How To Invest in Real Estate
Seven tips for affluent and high net worth investors
![]() | Written by Tom Yeung, CFA | CDFA Investment Advisor & Fund Manager, Jurnex Financial Advisors |
For affluent and high-net-worth families, real estate is more than just a place to park money. It’s a great way to get MORE from your investments. That’s because US real estate comes with unique tax and borrowing advantages, thanks to special government incentives. But there’s so much information out there, and it’s sometimes hard to know where to begin. So in this article, I’d like to cover from an affluent investor’s perspective: how to invest in real estate.

Real estate can be one of your greatest investments, thanks to numerous tax and mortgage benefits.
Why invest in real estate?
Most wealth managers focus on stocks, bonds, funds, and insurance products. That’s because wealth managers often work for brokerage firms or banks that ONLY offer those products.
Yet, real estate can be an even better asset than exchange-traded products. There are three key reasons:
1. Ability to borrow cheaply
Thanks to implicit government subsidies, the US mortgage markets offer unusually cheap and long-dated mortgages. Studies show that mortgage rates are at least 0.5% lower in the US than elsewhere in the world thanks to programs such as Fannie Mae and Freddie Mac.
2. Less efficient market
Thanks to market fragmentation, there’s a lot of hidden deals in real estate. More than 6 million homes are sold every year in the US. In comparison, the New York Stock Exchange (NYSE) lists just 2,800 stocks.
3. Favorable tax laws
In the 1930s, Congress enacted laws to promote home-ownership. Many of these deductions are still available today, including deductions for mortgage interest, repairs, travel, home office, depreciation, and insurance. Investors can also use 1031 exchanges to upsize their investments without triggering capital gains taxes.

The effects of Fannie Mae and Freddie Mac has given US home-buyers unique advantages
How to invest in real estate
The seven tips to supercharge your returns
Now that we’ve covered the importance of real estate investment let’s examine the seven tips on how to invest in real estate.
1. What your minimum investment return requirement?
Before you even start looking at real estate, I want you to take out a sheet of paper and write down your minimum required return. Typically, this will fall into a range of 7-16%. For most affluent and high-net-worth individuals, I recommend at least 12%.
Why bother creating a target?
The best investors will first determine WHAT they’re seeking before they start looking. That’s because they know that people who fail to write down their goals tend to move their goalposts.
I’ve seen many well-intentioned investors go into real estate investing without a plan and say, “well, that house seems ALMOST good enough.” Invariably, they end up settling for a second-rate investment. Why? The human mind is highly adaptable, for better or worse. Also, sitting on uninvested cash can be hard for the affluent and high net worth. That’s because those who have accumulated wealth have done so by putting their money and minds to work. Assets often feel like they *should* get invested to generate even more assets.
But investing your hard-earned cash into mediocre investments is a recipe for disappointing returns. Don’t do it!
Read about the importance of growing your assets

Having a well-defined required rate of return will help you stick to only making good deals.
2. What’s your Special Sauce?
If you want to know how to invest in real estate well, the #2 principle applies to any investment: you need a special sauce.
What’s a “special sauce?”
A special sauce is something you KNOW will generate excess returns. Successful businesses do this all the time by focusing on serving the right clients in favorable industries. Sounds familiar to your work?
In contrast, unsuccessful businesses tend to sell low-margin commodities in sunset industries. Such actions are a recipe for low returns and disappointment.
How to find a “special sauce” in real estate?
- Superior knowledge of local trends. Often, Peter Lynch’s “buy what you know” philosophy works well for real estate. The chances are good that you’re an expert in the neighborhood you live in, and that you’d know far more than any outsider.
- Access to cheap capital. The ability to use other people’s money comes in handy in real estate investing. General partners can often charge significant management fees to manage properties on behalf of limited partners.
- Ability to fix & flip. Access to high-quality contractors can make an enormous difference in your financial returns. Some become so successful in upgrading properties that they can immediately sell for profit to buy even more real estate.

“Special Sauce” often refers to something that makes a meal special. The right sauce can make your investments special too.
3. Do you qualify for special incentives?
Real estate comes with hundreds of particular provisions. Knowing your local, state, and federal incentives can add even more to your returns.
- Local. Local municipalities offer hundreds of incentives for redevelopment. In one example, the City of Manassas, VA, provided an economic development grant to the creators of Centerfuse, a co-working space in downtown Manassas
- State. Virtually every state offers special incentives to homebuyers. Virginia, for example, offers 25% tax credits for rehabilitating historic buildings. Since 1999, Virginia has given away $355 million to investors in historic homes
- Federal. The HUD (The US Department of Housing and Urban Development) offers multiple programs that can take up to 50% off list prices of homes in certain redevelopment neighborhoods.
The USDA also provides rural redevelopment programs that covers almost 90% of US land.
When it comes to finding special incentives for real estate, ask yourself if you’re willing to do the work. Those who are eager to work with historic houses, redevelopment zones, housing vouchers, or low-income housing will almost certainly qualify for special governmental incentives.

Knowing WHERE to look for special incentives is half the challenge.
4. Do you have a good sense of accounting?
I tell every investor this: know your numbers. While it’s fine to buy and sell short-term investments on instinct, it’s essential to know your math for long-run investing. Here are three examples of why accounting matters.
A. Choosing the optimal mortgage size
The larger your mortgage, the more house you can buy. And that usually means extra rental revenue. However, the higher loan-to-value ratio also means higher interest rates. Banks are wary about losing money, so they will penalize borrowers for taking out riskier mortgages.
As an investor, you need to find the sweet spot that minimizes your total payments while maximizing your overall return. Often, this requires getting dozens of quotes from different mortgage brokers and running projections to find the right mortgage. It can be a time-consuming process, but finding the right balance can save you $50,000 or more in the long-run.
B. What are your all-in expenses
Many novice real estate investors forget to account for all possible costs. Expenses, such as broker fees, taxes, maintenance, and HOA fees, can consume up to 25% gross revenue, depending on the property. Professional management fees can eat up an additional 10-15% if you require outside help.
C. Does the investment generate good cash flow?
If your real estate investment needs repairs or upgrades, how much cash will you need? Even though you can deduct improvements from the building’s taxable base, cash outflows today might not get repaid until years later.
If numbers aren’t your strength, don’t worry. The good news is help is available. Finding a qualified investment pro to analyze your real estate investment can help make sure you’re on the right track.
Read more about calculating housing affordability
5. Do you have an extended time-frame?
Having a long time horizon is key to supercharging your investment returns.
That’s because transaction fees are high. Even if your real estate investments earn 12% annually, if you’re always buying and selling houses, the 6-8% brokerage fees will eat into investment returns.
Alternatively, real estate gives you the ability to compound returns over time. It’s typical for families that bought housing in New York City in the 90s to find their investments multiplying 50x or more over 30 years.
Patience is key
Real estate investors should stay invested for at least 7 to 10 years. You can hold even longer. But if you do, I recommend you consider refinancing to extract profits at some point. Refinancing allows you to reinvest earnings into another real estate investment. Having a healthy mortgage is a GOOD type of debt that can increase your returns.

Like growing plants, real estate growth takes patience and a long-term view.
6. Know how much risk you’re willing to take
It doesn’t matter if your risk tolerance is high or low. You only have to KNOW your level and invest accordingly.
For example, compare two investors: one in their 50s and another in their 70’s. The younger investor can afford to buy in a redeveloping neighborhood awaiting revitalization. On the other hand, a seventy-year-old investor might consider purchasing an income-generating property to sustain his or her lifestyle. Neither investment is inherently better than the other because their risk level matches their owner’s needs.
What to invest in?
- High-risk tolerance. For those with higher risk tolerance, investments in redevelopment zones, low-income housing, or revitalizing neighborhoods can increase investment returns
- Low-risk tolerance. For those with lower risk-taking abilities, investments in income-producing real estate can be a better choice.
7. Know your “walk-away” conditions
Once a business deal is underway, there’s a strong temptation to stick with it, regardless of whether the outcome is favorable. That’s one reason why car salespeople start with basic models and up-sell you over time.
There’s a scientific reason for this. Humans suffer from consistency bias. Once we start saying “yes,” there’s a strong temptation to continue telling “yes” to appear consistent with past behavior.

Consistency Bias is a common cognitive bias that affects investor decisions.
You need a way to short-circuit this behavior. So before going into a real estate deal, write down the conditions that will cause you to “walk away” from the agreement. What’s the maximum price you’re willing to pay in a bidding war? Or when you’re shopping for a mortgage, what’s the maximum monthly payment you’ll accept before saying “no, thank you” to the broker?
The ability to walk away from deals can become a life-saver when it comes to avoiding bad deals. Problems often come up during the sales process, especially once home inspections start finding issues. Repair costs might seem minor at first, but they can add up and turn a great real estate deal into a poor one.
Don’t be tempted by bad deals
The problem with jumping into a low-quality real estate investment is that it takes money to get out. While you might suffer pennies of slippage in selling a dud stock, brokerage fees and closing costs can eat up to 6-8% of a property’s sale price.
Instead, the affluent and high net worth should exercise self-control with their money, just as they’ve done with their business. Because once the RIGHT real estate deal comes around, you want to be ready with the cash in hand to jump on that great investment.
Where to find more resources
If this seems like a lot of information, don’t worry. The great news is that help is available. That’s because here at Jurnex, we work with individuals and families just like you to make the most out of investing. I’ve helped invest client money for over a decade in the same old-fashioned way. And that’s to seek out great companies in great industries that can you can buy at a discount to their fair value. Sounds too simple to be true? Give me a call today, and I’ll show you that it’s still possible after all these years.
Read the Ultimate Guide to Real Estate Investing
About Jurnex
We are an independent registered investment advisor and asset manager. We have the securities backing of Charles Schwab, yet we retain our operational independence from any third party. This means you can have the confidence your money is safe with one of America’s best brokerages and still receive knowledge and advice from an independent firm focused on YOU.
Want to learn more?
Book an Initial Meeting