I don't know if I agree. On average renting a room out of your place is the same as buying a place as a rental investment with the difference you can claim you live there (which gives you some small tax advantage).
In general, real estate rental investment are terrible subpar investment. How would this be different?
I don't know, I hear this advice all the time and I think people are just not looking hard enough. I invested in Seattle between 2017-2022 and have several properties here that are cash flowing.
For example, for an $800k house you would have to generally put down 160k. If you picked the right property, with enough rooms, you can cash flow around $1-2k on this which will net you around 10-20k a year, and that's not counting the tax advantage of depreciating the house which is substantial.
When you throw in the fact that the asset could/should appreciate, the fact that you can borrow against it, leverage aggressively to buy more—don't know, my reasoning could be wrong, but it doesn't seem to always be an inferior investment vehicle.
is it really cash-flowing $1-2k a month after you account for repairs, taxes, fees, realtor fees, closing fees, bad tenants (which will always eventually happen) and all the time you spent managing this?
The tax advantage are really marginal since 2016.
160k$ invested in the SP500 gives you on average 16k$ a year compounding fully liquid with zero management.
Yes the place should appreciate at 3% a year historically. But even that doesn't make up for it.
In general, real estate rental investment are terrible subpar investment. How would this be different?