REI vs Stock Market

[Desmond Price]

Hey guys, obviously I'm new to REI and trying to understand REI vs investing in the stock market. I have been focusing on SFR to buy and hold and I don't see the returns I do in my stock market portfolio (up 24% YTD). The S&P 500 Index is up 16.23% this year and up 100% in the past 6 years. What am I missing in regards to the BRRRR strategy? The properties I see have a cash flow of $100-$200 for a $150,000 property and I dont see the benefit vs risk. Thanks for any insight or suggested reading (in addition to Brandon's book on rental property investing).

[Craig Curelop]

@Desmond Price - you bring up a great point. The returns on the market this past year have been incredible. However, seeing 16%-25% returns on the market is not going to continue. Seeing those returns in real estate are absolutely possible year over year as you have the 4 wealth generators working for you:

1. Cash Flow - Receiving rent from your tenants irregardless of whether the market goes up and down. 

2. Appreciation - While year over year, housing prices may fluctuate, in the long term, they will increase. Companies could go out of business leaving you with little or no return. Not to mention, you can always force appreciation into your property. You don't have that type of control in the stock market. 

3. Loan Paydown/Leverage - Your tenants are paying down your mortgage AND you can buy a property with as little as 3% down (0% if you're a veteran). That's a very high (or infinite) cash on cash return.

4. Tax Advantages - Uncle Sam rewards homeowners with tax breaks. I am not a CPA, but I know that one of the biggest benefits is being able to deduct depreciation. So your property could actually be cashflowing you month over month, but to the government, it shows that you are losing money. So you will not be taxed on your gains. Those losses carry over to other forms of income as well.