Real Estate vs Stocks: The Math Everyone Gets Wrong

Two people, both 28, both earning $65,000, both with $50,000 saved. She buys a $250,000 house and rents it out. He buys an index fund and forgets about it. Twenty years later they finish $743 apart — and only one of them ever had to show up. This is the arithmetic almost nobody runs before they buy a rental. Not "rent isn't profit" — the actual number the house has to rent for before the owner keeps a single dollar. It's $2,696 a month. The national average for that house is $1,325. Everything in this video is calculated from the assumption most generous to the landlord: the lowest operating-cost figure in the range, and the full tax break including depreciation, which every other video on this subject leaves out. One correction we make along the way: the 7% mortgage rate you'll see on every whiteboard is the rate for a house you live in. An investment property prices higher — 7.3% to 7.8% in August 2026 — because lenders know tenants stop paying before owners do. SOURCES S&P 500 2006–2026, dividends reinvested (11.07%/yr) — includes the 2008 crash Case-Shiller national home price index, Jan 2000 to May 2026 (4.7%/yr) Zillow price-to-rent ratio, mid-2026 US rental vacancy rate 7.3%, Q1 2026 Single-family rental operating expense ratio, 35% of gross rents IRS residential rental depreciation, 27.5 years, recapture capped at 25% ATTOM 2026 single-family rental report — yields fell in 54.8% of US counties The full working is in the pinned comment. #realestate #investing #rentalproperty #indexfunds #personalfinance #money