‘The numbers just don't pencil out’: Millionaire real estate investor Graham Stephan says he’s not buying US homes in 2025 — prefers this 1 asset instead. Here’s what it is and how to buy in

The personal finance guru has said that he first became a millionaire at the age of 26 and that his net worth is somewhere between $15 and $19 million. Much of this, he professes, has been built through buying and renting real estate, which is why it’s surprising that Stephan seems to be giving up on the asset class.

However, in his recent video he runs the numbers and discovers that real estate simply isn’t as lucrative as it was when he was getting started in 2008. Instead, he’s found a better asset class to park his money in. Here’s a closer look.

Better than real estate

Stephan attributes much of his success to the fact that he started buying real estate at the right time. He purchased his first property in 2012 in Southern California’s San Bernardino for just $59,500 and paid in cash. By his estimate, the unit is now worth roughly $400,000 and delivers $1,500 in monthly rental income.

Other properties added to his portfolio at the time have had a similarly impressive run. However, the rising cost of homes and surge in mortgage rates in recent years has changed the landscape dramatically.

From the end of 2020 to the end of 2024, the median U.S. home price surged by nearly 24%, according to the Federal Reserve. Over the same period, the average fixed rate for a 30-year mortgage climbed from roughly 2.7% to 6.95%, according to the Fed.

The significantly higher costs of borrowing money and purchasing property has changed the dynamic for real estate investors.

“For me, I just haven’t seen many opportunities after 2020,” Stephan admits.

“I’m only able to run a profitable rental business because a lot of these properties were bought at a fairly low price almost a decade ago. Financed with really cheap debt locked in for 30 years. At today’s prices, none of this would be feasible. Nothing would cash flow.”

In fact, investing in real estate is so expensive right now that he believes passively investing in the stock market is easier and more lucrative.

“I’m much happier just throwing it all in an index fund and letting it do the heavy lifting for me,” he claims.

The S&P 500 is up over 60% since January 2021, a compounded annual growth rate of more than 13% over four years. Investing in a fund that passively tracks the S&P 500 is much easier than taking the time to find a new property, complete the purchase, possibly renovate, find tenants and pay for monthly maintenance.

If you’re looking to adopt this passive investing approach too, here’s a few options.