Pros and cons of investing in real estate
Last Updated on 4 February 2026 by Equipo Urbanitae
Historically, real estate has been one of the most solid ways to grow wealth—and yes, it’s possible to do it without buying a house. Despite market ups and downs, the real estate sector continues to attract investors due to its stability and because it offers something not all financial assets can: a tangible, useful, and durable asset. But not everyone is willing—or able—to buy a flat to rent it out. Fortunately, that’s no longer necessary.
The market has changed. Digitalization, new regulations, and the emergence of alternative investment vehicles have opened the door to other ways of participating in real estate. These methods allow for diversification, low capital entry, and a more agile and professional approach. In this article, we’ll explore the advantages of real estate investing, the risks to be aware of, and the different paths available depending on your goals and resources.
Benefits of investing in real estate
- Diversified portfolios and professional management. You gain access to sets of assets selected and monitored by specialized teams, with defined investment policies and risk controls. This reduces reliance on a single property and smooths out market ups and downs.
- Lower minimum investment and a streamlined process. You can start with moderate amounts and complete the onboarding in a few digital steps. This makes it easier to try the option and adjust your exposure as you gain confidence.
- Better liquidity than direct property purchases in many cases. Depending on the vehicle, you may be able to sell units or request redemptions within reasonable timeframes. This is useful if you want to align the investment with short- or medium-term goals.
Investment risks
- Returns are not guaranteed and values can fluctuate. Rental income and asset valuations can change with the cycle. You should be prepared for periods of more modest returns.
- Liquidity depends on the instrument. For listed vehicles, exits depend on market conditions; for unlisted vehicles, there is usually a schedule of redemption windows or set notice periods. It’s wise to plan your time horizon to avoid selling at the wrong moment.
- Costs can reduce net results. Management, depositary/custody, and platform fees take points off performance. Review the total cost in euros and compare it with alternatives of similar risk before deciding.
Why investing in real estate is still a good idea
One of the main appeals of real estate is its physical, long-lasting nature. These are not stocks or cryptocurrencies—they’re buildings, land, retail spaces, houses. Assets that always have some use value, and that, in times of inflation or uncertainty, offer a sense of security.
Additionally, they offer the potential for returns in two ways: regular income from rent and possible long-term appreciation. Even when not rented out, properties tend to increase in value over time if the location and type of asset are well chosen. On top of that, local markets often show high rental demand, especially in large cities, which helps sustain investor interest.
Moreover, today’s market has evolved. There are collective investment options that allow you to start with little capital, reduce exposure to risk, and delegate the entire management process.
What to consider before getting started
Still, real estate investing is not without its bumps. Like any investment, it carries risks. The most obvious is that returns are not guaranteed: prices can fall—as they did during the 2008 crisis—or the property may remain vacant for months. Additionally, investors must cover entry costs (notary, taxes, renovations), exit costs (capital gains tax, commissions), and ongoing expenses (maintenance fees, repairs, insurance, etc.).
Another key factor is liquidity. You can’t sell a property in 48 hours. If you need to recover your investment quickly, this might not be the best option—unless you choose more liquid formats like shares in real estate funds or REITs.
Finally, there’s the operational side. Becoming a landlord involves work: managing tenants, repairs, contracts, taxes… and not everyone wants—or is able—to take on that responsibility.
Ways to invest in real estate
For those who want to benefit from real estate without committing to full property ownership, there are now several alternatives. Some have been around for years; others are newer but quickly gaining traction:
1. Buy-to-Rent (the classic)
A property is purchased and rented out long-term. It provides regular income but requires active management and assumes ongoing maintenance costs. It’s the most traditional route but also the most capital- and responsibility-intensive.
2. Vacation Rentals
Higher potential returns, but also higher turnover, more effort, and dependency on local regulations. Profitable in tourist areas but prone to seasonal risk.
3. Off-Plan Purchases
Buying early—before or during construction—often means lower prices. If sold after completion, it can yield significant gains, though there’s a higher project execution risk.
4. Flipping
Buy low, renovate, and sell at a profit. Requires savvy, knowledge, and the ability to manage renovations. High return potential, but also higher risk exposure.
5. Real Estate Funds
Managed by professionals, these invest in various real estate assets (residential, commercial…) and distribute profits. They require low initial capital, allow diversification, and offer moderate liquidity.
6. REITs (Socimis in Spain)
The Spanish version of REITs. They invest mainly in rental properties and are required to distribute dividends. Publicly traded, they allow entry with little money and no direct management.
7. Real Estate Crowdfunding
Platforms like Urbanitae let you invest from as little as €500 in selected real estate projects: housing developments, land purchases, renovations… You can choose between debt projects (fixed interest) or equity projects (returns linked to project success). Everything is professionally managed, regulated by the CNMV, and fully transparent for investors.
8. Real Estate Crowdlending
Very similar to crowdfunding, but focused on lending. Instead of buying a share of the project, you lend money to the developer in exchange for a fixed return. Expected returns are lower, but so are the risks—and the outcomes are more predictable.
Conclusion: real estate is evolving—and so are the returns
Real estate investing remains a solid option, but it’s important to understand that it can now be done in multiple ways, without having to buy a home. Today’s market offers many more possibilities, tailored to different investor profiles, risk levels, and financial capabilities.
Understanding the pros and cons of each method is key to making smart decisions. And platforms like Urbanitae have made it possible for even those with tight budgets to start investing in real estate with confidence, transparency, and the backing of a professional team. Because in the end, smart investing isn’t about having a lot of money—it’s about knowing where, how, and with whom to invest.
Frequently Asked Questions
What is the usual minimum investment?
- Real estate crowdfunding and crowdlending: typical minimums between €100 and €500.
- Real estate funds for retail investors: common initial subscriptions from €100 to €1,000, depending on the fund manager.
- SOCIMIs (listed real estate companies): you enter by buying one share through a broker, so the minimum depends on the market price.
Which option offers the most liquidity without buying a property?
If your priority is exiting quickly, SOCIMIs are usually the most liquid because they are listed and you can sell on the market. Open-ended real estate funds allow redemptions within timeframes set by the manager, usually within days. With crowdfunding and crowdlending, it’s common to wait until the project closes or until payment milestones are reached.
What costs can reduce the final return?
- Real estate funds: management fee and depositary/custody fee.
- Crowdfunding and crowdlending: platform fees and vehicle-related expenses.
- SOCIMIs: broker fees for buying, selling, and custody.
- In all cases: review the total cost in euros and its impact on expected returns.
