They Are LYING About Rental Property Investing | Real Estate in 2023

I wouldn’t buy a rental property in 2023. Real estate prices are high, returns are not as high as you think, risks are rising, and it will negatively impact your career and lifestyle. Besides, REITs are today discounted and offer better risk-to-reward. Please follow me on Twitter: https://twitter.com/askjussi and subscribe to my YouTube channel.

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More on the risks of rental properties: https://www.youtube.com/watch?v=RxSOwFf0_wY&t=23s&ab_channel=JussiAskola-REITInvesting

Rental properties are very popular investments among individual investors. They allow you to leverage your money, earn passive income, and you also get tax benefits.

But there is also a dark side to rental properties. A hidden truth if I may.

For one, returns are not as high as you may think. Many claim that they earn 25%+ annual returns but in reality, they typically miscalculate their returns by understating the expenses and not accounting for the value of their work.

For two, the risks are much greater than typically advertised. Rental properties are commonly perceived as relatively safe investments because they are not as volatile as stocks. But in reality, they are a lot riskier. They are private, illiquid, concentrated investments with high leverage, liability issues, and an added social element.

For three, owning rental properties will negatively impact your career, which is your primary income source. Your career is what will provide you most of your wealth. But owning rentals will lower your geographical flexibility and also take up a lot of your time and energy.

For four, rental properties will also hurt your lifestyle. It will make it more difficult to spend a relaxing weekend with your family or to plan that long trip that you have been wanting to take.

Finally, today, publicly listed REITs are priced at large discounts to their net asset value and therefore, it makes little sense to invest in rental properties. Many REITs are offered at 30-40% discounts and so their risk-to-reward is a lot more compelling. BSR REIT is one good example.

Image sources: NAREIT, YCHARTS, EPRA, imgflip, BSR REIT, Canva

Important Disclaimer: This video is impersonal and does not provide individualized advice or recommendations for any specific person. Viewers/readers should not make any investment decision without conducting their own due diligence and consulting their financial advisor about their specific situation. This video is for entertainment purposes only and you are responsible for your own investment decisions. The information is obtained from sources believed to be reliable, but its accuracy cannot be guaranteed. The opinions expressed are those of the publisher and are subject to change without notice. This YouTube channel is managed by Leonberg Research OÜ, a subsidiary of Leonberg Capital OÜ.

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