Multi-family Investors
For those with some cash available to invest who are trying to decide where to put their funds, multi-family apartments and small multi-family buildings provide a better option than stocks for several reasons:
Benefits of Multifamily Real Estate vs. Stocks
1. Predictable Cash Flow
- Multifamily units generate monthly rental income, often exceeding basic expenses like mortgage, taxes, and insurance.
- Stocks may pay dividends, but they’re typically smaller and less consistent.
2. Leverage
- Real estate allows you to use other people’s money (the bank’s) to build wealth. With a 20–25% down payment, you control 100% of the asset.
- In contrast, buying stocks typically requires paying 100% upfront (unless using margin, which carries significant risk).
3. Appreciation + Forced Equity
- Property values in the Twin Cities generally rise over time. You can also increase value through renovations, rent increases, or operational improvements.
- Stocks rely on market perception and are harder to influence directly.
4. Tax Advantages
- Real estate offers depreciation, mortgage interest deductions, 1031 exchanges, and more.
- Stock gains are subject to capital gains taxes and offer fewer sheltering strategies.
5. Inflation Hedge
- Rents and property values typically rise with inflation, helping protect purchasing power.
- Stocks may not always track with inflation and can lose value in volatile periods.
6. Control Over the Asset
- In real estate, you control decisions: who rents, what upgrades to make, and how to manage expenses.
- Stockholders are passive and have no influence over corporate decisions.
7. Tangible Asset
- A physical property offers real, usable value and cannot disappear overnight.
- Stocks are paper assets that can lose value quickly due to market swings or corporate mismanagement.