• Buying rental properties is a popular way to get into real estate investing, but it's not passive.
• Experienced real estate investors are shifting from rentals to more passive strategies.
• Two popular, more hands-off strategies are real estate syndications and private money lending.

A popular way to get started in real estate investing is by buying a rental property. After finding and closing on a deal, investors place a tenant and ideally collect more in rent than they owe each month on the mortgage and expenses. Whatever is left over is cash flow.

It can be a lucrative income stream, but real estate investors are upfront about one caveat: It's not passive. Owning rentals means dealing with tenant turnover, maintenance requests, vacancies, repairs, and, in some cases, evictions.

That's why some experienced investors are using rentals as a launching pad. Once they've built capital and experience, they're shifting to more passive strategies that allow them to keep exposure to real estate without taking on the day-to-day responsibilities of being a landlord.

Two such strategies have come up repeatedly in Business Insider's conversations with financially independent investors: real estate syndications and private money lending.

Real estate syndications

A syndication allows investors to put money into a larger real-estate deal — such as an apartment complex, student-housing development, or boutique hotel — without personally buying or operating the property. A sponsor or operator manages the deal, while investors typically receive cash-flow distributions and, if the property is eventually sold for a profit, a share of the proceeds.

Cody Berman, who started with a house hack and later bought rentals that generated enough cash flow for him to live on, said much of his real-estate exposure today comes through syndications.

"My return on effort in my main business, my digital-products business, is a lot higher than my return on effort in real estate," he said. "I still want the real-estate exposure, but I don't want to go out there and just buy a 20-unit apartment building myself and then have to get it tenanted and figure out how to set up all the maintenance stuff."

In a syndication, Berman said, he might invest in a 100-unit apartment complex in another part of the country — a property he has never seen in person — because he trusts the operator running the deal.

"I will invest a chunk of money with them for some set period of time, usually somewhere from three to seven years," he said. "I'll make money every quarter on cash-flow distributions based on the rent the property is generating. And then if there is a sale event, which is usually the goal of a syndicator, then I'll get all my money back and some more in the form of a check."

He described it as "owning rental properties without actually having to own rental properties."

There are trade-offs. Investors in syndications generally do not have the same control or upside as the general partner running the deal. Their money is also typically locked up for years.

Choosing the right operator is crucial, added Berman, who relies on referrals, interviews, and research.

"Pretty much everyone that I've ever invested with has been through a word-of-mouth referral plus an interview, talking to the person, doing my research."

Private money lending

Another strategy experienced investors use to keep real estate in their portfolio without owning additional property is private money lending. Instead of buying or renovating properties themselves, they lend money to other investors who need capital for deals.

To get started in private lending, you need capital and, ideally, a presence within your local real estate community. Real estate is a relationships business, and typically, the broader your network, the more opportunities you'll encounter.

Carl and Mindy Jensen, who grew their net worth to more than $5 million and retired early, have tried a variety of investment strategies, including live-in flipping. They said that private lending is one of their favorite strategies.

"The private lending generates such a nice return that it's difficult to be like, 'No, we don't want to have the easy money. Let's go do another live-in flip,'" said Mindy. "But we're also in a much different financial position now than we were when we started live-in flipping, and I think that's important to note: You could still make money live-in flipping, and if you have more time than money, it can be a really great way to turn your home into an investment."

Josh and Ali Lupo, another financially independent couple, started lending to other real-estate investors in 2025, and it's resulted in double-digit returns.

"There are some industry standards," Josh said. "In the private money lending world, 10 to 12% interest is very common. That's the baseline."

The lender generally determines the terms of the loan, he added, and the rate can vary depending on the deal's length.

Private lending is not risk-free. One of the main risks is that the borrower fails to repay the loan, which makes vetting both the borrower and the deal essential. That due diligence takes time, but once the Lupos have completed their research and decided to fund a deal, the process itself is relatively hands-off, said Josh.

"It takes us 30 minutes driving to the bank, wiring the funds, and then the investor that is borrowing the money sends us updates, and that's the extent of it."

• To invest in real estate without having to fork over a big down payment, some investors are using the BRRRR method.
• It involves buying a property with potential, renovating it, and renting it out.
• Then, investors can use a cash-out refinance to help fund their next purchase.

Real estate investing can be an effective way to build wealth, but it's not as simple as selecting an index fund, contributing money, and letting it grow.

Successful real estate investing requires time, strategy, and money — often a significant amount, especially for investors looking to build multi-property portfolios.

To scale without having to save for a new down payment and closing costs for each deal, some investors use a strategy known as "buy, rehab, rent, refinance, repeat," or BRRRR.

The approach involves buying a property with potential, renovating it, and renting it out. Once rented, the next step is to refinance, allowing investors to pull out their original investment, plus any equity they've built, to help fund their next purchase. Banks typically lend up to 70% to 75% of a property's value in a cash-out refinance.

Scaling quickly by recycling capital

When buying an investment property, "you're really looking at at least 20% down," Pieter Louw told Business Insider. He and his childhood friend, Connor Swofford, used the BRRRR strategy to scale from zero to 24 units in 12 months. "Even with a $300,000 or $400,000 property, with closing costs, you have to come up with 60 to 80 grand, which is not very scalable."

Their first deal was a duplex with a carriage house in Buffalo. Two of the three units were ready to rent, while the third required renovations. They said they bought it for $295,000, put about $40,000 into it, and by the time they refinanced, it appraised for $430,000.

"That really kick-started us," said Louw.

They've financed their deals with hard money loans (short-term loans secured by a "hard" asset, such as real estate), sometimes layering in private money for the down payment or renovations. Working with hard money lenders allows them to move faster than traditional banks, though it does come with risk, Swofford said: "It's a big balloon payment, you have to personally guarantee the loan, and there's a bit more paperwork and harder compliance hurdles to clear."

Thanks to Louw's construction background, they can confidently predict their rehab costs and timeline, which is critical for a successful BRRRR.

"The two biggest things are making sure that your construction budget is reasonably accurate," said Louw, "and knowing your purchase price and what the value would be afterward: the ARV."

Carolyn Yu has used the BRRRR method to scale to five properties in two years.

Her strategy centers on buying below market value, improving the property, allowing it to appreciate, and then tapping into the built-up equity to help finance another purchase.

"My strategy is basically to use every property to fund the next one," said the 27-year-old investor seeking early retirement.

A slower, more flexible version of BRRRR

There's more than one way to execute a BRRRR. Financially independent investor Dion McNeeley has experimented with a "live-in BRRRR," and Mike Newton, a Washington State trooper who owns more than 20 rental units, uses what he calls a "slow BRRRR" strategy to reduce risk.

"One of the main concerns with the BRRRR strategy is, what if I don't get the appraisal I want? What if I don't get it remodeled as quickly as I thought I would?" said Newton. "All of a sudden, as I take longer, it now costs me way more money."

His "slow BRRRR" strategy works like so: First, he secures private money from individual investors in his local real estate community. There's nothing unique about that step; the key is how he structures the loans. He sets up a five-year interest-only loan term. For example, on a 2025 triplex purchase, he borrowed $60,000 at 10% interest, meaning he owed the lender $6,000 per year, or about $500 a month, with no principal payments.

He'll eventually pay the loan back in a lump sum after he rehabs and refinances the property, but he has plenty of time to do so. He includes a clause that allows him to extend the loan for up to three additional years if the appraisal doesn't meet a specified threshold. He also includes a no prepayment penalty clause.

"If we had some crazy recession or the value didn't come back, I can wait longer and continue to cash flow," he said. "Even though 10% is not a great interest rate, if you're not paying any principal, the actual payment I'm making of $500 a month is less than what a principal and interest payment would be."

When the timing is right, he refinances, pays back the private lender, and moves on to the next deal.

Why some investors are shifting to BRRRR now

For Louisville-based investors Mike Gorius and Kevin Hart, BRRRR is becoming more attractive as market conditions change.

The business partners have primarily focused on house flipping since they started buying real estate together in 2019, but they're leaning more heavily into BRRRR projects in 2026.

A cooling market has made quick resale profits harder to rely on.

They know the strategy isn't risk-free. You still have to make sure your numbers work, and you can hit the value you're expecting, Hart said.

"From the get-go, you still have the risk of rehab and the risk of running correct costs to make sure that you can actually get a good appraisal."

However, compared to flipping, BRRRR offers a more predictable exit.

"You're taking out the risk of the market," explained Hart. Instead of worrying about a flip sitting for months while you're paying interest, "you know that at the end of the rehab you can get a tenant in there and you can immediately refinance with the bank."

It may not yield quick cash like a successful flip, but they're playing the long game.