Residential Rental Advantages

Scott Galloway recommends investing in residential rental real estate as a superior investment strategy compared to stock picking or even index funds.

Investment Strategy: Residential Rental Real Estate

• Primary recommendation: "If I had it to do all over again, I probably just would have taken all my excess cash flow and done massively diversified ETFs all over the world and bought more and more residential rental real estate"

• Key advantages of residential real estate:

  • Leverage opportunity: "Very few investments you can lever up five to one"
  • Tax benefits: "Very few investments you can depreciate two or 3% a year regardless if they're going up in value"
  • Mental wellness: "I like the idea of being in investments that aren't marked every day"
    • Unlike stocks that can ruin your day with price fluctuations: "I check my phone five or six times a day and get all bummed out"
    • With real estate: "I don't know what they're worth today... maybe they went down 10%, maybe they didn't"

• Focus on billionaire hotspots:

  • "Billionaires wanna live in one of five places: Dubai, London, Palm Beach, Aspen, or New York"
  • Strategy: "I own really nice homes in four of those five areas"
  • Long-term thesis: "In thirty or fifty years those homes could be worth a lot of money"
  • Supply constraint advantage: "They're not making any more beachfront real estate in Palm Beach, Manhattan is constrained, Aspen is almost impossible to develop in"

• Income inequality thesis:

  • "Income inequality has gone so batshit crazy not only in the US around the world"
  • "The number of billionaires has gone from 500 to 2,500 in ten years"
  • Investment implication: "You wanna find places where these people wanna live"
  • "My biggest personal investment theme is that I think income inequality is only gonna get worse"

• Personal benefit: "There's a psychic benefit... I wanna try and figure out an investment strategy that makes it hard for my boys to avoid me"