The Best Alternative Real Estate Investments (And How to Choose the Right One)

Many real estate investors own traditional rental properties, but other investments can help you get started without a ton of capital, diversify across different markets, or avoid typical landlording headaches. In this article, we’re sharing 10 of the best alternative real estate investments to pair with your buy-and-hold properties for a well-rounded portfolio!

Summary:

• Alternative investments are another way to get exposure to real estate without having to buy a rental property outright.

• Alternative real estate investments, while often convenient, do not offer the same benefits—like control and tax benefits—as direct ownership.

• Turnkey rentals blend a level of passivity of certain alternative investments with the benefits of direct property ownership.

What Are Alternative Real Estate Investments?

Alternative real estate investments can give you exposure to the real estate market without buying and holding a traditional rental property. These investments typically fall into one of two broad categories: non-conventional properties and non-direct ownership structures. Non-conventional properties include buildings like self-storage facilities, data centers, and student housing properties, while non-direct investments include things like REITs and crowdfunding platforms.

While alternative investments don’t always allow for direct ownership, the income drivers are similar, and returns are largely tied to property appreciation and rental income.

Why Are Investors Looking Beyond Traditional Rental Property?

Rising home prices and high mortgage rates have made traditional rental property investing more difficult for some investors—particularly those who don’t have a large amount of capital or the bandwidth (or desire) to manage rentals. While alternative investments don’t offer the same benefits as direct ownership, they give you another path to real estate investing!

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The Core Benefits of Alternative Real Estate

Alternative real estate investments offer three distinct advantages. First, they allow you to diversify across sectors and asset classes. Many of them also have a lower barrier to entry, whether it’s due to smaller investment minimums—as low as $10, depending on the investment—or an easier learning curve. Finally, they often generate passive income, as the investor isn’t responsible for buying or managing the property directly.

The trade-offs are that they don’t provide the same level of control, tax benefits, or wealth-building potential of direct ownership!

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10 Alternative Real Estate Investments Worth Exploring

There are dozens of alternative real estate assets you can add to your portfolio. Here are 10 of the best options in 2026:

1. Real Estate Investment Trusts (REITs)

REITs are large companies that buy and manage income-producing properties. You can buy shares of these companies, much like you would with a stock or index fund, and potentially make a return from dividends and share price appreciation (when you sell). These investments have a very low barrier to entry, as you can get started with as little as a few hundred dollars and sell your shares at any time.

2. Real Estate Crowdfunding

Through crowdfunding, investors pool their money to invest in much larger real estate assets or portfolios that are too expensive for most individuals. Depending on whether it’s an equity or debt investment, returns may come from rental income, property appreciation, refinancing, or regular interest payments.

3. Self-Storage Facilities

People rent storage units for several reasons, such as moving, downsizing, or simply needing more space for their belongings. This consistent demand has made self-storage one of the most resilient commercial real estate assets, regardless of economic conditions. What’s more, operations are relatively simple, thanks to simple tenant dynamics, lower expenses, and limited maintenance.

4. Industrial & Logistics Properties

Industrial properties have been some of the strongest-performing real estate assets of the last decade. Buildings such as warehouses, distribution centers, and logistics facilities often have long-term leases in place, reliable tenants, and steady rental income. As e-commerce, online shopping, and faster delivery expectations grow, so does demand for these facilities!

5. Student Housing

Purpose-built student housing provides an alternative to traditional dorm living while also giving investors an alternative to conventional residential real estate. These properties are typically located around university campuses and see steady demand from new students each year.

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6. Data Centers

Data centers are specialized buildings that house computers, servers, and technology needed to power AI infrastructure, cloud computing, and other services. As our world becomes increasingly digital, the demand for these facilities continues to grow—providing investors with opportunities for long-term leases with major technology companies.

7. Farmland & Agricultural Real Estate

Farmland is a limited resource with steady demand, offering a combination of low volatility and consistent rental income. Through crowdfunding platforms like FarmTogether and AcreTrader, you can invest in farmland across the U.S. without having to buy or manage it directly.

8. Senior Housing & Medical Outpatient Buildings

The aging Baby Boomer generation is driving higher demand for senior living facilities, with NIC MAP forecasting a 550,000-unit shortage by 2030. Meanwhile, outpatient care is expanding, as healthcare providers move more of their procedures and services out of hospitals and into lower-cost facilities.

9. Distressed Properties

Distressed properties are homes or buildings that are sold below market value due to financial difficulty, foreclosure, or deferred maintenance. For the experienced investor, they can deliver strong returns through various value-add strategies. These properties are often great candidates for house flips, but they can also be wholesaled to end buyers, which circumvents direct ownership.

10. Green & Sustainable Buildings

Modern, sustainable buildings use less energy, water, and other resources than many older properties, making them an attractive option for environmentally conscious tenants and investors alike. Their greater efficiency not only reduces operating costs but also helps command strong rents and long-term valuations.

How Do Alternative Investments Compare to Direct Property Ownership?

You can build wealth through alternative real estate investments, but like any investment, there are clear pros and cons. Let’s look at how their benefits stack up against direct property ownership:

While alternative real estate investments offer several advantages, they’re not a one-to-one substitute for traditional rental property investing. Pair them with direct ownership to form a well-rounded real estate investing strategy!

Fully-managed turnkey rentals give you tax benefits, cash flow, and semi-passivity, all with direct ownership!

How Do I Choose the Right Alternative Real Estate Investment?

The best alternative real estate investment for you largely depends on your risk tolerance, investment timeline, and the amount of capital you have access to. Be sure to address the following before committing to any one option:

Define Your Goal

Do you want to earn more passive income? Grow your capital? Diversify across different asset classes? Determine what you want to achieve and then identify the best investment vehicle for your goal!

Know Your Liquidity Needs

Will you need access to funds within the next few years? Investments like REITs are relatively liquid, but others, like private funds, may have long lock-up periods (and even capital calls!).

Vet the Platform or Manager

With many alternative real estate investments, someone else is managing the asset. This means you should do your due diligence on both the deal and the operator. Look closely at historical returns, fee structures, and investor reviews!

Alternatives + Rentals = A Diversified Win

Even if you’re just starting your real estate journey, alternative real estate investments work best when paired with—not substituted for—direct property ownership. If you want the full benefit of real estate investing, buying a rental property and holding it for several years allows you to build wealth through cash flow, appreciation, and tax deductions (like property depreciation). Plus, you can use leverage (debt) to take control of an asset without buying it in cash!

Want direct ownership without the typical landlording headaches? Rent to Retirement has turnkey properties that require minimal maintenance and come with property management already in place!

Alternative Real Estate Investments FAQs

What Is the Downside of Alternative Real Estate Investments?

Some alternative real estate investments are riskier than traditional rental properties, particularly those with long lock-up periods and no easy exit. Some alternative investments also provide less transparency than direct ownership, where you have full visibility and control over the asset, tenants, and performance.

Are Alternative Real Estate Investments Safe?

Like any investment, alternative assets carry investing risk. However, some are less “safe” than others. For example, private crowdfunding deals may involve long lock-up periods and have less regulatory oversight than publicly traded REITs.

Are Alternative Real Estate Investments Better Than Owning Rental Property?

Alternative real estate investments aren’t inherently better than owning rental properties, but they do serve a different purpose. They are often easier to invest in, thanks to lower investment minimums and fewer management responsibilities. However, direct ownership typically delivers stronger long-term returns, better tax benefits, and more control over the asset itself.

Can I Invest in Real Estate Without Being a Landlord?

Yes, you can invest in real estate without being a landlord, which is largely the appeal of alternative real estate investments. REITs, crowdfunding, and other strategies allow you to benefit from income and appreciation without dealing with tenants or maintenance. For investors who want a more hands-off experience without giving up the advantages of direct ownership, buying turnkey gives you the best of both worlds. Browse our turnkey rental properties for sale!