You can use leverage in the stock market too. It's called buying on margin. Not that I recommend doing that. You can quickly lose your ass if you don't know what you're doing. Honestly if I I had a million in cash tomorrow I think I'd just throw it in a low cost S&P 500 index fund and call it a day. If the market returned its average 10% a year over time that's $100k a year on average and I could live very comfortably off that. I think this is the only truly passive income.

Wait until interest rates drop, If/when that happens, you’ll have post after post of people wondering why you’d ever buy stocks when you can leverage RE at sub 5%.

I would love to buy an apartment building where rents triple in 15 years and the property doubles in value. I’m not sold that is realistic for the next 15 years though.

People think too short term. They act like a higher interest rate is a deal breaker because it means a few years are more difficult. Yes, higher rates make it more difficult in the short run….but you don’t have to care that much if you are a long term, 30-40 year investor.

And what happens if the property doesn’t double in value over 15 years, but instead stays relatively stagnant or increases just at the rate of inflation?

Example: Buy a million dollar multi family property. Right now rents, minus mortgage, taxes, maintenance, etc gives a 3 percent cash on cash return. Not so great, right? 15 years later. That 1 million dollar property is worth 2 million, and rents have tripled. Now think about the return….. Not saying index funds are not great and real estate is the best investment ever. But too often people look at the numbers of a property right when they buy it, but when you think about what that property will be giving back in 15-20 years, it’s absolutely massive.

Literally couldn't have said it better myself! 100% agree with all of your points. Only thing I would add is that you can also use your primary home as an investment vehicle - you limit your risk tremendously and have a huge upside. I mean, you have to live somewhere, so you can buy something and fix it up (or just hold) over time and then move out and rent or sell down the line - you only need to hold it for a year - and if you don't like the outcome just stay. The benefit of being able to have your worst case scenario he "whatever, I'll just live here and not pay rent" and the best case scenario being "what a killer investment" is often slept on. No other investment has such a high floor/ceiling combo.

Couple points: 1.) it’s not that it’s leverage that makes real estate perform it’s that it’s very cheap leverage. You can buy stock on margin, but not with a 30 yr loan that’s government backed. 2.) the government protects you as a landlord with taxes, write offs, and other regulations. Usually those don’t exist in other capital markets. 3.) illiquidity is a feature not a bug. It prevents you from selling at an inappropriate moment when your emotions get the better of you. It also makes, “deals,” somewhat easier to spot and jump on if you’re enterprising. Similar to buying and selling actual bonds. For instance there’s no ticker scrolling across cnbc for Boeing debt, you have to be in the weeds and looking at the buy and sell spreads to know if you’re getting a deal or not. 4.) Real estate is very broad. Most people think of real estate investing as buying duplexs with residential mortgages, but you can buy raw land and develop it, fix and flip office buildings, etc, Some of these strategies don’t necessarily need leverage for the outsize return. 5.) It really isn’t a passive investment. It’s much more active than buying index funds.

Yes. Real estate is dog shit otherwise. 30+ days to close? Force to pay absurd fees to sell? Having to pay taxes and insurance on unrealized gains? 5% ROI?Variable payout streams on random shit? Full stop payment stream and having to wait 30-180 days before you can restart the stream of income again? Absolute dogshit risk if leverage wasn’t in play even with depreciation.

You’re not considering any other expenses. You take your rental income minus maintenance, property management fees, insurance, Hoa fees, etc. Then you subtract mortgage interest and depreciation and that number will be what you pay taxes on. It’s almost guaranteed to be a loss for at least the first couple of years for most investments.