Investing in real estate has long been one of the most proven strategies for building wealth, offering both stability and long-term growth potential. However, the landscape of real estate investing is evolving, with new opportunities emerging through crowdfunding platforms. Rod Khleif, a seasoned real estate investor and mentor with decades of experience, recognizes that as we move into 2025, investors are faced with a crucial decision: Should they invest in traditional real estate, purchasing and managing properties directly or opt for crowdfunded real estate, where multiple investors pool funds into properties or real estate projects? Each approach comes with its own set of advantages and challenges, making it essential for investors to assess their financial goals, risk tolerance and level of involvement before deciding which strategy best suits their needs.
Understanding Crowdfunded Real Estate
Crowdfunded real estate allows investors to participate in real estate projects with lower capital requirements. Platforms such as Fundrise, RealtyMogul and CrowdStreet provide access to residential, commercial and mixed-use properties, eliminating the need for direct property management.
Benefits of Crowdfunded Real Estate
Lower Capital Requirement – Investors can enter real estate markets with a fraction of the capital required for traditional property purchases.
Diversification Opportunities – Investors can spread their funds across multiple properties and markets, reducing overall risk.
Passive Income Potential – No hands-on management is required, as professionals handle property operations and maintenance.
Access to Exclusive Investments – Some platforms provide institutional-grade investment opportunities that are typically unavailable to individual investors.
Liquidity Options – Certain platforms offer secondary markets where investors can sell shares before the investment term ends, enhancing flexibility.
Challenges of Crowdfunded Real Estate
Limited Control – Investors have little to no say in property management decisions.
Platform Fees – Crowdfunding platforms charge management and transaction fees, which can reduce overall returns.
Longer Investment Horizons – Some investments require multi-year commitments with limited withdrawal options.
Market Dependency – Returns are influenced by overall real estate market performance and platform management decisions.
Understanding Traditional Real Estate Investing
Traditional real estate investing involves purchasing physical properties, either for rental income or appreciation. Investors retain full control over management decisions, allowing them to directly influence cash flow, maintenance and improvements.
Benefits of Traditional Real Estate
Full Ownership and Control – Investors make all decisions related to the property, from tenant selection to renovations.
Leverage Opportunities – Using mortgage financing allows investors to control a larger asset with a smaller initial investment.
Tangible Asset Security – Physical ownership provides a sense of security, as investors hold a real asset with intrinsic value.
Tax Advantages – Traditional real estate investors can benefit from deductions on mortgage interest, depreciation and property-related expenses.
Long-Term Wealth Accumulation – Direct ownership can lead to higher appreciation potential and long-term financial stability.
Challenges of Traditional Real Estate
High Capital Requirement – Purchasing properties typically require a substantial down payment and closing costs.
Active Management Responsibilities – Investors must handle tenant relations, property maintenance and financial oversight.
Market Volatility Risks – Property values and rental demand fluctuate based on economic conditions.
Illiquidity – Selling a property can take time, making it less liquid than some other investment options.
Comparing Returns: Crowdfunded vs. Traditional Real Estate
A well-planned investment approach ensures financial stability and growth. Rod Khleif stresses, “The best deals aren’t always listed—they’re found through relationships.” Strong networking with brokers, property owners and investors often uncovers hidden opportunities that may not be accessible through conventional channels. By leveraging these connections, investors can gain a competitive edge in both crowdfunded and traditional real estate markets.
1. Cash Flow Potential
Traditional real estate often provides consistent rental income, but it requires active management and upfront costs. Crowdfunded real estate offers passive income but may have delayed distributions based on project timelines.
2. Appreciation and Equity Growth
Direct ownership in traditional real estate allows investors to build equity and benefit from property appreciation over time. Crowdfunded investments may also be appreciated, but investors do not own the property outright and may have limited exit strategies.
3. Risk and Diversification
Crowdfunded real estate provides built-in diversification by allowing investors to spread funds across different properties and markets. Traditional real estate carries greater risk per property but offers more control over risk mitigation strategies.
4. Accessibility and Ease of Entry
Crowdfunding platforms enable investors to start with as little as a few hundred dollars, while traditional real estate requires significant capital for down payments, maintenance and unexpected costs.
5. Liquidity Considerations
Traditional real estate is highly illiquid, as selling a property takes time and transaction costs can be high. Some crowdfunded platforms offer secondary markets, providing investors with an opportunity to sell shares early.
Which Strategy Offers Better Returns in 2025?
Choosing between crowdfunded and traditional real estate investing ultimately comes down to an investor’s financial objectives, risk tolerance and desired level of engagement. For those who prioritize passive income, broad diversification and a lower barrier to entry, crowdfunded real estate offers a hassle-free way to gain exposure to the market without direct management responsibilities.
Conversely, investors who value full ownership, hands-on property management and the potential for tax advantages may find traditional real estate a more rewarding long-term strategy.
Making the Right Choice
Economic trends, evolving technologies and shifting investor priorities will drive the future of real estate investing. As market conditions fluctuate, investors must remain adaptable and informed to make strategic decisions that align with their financial goals. Whether opting for traditional real estate investing or exploring the opportunities in crowdfunding, understanding risk exposure and potential rewards is key.
With the increasing adoption of innovations like tokenized real estate, blockchain-secured transactions and AI-driven market insights, investors can leverage data and technology to enhance decision-making. Staying ahead of regulatory changes, tax implications and financing options will also play a crucial role in ensuring long-term success.
While crowdfunded and traditional real estate investments offer compelling advantages, the right choice depends on an investor’s risk tolerance, desired level of involvement and financial objectives. By carefully analyzing investment opportunities, diversifying portfolios and maintaining a disciplined approach, real estate remains one of the most effective tools for building long-term wealth in 2025 and beyond.
