@Juan Rango
Blatant plagiarism from the Millionaire Real Estate Investor and other tomes (not my original thoughts). Real estate Investing provides some unique advantages:
Leverage: Good luck going to a bank and getting an 80% LTV loan (or more) to buy stocks/bonds as an average Joe. Also at any time you can re-leverage your equity position (HELOC) to go secure more assets. HELOCs are a great hedge against the illiquidity of RE as well. Need $100K for personal expenses but don't want to liquidate assets or pay taxes? Hello HELOC.
Loan Pay Down: Try having a third party give you incremental payments to increase your equity position in stocks/bonds like renters do. It operates much like a high yield bond fund, only better. Some markets still have SFH that follow the 2% rule. So they have a rent equal to 2% of the purchase price. If we assume a 50% expense ratio that's a 1% increase in your equity position every month (12%/year). If you only invest in A and B neighborhoods that'd be 6%/year. Dividend mutual funds and high yield bond funds can equal those, but they have none of the appreciation upside or tax advantages of real estate.
Appreciation: Stocks appreciate when the underlying business grows. Real Estate appreciates based on the local market conditions. In both instances that is out of the investor's control, so that part is a wash. Where the small RE investor can beat the financial markets and really win: forced appreciation. Find a two-bedroom house >1000 square feet with a funky layout, a few thousand in rehab costs and you now have a 3 bedroom. You can capture 25-45 percent appreciation right there. There's dozens of tricks like that where a little investment in the property creates outsized returns (apartments->condos, selling mineral rights etc...). Go try and force Apple stock to appreciate by 25% from your own actions. If you can, let us know before you pull the trigger.
Imperfect Information: In the wider equity/debt markets there are disclosure regulations and insider trading rules. If you find a way to buy stocks/bonds for a 50% discount on their fair market value let us know, but it's probably illegal. RE investors take advantage of imperfect information every single day. If there's a FSBO that's worth $100K listed for $85K, buy it. You can mail out of state landlords and make offers on properties that never make it to the MLS. You can take advantage of other people's mistakes (foreclosures, short sales, tax liens, REO etc...). When RE investors talk about finding "deals" they are talking about paying less than market value for a property, and they do it every day. This is the #1 advantage of RE for me. Your average individual investor can't take advantage of imperfect information in "normal" investments.
Deduct, Depreciate, Defer: The tax advantages of real estate are legion and there are folks on this site who've literally written books on the subject. What's important for this discussion is there is no tax advantage to traditional IRA/401K/Mutual fund investing over RE investing. Every tool available to normal individual investors is available to RE investors + dozens of others.
Autonomy: You can build the business you want and run it according to your lifestyle and values. Don't agree with the behavior of a company in your mutual fund? Good luck changing it. Your concern seems to be that your ROI on your extra time will be lower than just plowing money into mutual funds. There are so many ways to skin this cat, you don't need to spend 80 hours/week. Don't forget it's not an all or nothing proposition. You don't have to become a RE mogul to earn some returns. Someone proved that buying just two duplexes would earn more than the average person would expect to earn with their social security payments. You could do that and still keep 90% of your net worth in other asset classes.
