🏘️ The Passive Income Myth in Real Estate
FIRE BTC Issue #70 - What real estate investors won't tell you — and what a $300M CRE broker told me instead.
Real estate is the largest asset class on the planet. According to Savills, the total value of all property worldwide sits at roughly $393 trillion, which is more than all global equities, bonds, and gold combined. To put that in perspective, every ounce of gold ever mined is worth roughly $22 trillion. Real estate is nearly 18 times that.
For as long as most of us can remember, property has been the default answer to the question of where to store wealth. Your parents told you to buy a house. Financial advisors told you to build a rental portfolio. The FIRE community told you that cash-flowing properties were the ticket to early retirement. And for generations, that advice made sense, because real estate was the best available option for preserving and growing purchasing power over long periods of time.
But there is an important distinction that rarely gets discussed: how much of that $393 trillion represents the value of actual shelter, commercial space, and agricultural land, and how much of it is simply people using property as a savings vehicle? In other words, how much of the price you pay for a home or an investment property is about the building itself, and how much is a monetary premium — value that exists because people are storing wealth in property because they had nowhere better to put it?
This week on the FIRE BTC podcast, I sat down with Chris Drzyzga, a commercial real estate broker with over 275 transactions and $300 million in total deal consideration, who has been selling off most of his real estate to buy bitcoin. Chris lives and breathes the CRE market every single day, and his perspective on where things are headed was one of the most honest and grounded conversations I've had on this topic. You can listen to the full conversation here:
This newsletter will explore the ideas that came out of that conversation and what they mean for your FIRE plan.
💰 The World's Biggest Savings Account
The reason real estate has been such an effective store of value for so long comes down to a handful of attributes. Property is tangible and relatively scarce. It can be purchased with leverage, which amplifies returns on a small initial investment. There are favorable tax treatments like mortgage interest deductions, depreciation, and 1031 exchanges. And people have an intuitive understanding of it. You can see a house. You can walk through it. You can point to comparable sales down the street and feel confident about what your property is worth.
These characteristics made real estate the world's dominant savings technology for centuries. When currencies were unreliable or inflation was eroding purchasing power, people bought land and buildings. When families wanted to pass wealth to the next generation, they bought property. The logic was simple and deeply embedded in culture: they're not making more land.
When you buy a home, part of what you are paying for is the physical structure and the utility it provides. You need somewhere to live, and there is real value in having a roof over your head in a good neighborhood with good schools. I think about my own home primarily as a utility. I own it because my family needs to live somewhere, and I want that somewhere to be in a good area with growth potential around us.
However, part of what you are paying for is something else entirely. A significant chunk of the price reflects the fact that real estate has functioned as a savings vehicle, a place where people park value because it has historically appreciated faster than inflation. That is the monetary premium, and in some markets it is substantial. Manhattan penthouses, London townhouses, and coastal California properties are not priced on utility alone. The gap between what it would cost to build those structures from scratch and what they sell for on the open market tells you how much of the price is about storing wealth rather than consuming shelter.
I wrote about this in detail in Homeward Bound, where I broke down the math on levered housing returns versus simply investing in index funds. The conclusion was clear: homeownership succeeded historically not because housing was a better asset, but because it combined leverage, forced savings, inflation protection, and lifestyle consumption into a single vehicle. When you separate those components and compare them honestly, the returns are much less impressive than they appear.
This distinction between your primary residence and investment properties matters, because they have very different economics and very different roles in a FIRE plan. Your home is a utility purchase that you should make intelligently, using leverage and buying in a good area, and the equity you build can be borrowed against to invest in other assets. But the ongoing costs of ownership — maintenance, property taxes, insurance, repairs — are expenses that factor into your FIRE number, and the appreciation of your home is largely offset by those costs over time.
Investment properties are a completely different conversation, and that is where things get much more complicated.
🔧 The "Passive Income" Problem
One of the most persistent narratives in the FIRE community is that rental properties generate passive income. Buy a few houses, rent them out, collect checks every month, and eventually those checks cover your living expenses. Financial independence achieved.
There is no such thing as passive income in real estate. Stock dividends are passive. You buy shares, and the money shows up in your account. You don't have to fix a broken water heater at 2am or deal with a tenant who hasn't paid rent in three months. But managing rental properties is running a business, and it needs to be treated as such. This is something Chris and I spent a good amount of time discussing on the podcast, because he sees it from both sides — he brokers real estate transactions for a living and he's experienced firsthand the demands that come with owning investment properties.
What concerns me is when people who are early in their FIRE journey decide that rental properties are the way to go. You are taking your savings, tying them up in an illiquid asset, layering on a significant amount of leverage, and doing all of this with no experience operating a rental business. The learning curve is steep, the costs can be surprising, and the margin for error is thin when you're stretching to make the numbers work on your first property. I think it is genuinely dangerous for people to start their wealth-building journey with real estate investing. You need to already have some capital to play that game effectively, and you should expect that it will take time to figure out how the business actually works.
Full disclosure: I've had my own bad experiences with rental properties, so take my perspective with a grain of salt. I know people who have made it work, and I respect what they've built. But even the success stories come with chapters that don't make it into the highlight reel. A buddy of mine bought an AirBnB last year and was fired up about it being fully booked through the summer. Then winter hit, and the bookings dried up. Now he's staring at an extra mortgage payment every month with nothing covering it, and he told me he's worried the property isn't going to perform the way he thought. That part of the story never shows up on the YouTube thumbnail.
The other thing that strikes me about the rental property approach is the math at the individual level. People get excited about generating $100 or $200 a month in cash flow from a single-family rental, and they are doing a tremendous amount of work for that. You have to find the deal, secure financing, manage the rehab, find tenants, handle maintenance, deal with vacancies, and navigate the occasional nightmare scenario. Then you have to do it again and again and again, stacking property on top of property, just to build anything meaningful in terms of monthly income.
And the focus on that monthly cash flow is often misplaced, because the real wealth in rental real estate comes from having your tenants pay down the mortgage and building equity over time. But that equity is extremely illiquid. You can't access it without selling the property and eating a significant transaction cost, or taking out a new loan against it. Either way, the wealth is locked up behind a wall of friction.
Meanwhile, if you do what I advocate for and buy bitcoin, or even what most traditional FIRE people do with index funds, you can achieve very similar long-term returns without the leverage, without running a business, and with all the liquidity you could want. That doesn't mean there aren't real advantages to owning rental properties. There absolutely are, particularly for people who have the capital, the experience, and the appetite to run that kind of business. But if you are going in thinking it will be easy or passive, you need to be aware of what you are actually getting yourself into.
🏚️ Cracks in the Foundation
Beyond the individual-level challenges of owning investment properties, there are structural shifts happening in the broader real estate market that are worth paying attention to.
The US office vacancy rate hit 18.2% in January 2026. That is not a cyclical blip caused by interest rates that will recover when the Fed eases. This is structural. Hybrid and remote work have permanently reduced the amount of office space that companies need, and that shift is accelerating as AI tools compress headcount further. You need fewer desks when you need fewer people, and many of the buildings that were designed for a pre-AI workforce are becoming functionally obsolete faster than anyone expected.
An estimated 330 million square feet of US office space could become stranded by 2030, and roughly half of all commercial buildings in this country are over 50 years old. In 2025 alone, more than 35 million square feet of office space was removed through conversions and demolitions. They are not filling these buildings — they are tearing them down.
Chris sees this every day in his work. One of the most interesting things he talked about on the podcast was the extend-and-pretend problem in commercial real estate lending. Lenders are keeping zombie assets alive on their books rather than forcing the write-downs that would clear the market and allow recovery to begin. This isn't a correction that resolves in a year or two. Chris believes we're looking at a decade-long structural rebuild of the commercial real estate market.
And it's not limited to offices. AI is changing what industrial and warehouse space needs to look like as automation reshapes logistics and fulfillment operations. Retail has been evolving for years. The sectors that appeared resilient are facing their own versions of the same question: were these buildings designed for the economy that's emerging, or the one that's fading?
The performance numbers tell a similar story. In 2024, bitcoin returned over 120% while real estate as measured by VNQ returned roughly -1%. The S&P 500 returned about 25% and gold about 27%. In 2025, national home values grew by just 1.3%, which actually trailed inflation, meaning that in real terms, most homeowners got poorer. Commercial is the canary in the coal mine, but residential is not immune to the same dynamics. The monetary premium that has been embedded in property values for decades is starting to face real competition.
⚡ A Better Savings Technology
When you break down the specific attributes that have made real estate a good savings vehicle, bitcoin matches or exceeds nearly all of them.
Start with scarcity. "They're not making more land" has been the foundational argument for real estate's value for as long as anyone can remember. And it's relatively true — building new properties takes time, capital, and regulatory approval. But "relatively scarce" is not the same as "absolutely scarce." They are really, genuinely not making any more bitcoin. There will only ever be 21 million, and that supply schedule is enforced by mathematics rather than zoning boards. If scarcity is what you value in a savings vehicle, bitcoin wins this comparison decisively.
Liquidity is where the gap becomes enormous. Selling a property takes months and costs 5-6% in transaction fees. Selling bitcoin takes minutes and costs a fraction of a percent, and the market is open 24 hours a day, 365 days a year. You can sell 0.00000001 BTC if that's what you need. You cannot sell one percent of a duplex. For someone building toward FIRE, this liquidity advantage is massive. You can draw down $500 worth of bitcoin in a month without restructuring your entire portfolio. Good luck doing that with an investment property.
One of the things I find most interesting about the volatility comparison is that real estate is significantly more volatile than people realize. It just doesn't look that way because property values are not marked to market on a continuous basis. You only discover what your property is actually worth when you try to buy or sell it, and those transactions happen infrequently. In between, you're carrying an asset at whatever you think it's worth, but the market is constantly shifting underneath you. Each individual property is extremely bespoke, influenced by its unique characteristics, location, neighborhood dynamics, school districts, and a dozen other factors that make pricing it accurately very difficult. The overall real estate market may appear relatively stable, but your specific property has its own volatility profile that sits beneath the surface, invisible until transaction day.
Bitcoin, on the other hand, is more visibly volatile for two reasons. First, it's a much smaller market — less than $2 trillion compared to over $300 trillion for global real estate. Price moves are amplified when the market is that much smaller relative to the capital flowing through it. Second, and perhaps more importantly, the world is still in the early stages of understanding what bitcoin is and why it is valuable. We are in a price discovery phase where adoption and comprehension are still spreading, and as both deepen over time, volatility has been compressing cycle over cycle. Both of these factors are features of where bitcoin sits on the adoption curve, and both resolve over time.
On the maintenance side, the comparison is almost unfair. Owning property means paying property taxes, insurance premiums, maintenance costs, repair bills, and capital expenditure reserves, and dealing with tenants if you're renting it out. Owning bitcoin means holding your keys. That's it.
Now, I want to be honest about where real estate still has genuine advantages. Mortgage leverage is a powerful tool. A 30-year fixed rate mortgage at current rates is one of the cheapest forms of long-term leverage available to regular people, and I've written about using that leverage as a feature rather than a burden. Rental income is real cash flow that shows up every month. And the tax code offers meaningful benefits to property owners through depreciation, 1031 exchanges, and mortgage interest deductions. These are not trivial, and anyone thinking about this comparison needs to weigh them honestly.
But the migration is already underway. Chris sold most of his real estate to stack sats, and he is someone who brokers commercial real estate transactions for a living. When I heard him say that, I was not surprised, because I have a lot of clients at Unchained who are real estate investors and have been doing the same thing. They understand the liquidity advantages, the growth potential, and the simplicity of owning bitcoin, and once they reach that conclusion, divesting from real estate and moving into the asset they're more bullish about becomes a straightforward decision.
🧭 What This Means for Your FIRE Plan
If you are building a long-term wealth plan, I think the framework is pretty straightforward.
Your primary residence is a utility. Buy in a good area, use leverage wisely, and borrow against the equity to invest in assets with better growth potential. But be honest with yourself about what the house is earning you after you account for all the costs. Don't confuse the mortgage paydown and modest appreciation with strong investment returns.
Rental properties are optional, not foundational. If you have existing capital, real-world experience, and a appetite for running a property management business, they can be a valuable piece of your overall financial picture. But they should not be the starting point for someone who is new to their FIRE journey, and they should certainly not be treated as passive income. The people who are successful in real estate investing will be the first to tell you how much work it takes.
Bitcoin is where I believe your savings should live. It is the best savings technology available today — liquid, perfectly scarce, globally accessible, and requiring zero ongoing maintenance. I've laid out the case for this across dozens of issues of this newsletter, and the thesis only strengthens as adoption grows and the monetary premium that has historically been stored in other assets continues to migrate.
If you are currently a real estate investor and you're curious about bitcoin, my advice is simple: set up a dollar cost average using some of the cash flows from your properties. Get skin in the game and keep learning. If you decide it isn't for you, the bitcoin is liquid and you can sell it and reinvest in what you know. But odds are, once you start doing the research, you'll come to the same conclusion that Chris and many other real estate investors I've spoken with have reached — that bitcoin is a superior savings vehicle, and the logical move is to start shifting your portfolio in that direction.
The hybrid approach makes the most sense for most people: own your primary residence and use the equity strategically, stack bitcoin as your primary savings vehicle, and use real estate for income only if you have the capital and the desire to operate that business. What you don't want to do is treat real estate as your savings vehicle, your income strategy, and your retirement plan all at once. That is too much concentration in a single illiquid asset class, and it leaves you exposed to exactly the kind of structural shifts we're watching unfold right now.
That $393 trillion in global real estate value is not going to zero. Property serves real human needs, and it always will. But the monetary premium that has been baked into those prices for generations — the portion of value that exists because people used property as savings in the absence of a better alternative — that premium is starting to move. The question is how much.
Even a small percentage of that premium migrating into bitcoin would be extraordinary for its valuation, because bitcoin has a perfectly fixed supply. When capital flows into real estate, developers can build more. When capital flows into bitcoin, the supply doesn't change. We are potentially watching the largest asset class on earth begin to leak monetary premium into the hardest money ever created, and the math on what that means for bitcoin's price over the next decade speaks for itself.
If you want to hear the full conversation with Chris Drzyzga, check out this week's podcast episode. Chris brings a perspective that's hard to find — a commercial real estate professional who has put his money where his mouth is and chosen bitcoin.
If you're ready to start modeling what a bitcoin-forward FIRE plan looks like for your situation, check out the FIRE BTC Compass — it's built for exactly this kind of planning.
That's it for this week. Thanks for reading!
Until next time,
Trey ✌️