8 Niche Real Estate Investments Outperforming in 2025

They say the riches are in the niches—and nowhere is that more true than in real estate investing.

As someone who reviews vastly different real estate investments every day as an organizer of a hands-off investment club, I wish I could say I’ve seen it all. But in this industry, there are thousands of deep niches, and no one knows them all.

Here are a few favorite real estate investing niches I’ve seen this year, including many I’ve invested in myself.

1. Property Tax Abatements

In my co-investing club, we’ve actually vetted and invested in several of these this year. They’re all performing great.

They work like this: A real estate syndicator partners with a nonprofit housing agency and the local municipality to set aside some or all of the units in an apartment complex for affordable housing. In return, they get a property tax abatement, typically 50%-100% of the tax bill.

Most people hear this and scoff: “Won’t the rent restrictions offset any savings on property taxes?”

Nope. At least not if the syndicator chooses the right deal.

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For some properties, the market rents are already under or around the limit imposed by this affordable housing designation. That makes the property tax abatement all upside.

It boosts the NOI (net operating income) immediately upon purchase, without requiring a single swing of the hammer for renovations. Because commercial real estate is priced based on NOI, this raises the property value from Day 1.

2. Section 8 Overhang

Properties that enjoy the Low Income Housing Tax Credit (LIHTC) also save big on taxes. But those tax savings come with a downside: caps on what tenants can pay out-of-pocket for rent.

A few savvy real estate operators have noticed the loophole there: out-of-pocket. They know that they can collect full market rents from Section 8 renters, because Section 8 pays the bulk of the rent. That leaves the tenant’s out-of-pocket portion of the rent below the LIHTC limit.

So they buy a property based on its current (LIHTC-restricted) NOI, then they help renewing renters apply for Section 8 and fill in new vacancies with existing Section 8 voucher holders.

Within a few years, they’ve supercharged the NOI (and property value), again without a heavy lift on renovations. They can sell the property with the LIHTC tax break intact, for a much higher price.

I also like that this strategy is recession-resilient, since the bulk of the rent is paid by the government.

3. Mid-Range Land Flips

It seemed like everyone and their mother got into flipping cheap land parcels during the pandemic. I know I did.

But despite what the land gurus will tell you, there’s competition in this space. It takes a lot of letters to score one deal, and while it’s true you can double your money on a $2,500 land flip, that’s still just a $2,500 payout for all the work involved.

As you scale the pricing ladder for land flips, the profit margins actually decrease, unlike most types of businesses. At the highest end of the spectrum, land flippers compete with institutional investors.

But in the co-investing club, we’ve found that mid-level land flippers actually earn great returns. These investors typically buy parcels for $50,000-$250,000, and either flip the land as-is or do minor improvements or subdivisions (up to five lots).

For example, one land flipper we’ve invested with has paid out a 16% distribution like clockwork. We plan to invest with him again over the next month or two. He faces less competition at this price point, not having to stand out amidst the flood of letters from cheap land buyers nor the big money of institutional investors.

4. Prefab Home Placements

Another land flipper we’ve invested in adds another twist to his investments: He places a prefabricated home on the land and sells it to a first-time homebuyer.

These are not “mobile homes” or trailers. They’re manufactured homes, typically ranches, that are permanently fixed on a foundation. They sell retail on the MLS through a real estate agent.

The investor we’ve partnered with on these deals sells his homes for an average of $230,000, which is literally half the local median home price of $460,000. That provides fantastic protection against recessions, because demand for affordable housing at that price point won’t disappear, even in a downturn.

5. Affordable Housing Flips

Similarly, some flippers have not seen any slowdown in demand or prices for their flips.

“Even with higher interest rates, the right cosmetic rehab can generate a 15% to 20% return in under six months,” shares Cameron Love of StrykCam REI with BiggerPockets. “We’re focusing on affordable properties where we can add value quickly and keep holding costs low, especially where buyer demand hasn’t cooled.”

6. Changing the Bedroom Count for Flips

Another flipper I know, Austin Glanzer of 717HomeBuyers, has found a niche flipping houses with low bedroom counts. He told BiggerPockets:

“If a 2-bed/1-bath layout is surrounded by 3-bed comps that are selling for $60,000 more, we’ll reconfigure walls, closets, and sometimes even unused porches to create that third bedroom. It’s a faster ROI than full rehabs, and appraisers love when you can point to a clean comp match. This strategy has helped us move properties at prices we couldn’t have touched without the extra bedroom.”

7. Title Cleanup Deals

Most real estate investors can’t or won’t hassle with properties that have a cloud or other complication with the title. But those investors who can solve title problems can access enormous returns.

Ryan Hess, owner of Capstone Land Transfer, handles “hard” title cases for investors. “In 2025, we’ve seen more investors using creative financing and buying properties with messy title histories,” he told BiggerPockets. He even steps in and provides hard money loans for properties with messy titles, since investors often struggle to find loans for these. That leaves him able to charge higher interest rates, even as he resolves the title issue.

8. Industrial Seller-Leasebacks

Another passive real estate investment we’ve made in our co-investing club this year was an industrial seller-leaseback.

The company owned the land and buildings where it operates, and to help finance its expansion, it sold the real estate and signed a lease contract on it. This particular company has a backlog of orders three years into the future, and their clients include the U.S. Navy—they’re not going anywhere.

Even if something catastrophic happened and they defaulted on their lease, the operator underwrote the deal to ensure replacement tenants would pay even more in rent.

We’ll enjoy a high distribution yield for the next few years, and then a big payout when the company either buys it back or the operator sells it to someone else.

Final Thoughts on Real Estate Niches

You’ve probably never heard of some of these niches, and there are countless others neither you nor I know about. But the more you niche down as an investor, whether active (like some of the flippers above) or passive (like me), the higher the returns and the lower the risk.

In fact, when I look over potential deals, that’s exactly what I look for: asymmetric returns. We like to see high potential returns with moderate potential risk.

Those deals are out there. You just have to find them—or join a club of investors that finds and vets them together.

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