personal residence as an investment is not nearly as effect as the stock market I would say you are right. I personally think of my home as a somewhat necessary luxury for that reason. It is a liability and something I may never see a usable return from during my lifetime.

However, you seem to be arguing against investment rental properties not being as good as the stock market. If so you keep leaving many things (most already discussed through this post) out of the equation and assuming truths which do not reflect reality.

When you say "select properties" and "median properties" those are such arbitrary ideas which are not supported by the results of true real estate investing. We are not talking about gurus here but people who are willing to learn the industry and use proper controls to earn returns and not rely on appreciation.

If what you are saying is that people who do not want to be involved in their own finances, are not educated on real estate investment and who have no desire to know more will see greater returns in the stock market where they can purchase funds that do all the work for them then you are probably right. They will almost assuredly do better in the stock market funds than they would in purchasing a rental property/properties they did not know how to research, maintain, support or fund correctly. If this is the insight then than that logic is a no brainer and I cannot argue differently.

Buy and hold real estate on loan and repeat is much more reliable, repeatable and lucrative. These "select properties" you mention are all over, particularly in certain parts of the country and they are not nearly as difficult to locate as you probably think. During a recession the prices get even better and making 20% on what you purchase during those times is actually low sometimes.

There are so many reasons that such investors aren't seeking to run a billion $ fund with such returns. Lending is not cleared on property by just showing a percentage return and lenders almost never lend 100% . Management infrastructure to handle such investment would need to be vast and reliable and you would have to show that it is vast and reliable for for any loans or investors. Compliance expectations would be atrocious. As manager you are skimming the profits so the return will automatically not be that high for investors. This are from stream of consciousness so I'm sure there are others.

Not sure why 20% seems unreasonable anyway. There are many businesses that know they will make massive returns on a loan that will allow them to expand markets, capacity, production etc. Why do you think so many big businesses were taking loans when rates were low the last couple years? They are making more money than they are paying. Sometimes a lot more. I know its not apples to apples but the concept of borrowing to extend the power of your own money is the same. Back in 2011 where I lived in the midwest loans for investment property was hard to come by but if I could have I would have taken out millions of dollars in loans to purchase properties for pennies on the dollar if I could have. The equity would have tripled by now but more importantly the rental income on those locations now would leave the returns at 35% or more. At those returns it doesn't even make sense to sell unless the buyer is paying way over what it appraises at.