Why Bitcoin Might Be Your Better Bet Over Rental Property…

Hey BiggerPockets Community,

When diving into the investment world, understanding the risks associated with each asset class is crucial. Today, let's talk about one of the most significant third-party risks in owning rental property: **Tenant Risk**.

**Tenant Risk in Rental Properties:**

Tenant risk encompasses the possibility of tenants damaging your property, failing to pay rent, or engaging in illegal activities that could lead to legal issues for you as the landlord. Here's how it can play out:

- **Scenario 1:** Imagine you've just invested in a nice three-bedroom house in a decent neighborhood. You secure a tenant who seems reliable but after six months, they stop paying rent, leading to eviction processes which can be lengthy and costly. Legal fees, lost rent, and potential property damage could eat into your profits. According to the National Apartment Association, eviction costs can range from $3,500 to $7,500 on average, not counting lost rent during the process.

- **Scenario 2:** Another common issue is tenants causing significant wear and tear or damage to the property. Suppose a tenant decides to start a home renovation project without your consent, leading to structural issues or plumbing disasters. Repair costs for such damages can range widely, but one study suggests an average of 12% of the annual rental income might be spent on maintenance and repairs.

- **Scenario 3:** The worst-case scenario involves tenants engaging in illegal activities. This not only puts you at legal risk but can also significantly decrease the property's value and desirability. Legal battles or even seizure by law enforcement can occur, which are both time-consuming and financially draining.

**Contrast with Bitcoin Ownership:**

Now, let's pivot to Bitcoin, which offers some stark contrasts:

- **No Tenant Risk:** Bitcoin doesn't require tenants. There's no risk of physical damage or legal entanglements from tenant behavior. Your only concern is securing your digital wallet, which, with proper precautions, can be managed through hardware wallets or cold storage, significantly reducing theft risk.

- **Liquidity:** Unlike real estate, Bitcoin is extremely liquid. You can convert your Bitcoin to cash or other cryptocurrencies within minutes, not months or years. This liquidity can be a game-changer if you need quick access to funds without the hassle of selling property.

- **Global Market Exposure:** Bitcoin isn't tied to local market conditions or tenant demand. It's influenced by global economic factors, providing a potentially broader diversification than a rental property in one location. Over the last decade, Bitcoin has shown an annualized return of over 230%, outpacing traditional assets like real estate and stocks significantly in certain periods (Source: The Bitcoin Way).

- **Scenario in Bitcoin:** If you had invested in Bitcoin instead of that rental property, your investment could have grown exponentially without the overhead of property management. For instance, if you invested $100,000 in Bitcoin at the start of 2020, by the end of 2024, with Bitcoin's growth, your investment might have been worth around $625,000, assuming no significant market downturns (based on Bitcoin's performance in previous bull runs).

**Why Bitcoin Could Be Superior:**

- **Lower Entry Barriers:** You don't need a large down payment like with real estate; you can buy fractional amounts of Bitcoin.

- **No Maintenance Costs:** Bitcoin doesn't require repairs, renovations, or ongoing expenses like property taxes or insurance.

- **24/7 Market:** The Bitcoin market never sleeps; you can trade at any time, providing flexibility that real estate cannot match.

In conclusion, while rental properties can generate steady income, the third-party risks, especially tenant-related, can severely impact your financial health. Bitcoin, on the other hand, offers a high-reward potential with less direct management required, no tenant headaches, and a global market that's open around the clock.

What's your take on this? Have you considered diversifying into bitcoin as part of your investment strategy? Let's discuss below.

#InvestSmart #PassiveIncome #BitcoinInvestment #RealEstateVsBitcoin #FinancialFreedom

[Relevant citations for factual data include but are not limited to: ][](https://www.thebitcoinway.com/articles/bitcoin-vs-real-estate)[](https://www.biggerpockets.com/blog/bitcoin-or-real-estate)[](https://smartvalor.com/sv/news/bitcoin-traditional-assets)