Rental Properties Safer Than Stock Market For Long Term Wealth?

[Chris Scharf]

Anyone else have the thought that good cash flowing rental properties will outperform index funds over many years hands down? Even if I don't utilize the BRRRR method or force appreciation it still looks like a better investment. Take for example the following:

Rental Property that is for sale near where I live:

$80,000 property that doesn't need any repairs (essentially turn-key that I will self-manage) - $900 rent 

$16,000 down with $2,000 closing costs - Total All-In: $18,000

Assuming 5% vacancy, $1,000 in taxes, $800 for insurance, 5% for maintenance, and a buffer of $200 a month, I would cash flow roughly $3,300 a year.

https://www.calculator.net/rental-property-calcula...

I've been around this forum to know that people will say things like 'well your vacancy/taxes/capex is way too low.' Even if you don't agree with my numbers and need to decrease the return by 5% it's STILL ahead of an index fund.

As you can see from the link above, over 30 years I would see a 23.98% gain EACH year. Now obviously I know that a roof/furnace would alter this number, but overall it's a huge gain.

401(k):

Now assume that I take that same $18,000 that I used for the rental property but instead max out my 401(k). Even with the historical average of 10% per year, it's nowhere near the roughly 24% gain I would achieve with putting that $18,000 towards a rental property. Instead of receiving $3,300 in cash flow plus the principle paydown and tax benefits, I would see a roughly $1,800 gain. I know that compound interest would play a role in the 401(k) gains, but I would also see it in the real estate market (more properties/more income/more doors/etc.). The benefit to this option is that it truly is passive income.

Obviously, I know that I'm posting this on a real estate forum so most people are biased, BUT, what am I missing? It seems like a pretty solid choice for building wealth. I know that rental properties have their flaws (tenants/repairs/etc), but assuming that doesn't really stress me out, what else am I not considering?

Thanks in advance!