 to buy a USD 100,000 property (so you’re using 20% of your own capital). That’s leverage; it means that your 20k controls 100k of property.
Benefits: If the property value goes up by, say, 10 % (to 110k), your 20k has turned into maybe 30k equity (100k → 110k minus still 80k debt = 30k) i.e. a 50 % return on your 20k.
Risks: If the property value falls, losses are magnified too. If the value falls by 10% (to 90k), your equity might become 10k (90k minus 80k debt), i.e. you’ve lost 50% of your 20k.
Over the long run, many studies show housing prices tend to grow faster than inflation in multiple countries, but results vary by location and cycle. A study of 15 OECD countries from 1980 Q1 to 2022 Q4 found a positive long‐run relationship between housing prices and core inflation.
Property can outperform, but it’s not magic — success still depends on smart buying, good management, and understanding the risks.
How to Get Started in Real Estate
Here’s where we’ll get clear. We’ll answer the question on how to get started in real estate.
In real estate investing, you’ll need to know the basics. Here are some basic things you can learn about how to get started in real estate.
- Local Market
To learn the local market, you can start by doing the following simple tasks:
- Check property sites like Rumah123, OLX, Marketplace, and local agent sites.
- Track prices and rental rates for the same neighbourhood over a few weeks.
- Visit the area and count “for rent” signs, see how many villas/houses are occupied.
- Ask local agents for market overviews and rental performance reports.
- Check tourism numbers (for short-stay areas like Bali).
Along the way, you will see the pattern of what’s expensive, what rents quickly, and what guests/tenants want. - Basic laws about owning and renting property
Here’s a simple rule: Understand ownership rules before you touch a property.
- Visit your local land office website (ATR/BPN in Indonesia).
- Read basic guides from notaries, legal firms, or trusted real estate agencies.
- Ask a lawyer or notary to explain ownership types (Hak Milik, HGB, leasehold, nominee risks, etc.).
For rentals, read government rules on tourism rentals, zoning, and licensing (e.g., OSS/NIB/Pondok Wisata in Indonesia).
- Taxes linked to property ownership
How taxes connect to property ownership. Taxes affect:
Buying → transfer tax, stamp duty.
Owning → yearly property tax.
Renting out → income tax on rental profits.
Selling → capital gains tax.
Taxes decide how much money you actually keep, so you need them in your calculations from Day Here are reliable, official places to check information (for Indonesia + general):
Indonesia (official):
- Ministry of Agrarian Affairs & Spatial Planning / BPN (land & ownership): https://www.atrbpn.go.id
- OSS Indonesia (business licensing + rental permits): https://oss.go.id
- Directorate General of Taxes (property tax, rental income rules): https://www.pajak.go.id
General / International:
- OECD Housing & Finance Notes: https://www.oecd.org/housing/
- IMF Real Estate Market Analysis: https://www.imf.org
- Investopedia for definitions (simple but reliable): https://www.investopedia.com
Check Your Financial Health
Before putting a huge amount of your money into a real estate investment. It’s superbly important to check your financial condition beforehand. Your credit score will be essential to this matter. A good credit score will leverage your borrowing options. The higher the score, the bigger the money you can get (for a loan). The next thing is to build a safety net before investing. It’s always good to have an emergency fund come in handy to help you just in case.
Real Estate Investing Tips for First-Timers
It’s normal to feel confused for a first-time investor. To help you navigate, you can use these real estate investing tips:
- Start small
Securing a simple deal that offers steady growth along the way is preferable to going straight to a big investment. By starting small, - Know your numbers
It’s best for you to always check your numbers. This includes checking the rent, the costs of renovation, and the possible profit your property would make. When you can provide a proper calculation, you can also have a backup plan for additional costs that might arise along the way. - Research the area
The most wanted properties are those that have proximity to public spaces. These include workplaces, schools, public transportation stations, and hospitals. Take your time to research areas that have most of these places nearby. - Plan for repairs
Owning a property is a lifetime project of maintenance. Nothing lasts forever, and neither do your property’s essentials. Roofs, pipes, and even appliances need to be regularly changed or repaired to keep your property in top condition. - Expect empty months
In owning rental property, occupancy is not going to be high year-round. Be ready for this possibility. Lower occupancy rate also does not mean your property is not performing; it’s just that everything has its time regarding the circumstances. - Think long term – real estate usually works best over years, not weeks.
You can’t expect results in just a few weeks after investing. Real estate investment takes years to show steady growth (but worry not, this growth is guaranteed). As long as you follow the steps and conduct our research properly, your steady stream of passive income has already been waiting.
Rental Property Pros & Cons
How Rental Property Works
When you buy a property with the intention of renting it out, you’re also aiming for this property to give you monthly profit and long-term value. Let’s take a quick overview at the rental property pros & cons:
Pros of Rental Property
- By renting your property, you’ll get a steady monthly income (cash flow). However, this can happen only if you keep your property in top condition. The better your property is, the higher the demand, thus, the higher the monthly profit.
- Suppose you buy a property with the money you borrowed, renting it out is one of the effective ways to pay off this loan while also getting profits from the monthly/yearly rental.
- Property value will always increase (due to inflation) or the location factor.
- You can also get tax benefits from renting out your property (this depends on which country your property is located in).
Cons of Rental Property
- Occupancy rates are influenced by lots of factors. For properties located in a tourism area, the low tourism season may affect monthly income.
- Be aware of the unexpected repairs and maintenance because they can get expensive.
- Dealing with tenants can be stressful and time-consuming. Make sure you learn your way through it.
- Over the years, property prices have fallen.
- Interest rate changes can make loans more expensive.
House Flipping: Fast Profit or Fast Trouble?
What House Flipping Actually Is
- The next one is house flipping. Some may ask what house flipping is and what house flipping involves. Simply put, house flipping is when you find a property below the market value and needing renovation, purchase the property and improve the condition and sell it for profit.
It’s more intensive than being a landlord because you are more active: you’re transforming property rather than just renting it. It involves greater risk (renovation cost overruns, delays, market downturns) but also higher potential upside (you capture value creation quickly). It can be sexy (before/after photos, big profit), but it requires strategy, good contractors, contingency for surprises, and timing.
When Flipping Can Work
However, doing house flipping does not work overnight. This has to follow certain steps for it to work effectively. Consider these factors before doing a house flip.
- Strong demand in the area. Research the local market and learn what’s trending, what people are looking for. By knowing this, you can narrow down what kind of property to find (and provide).
- Secure a good deal when purchasing a house. If you can get a good discount on the purchase, it’s possible to earn a lot more after you’re done renovating.
- Always make sure you understand renovation costs.
For instance, you bought a small fixer-upper house for $100,000. And then you spend about $5,000 on closing costs, then put $25,000 into repairs like painting, fixing the kitchen, updating the bathroom, and making it look fresh.
While you’re working on it, you also pay $3,000 for holding costs, things like mortgage payments, electricity, water, and insurance. When it’s ready, you pay around $10,000 for selling costs (agent fees, staging, and taxes). So before you even sell the house, your total cost is about $143,000.
If you sell it for $170,000, your profit is roughly $27,000, but if the market drops, repairs take longer, or costs go higher, that profit can shrink fast.
Big Risks of Flipping
With big actions also come big risks and responsibilities. To prepare you better, here are some possible big risks when doing house flipping.
- Sometimes, when you want to improve the condition of the house, you think everything needs changing. This will cause renovation costs to go over budget. Thus, making you spend more before even earning any profits.
- Market changing before you sell. This can happen unexpectedly. The real estate market is ever-changing; this change can cause good and bad things for your property. When the market changes, the trend shifts, and your property will lose the probability of being at the top of the demand pyramid.
- Holding costs like loan payments, taxes, and utilities.
- Stress and time commitment.
Flip projects carry execution risk (renovations, timeline), market risk (prices, demand), and financial risk (costs, leverage). The data show margins are shrinking and fewer markets are forgiving. If you’re thinking of flipping, treat it like a high-risk business, not a guaranteed win.
How to Invest in Property With Little Money
As interesting as it gets, many investors will always ask the same first question: how to invest in property with little money?
House Hacking
House hacking means you live in one part of a property and rent out the other parts so that your housing cost is reduced (or even eliminated).
What is house hacking? It’s when you live in one part of a property and rent out the other part to reduce the cost (or even eliminate it).
For example, you buy a duplex (which is a two-unit building), you live in one unit and rent the other. This can also work with buying a single-family house and renting the extra room you have, that is, once a basement.
The idea is you “hack” your housing cost by turning part of your home into a rental.
Real Estate Investment Trusts (REITs)
A Real Estate Investment Trust (REIT) is a company that owns, operates, or finances income-producing real estate—things like apartment buildings, shopping malls, offices, and warehouses.
How it works:
- Investors buy shares in the REIT (just like you buy shares in a company).
- The REIT collects rents or other income from its properties and distributes at least 90% of its taxable income to shareholders (depending on jurisdiction) as dividends. Because you’re investing via shares rather than buying a property directly, you get real estate exposure with much less capital and less hands-on management.
Partnerships and Joint Ventures
Partnership means a long-term business relationship where two or more parties share responsibilities, profits, and risks on an ongoing basis. While a Joint Venture (JV) is a more specific, often short-term collaboration for a single project (like developing a property), where each party contributes something (capital, expertise, property), and the venture ends when the project ends.
Teaming up: one brings money, the other time/skills + need for written agreements
Teaming up in real estate can mean: one partner supplies the capital (money), the other supplies skills/time (finding deals, managing, renovating, leasing). This arrangement leverages both assets: money + expertise.
Important: you must have a written agreement delineating each person’s role, contribution, profit split, decision-making, exit strategy, and liability. Without that, you risk misunderstandings, disputes, or worse. Legal and practical clarity upfront protects both parties.
Creative Approaches (Use With Care)
Here are two creative ways to invest when you don’t have massive capital:
- Seller financing: Instead of going to a bank for all the money, you buy a property and the seller agrees to lend you part (or all) of the purchase price under agreed terms. This can reduce traditional mortgage requirements and open possibilities when conventional financing is tough.
- Rent with option to buy (lease-option): You lease a property (rent it) with an agreement that gives you the option (but not the obligation) to buy it later at a pre-agreed price or formula. During the lease period, you may apply part of the rent toward purchase. It gives you time to accumulate capital or wait for market conditions while “locking in” the purchase option.
These creative strategies require careful legal structure, good terms, realistic exit plans and understanding of risk (e.g., what happens if you decide not to buy, market moves, seller problems).
Choosing a Real Estate Investment Strategy
Now that you have learned the basics, it’s time for you to set up the best real estate investment strategy for you.
Match Strategy to Your Time and Risk Level
First things first, it’s best to match your time and risk level when investing. Compare these three simple paths:
- Buy-and-hold rentals
For those who want something more steady and not too dramatic, a buy-and-hold rental path might be ideal. Renting a property is like planting a slow-growing money tree. When you buy a house and rent it out, the monthly rent eventually pays off your mortgage (and even adds a bit more to your pocket). When property values go up, the monthly rent usually goes up in hand (thus generating more profit). - House hacking
For those who want to earn extra cash but have limited resources, house hacking is ideal. This is like the shortcut strategy. As mentioned before, house hacking is when you rent out part of your house while still living in it. This allows you to have a cheaper life, save faster and also learn about real estate investing. - Flipping or short-term trading
If buy-and-hold rentals and house hacking are not really what you’re seeking, you can opt for house flipping or short-term trading. This is like the fast–paced and high-energy strategy. You simply buy something and improve it, and sell it for more than you paid.It sure can make bigger profits, but it also comes with bigger risks. Make sure to do your homework properly before you jump straight into this option.
Simple Decision Framework
Not sure which strategy matches your personality? Answer these three simple questions:
- How much time do you have each week?
- Very little time (1–3 hours/week) → Buy-and-hold rentals
- A bit of time (3–7 hours/week) → House hacking
- Lots of time (10+ hours/week) → Flipping
- Real estate takes energy. Match the strategy to the time you can realistically give.
- How long can your money stay invested?
Years → Rentals
Months → Flipping
A mix → House hacking
If your money needs to grow slowly and safely, rentals win. If you want fast turnaround and understand risks, flipping fits better.
- How well do you handle stress?
- Low stress tolerance → Rentals (stable, predictable)
- Medium tolerance → House hacking (you live near your tenants)
- High tolerance → Flipping (budget surprises + deadlines)
Your emotional comfort matters just as much as the numbers.
Common Mistakes New Investors Should Avoid
To avoid falling for these beginner’s traps, here are some things you should keep in mind:
Mistake 1: Overpaying Because They Skip Research
Don’t forget to always, always look at the recent prices, rents, neighbourhood trends, of the condition of the home. Otherwise, you will be paying more for unnecessary repairs and will go over budget.
Mistake 2: Ignoring Hidden Costs
Beware of these hidden costs that actually will take up lots of your money: repairs, taxes, insurance, and property management.
Mistake 3: Hoping Prices Just ‘Go Up’
Keep yourself informed with data-driven information. Again, the market is ever-changing, so you’ll have to keep adjusting to what’s in demand recently.
Mistake 4: Not Checking Local Laws
Airbnb rules, zoning laws, and rent control can totally influence your investment journey. Pay attention to the details.
Mistake 5: Believing in ‘Guaranteed’ Returns
There is no such thing in real estate. If someone promises perfect results, walk away.
Let’s take a look at these examples to understand it better:
Example 1 — Maya | Example 2 — James |
Maya bought a condo planning to Airbnb it, but she forgot to check the building rules. Short-term rentals were banned, so her income dropped almost to zero. | James bought a flip but didn’t check the roof. One surprise $8,000 repair wiped out half his profit. |
Simple Action Plan to Get Started
Suppose you have decided to invest in real estate. To which you have chosen your path (whether it is buy and hold rentals, house hacking, or house flipping). Here is a 4-week plan to help you navigate your journey better.
Week 1: Learn the Basics
Get familiar with terms like mortgage, equity, cash flow, interest rate, cap rate, and appreciation (some of these terms are explained in this article). To help you understand better, use neutral sources like the government housing websites, which you can easily access (not hype channels).
Week 2: Study One Local Area
Narrow down the research. Pick one neighbourhood and study the rental and sales prices. Pay attention to the changing trends, you might find the gap in what people look for and shoot your shot by providing what caters to most people’s needs in the market.
Week 3: Talk to Licensed Pros
Chat with one agent, one mortgage broker, and maybe one financial planner. Ask simple questions like:
- ‘What price range is common here?’
- ‘What are typical rents?’
- ‘What loans are available for beginners?’
You are gathering information, not committing to anything.
Week 4: Choose Your Starter Strategy
Decide on one direction, rentals or house hacking, which is ideal for beginners. Then set a savings plan: even $100 per month builds your investment fund.
Conclusion
All in all, real estate investing should fit in your life and not the other way around. Hence, the options to adjust this to what resonates the most with you. If you’re short on cash but still want to invest, house hacking is ideal. The same goes for buy-and-hold rentals that might take a lot more process but will earn more profits. And then there’s house flipping, which is good for those who love projects and risk-taking.
These options are available and are doable for first-time investors. But one thing that should not be left out of the discussion is, you need to have a strategic plan. Alongside a plan, make sure to always double-check advice with trusted sources. Track whatever needs to be done and confirmed.
Last but not least, give it a go. You don’t need to be rich to start, but with a plan and thorough research, you can navigate your resources to a steady stream of passive income.
