For years, we’ve been told that the stock market is the best way to build wealth. “Invest consistently, hold for the long term, and one day you’ll retire rich.”
But the problems that I’ve encountered with stocks are that they’re risky and volatile (performance is based on investor sentiment), they don’t produce monthly cash flow, and you have to pay taxes when you sell your shares.
And if you need to sell during a downturn, you could lose a significant chunk of your investment.
With these problems, why is it still the first asset people invest their money in? Is there a better alternative that lets you keep more of your money and pays you monthly?
I’d argue that multifamily real estate is that alternative.
Not only does it provide steady cash flow, lower risk, and better returns, but it also comes with massive tax benefits that stocks just can’t offer.
In this post, I’ll make my case for why multifamily syndications are the best alternative to the stock market and how you can use them to build wealth—passively.
The Hidden Problems with Stocks
I used to invest in the stock market. Lots of my investors who invest in my apartment buildings had or have money in stocks. What each of us realized about stocks boils down to 5 things:
1️⃣ Market volatility – Stocks are unpredictable. A 10% market drop can wipe out years of gains in days. If you need to sell during a downturn, you lock in losses that could take years to recover.
2️⃣ No cash flow – This is my biggest problem. Unless you’re trading stocks actively (which is risky), your portfolio doesn’t generate monthly income. The only way to make money is to sell your shares, which isn’t ideal for long-term wealth building.
3️⃣ High taxes – When you sell stocks, you pay capital gains taxes. If you’ve held for more than a year, it’s 15% (or more). If you’ve held for less than a year, it’s even higher—up to 37%! I like to keep more of the money I earn from my investments, what about you?
4️⃣ Inflation erodes value – Even if your portfolio grows by 8-10% per year, inflation eats away at your real returns. After adjusting for inflation, stock market returns can be much lower than expected.
5️⃣ No control over returns – Your wealth depends on market conditions, corporate decisions, and economic trends that you can’t control.
Now let’s compare this to multifamily real estate and why it’s a better option for building wealth.
5 Reasons Multifamily Syndications Beat Stocks
1. Lower Risk, More Stability
Everyone needs a place to live, no matter what the economy is doing. That’s why multifamily real estate is far less volatile than stocks.
Even during the 2008 financial crisis, multifamily loans had delinquency rates of just 0.4%, while single-family mortgages skyrocketed to over 4% delinquency.
Simply put, apartment buildings don’t crash the way stocks do.
2. Above-Average Returns
The stock market averages 7-9% annually, but when you factor in inflation, taxes, and fees, your real returns are much lower.
Meanwhile, multifamily syndications typically generate 15-20% average annual returns. That’s double what stocks provide—without the rollercoaster of market swings. And you’ll get to keep more of that money because of the tax advantages (we’ll get to that later in this list).
3. Monthly Cash Flow
Unlike stocks, multifamily syndications generate passive income every single month. As a limited partner, you get paid from rental income, without doing any of the work.
That means instead of waiting 30 years to cash out, you can start earning passive income immediately.
4. Massive Tax Benefits
One of the biggest secrets of the wealthy is how they use real estate to pay less in taxes.
Here’s how it works:
- With depreciation, you can write off part of the property’s value every year.
- Bonus depreciation allows investors to take massive upfront deductions.
- These “paper losses” offset rental income, meaning you can collect cash flow tax-free.
For example, if you invest $100,000 in a multifamily syndication and earn $10,000 in distributions, depreciation can completely wipe out your tax bill on that income.
Compare that to stocks, where every sale triggers capital gains taxes.
5. Built-in Inflation Hedge
Inflation is a silent killer of stock market returns. But with multifamily real estate, inflation actually works in your favor.
When inflation rises, so do rents. And because operating costs don’t increase at the same rate as rents, your net income grows faster than your expenses.
For example:
- If rent is $2,000 per unit and expenses are $1,000 per unit, your profit is $1,000 per unit.
- If inflation pushes rents up 10%, you now collect $2,200 per unit.
- But if expenses go up 10%, that’s only $1,100 per unit.
- Your profit increases from $1,000 to $1,100 per unit, meaning you make MORE money in an inflationary environment.
Stocks can’t do that.
The Best Part? Multifamily Syndications Are 100% Passive
Most people think investing in real estate means buying and managing rental properties — handling tenants, repairs, and property management headaches.
But with multifamily syndications, you invest passively while a professional team handles everything.
✔ You don’t have to find deals.
✔ You don’t have to manage tenants.
✔ You don’t have to deal with repairs.
You just invest, collect cash flow, and profit when the property sells.
Final Thoughts: Stop Relying on the Stock Market
The stock market has too much volatility, no cash flow, and heavy taxes. Multifamily investing provides steady passive income, lower risk, and higher returns—all while keeping more money in your pocket.
If you’re looking to invest in multifamily real estate and want to learn more about how we evaluate deals, we’d love to connect with you.
Want to learn more? Head to nighthawkequity.com/intro to book a call with us. Let’s see if our deals are the right fit for your investment goals!
To your success,
Michael Blank
