Traditional retirement plans have had a long run. For decades, people were told to stash cash into their 401(k), wait 30 years, and cross their fingers that the market would smile kindly when it was time to retire. But if you’ve ever watched your retirement account whiplash with the headlines, you’ve probably thought: “Is there a better way to build wealth?”
Spoiler alert: there is.
Multifamily real estate investing doesn’t just offer an alternative—it offers control, cash flow, and real assets you can feel good about. So before you park another dollar in your 401(k) or IRA, let’s walk through why investing in multifamily real estate might make more sense for long-term financial growth.
Let’s Talk Control—Who’s Steering the Ship?
If you’ve got a 401(k) or IRA, you’re not exactly in the driver’s seat. Your options are usually a handful of mutual funds, ETFs, and whatever pre-packaged picks your provider thinks are “balanced.”
Meanwhile, when you invest in multifamily real estate:
- You choose the deal
- You know the operator
- You see where your money’s going
You’re not just a number in a fund. You’re part of an actual property acquisition. With a good team behind you, you’ll get updates, cash flow, tax benefits, and a share of the upside—without needing to manage the asset yourself.
Compound Growth Is Cool. But What About Cash Flow?
One of the biggest knocks on retirement accounts? They’re locked up.
Sure, you might be earning 7–8% annually (on a good year), but you can’t touch it without penalties until you’re 59½. And if you’re hoping for a smooth ride? Not likely. The market goes up, down, sideways—whatever mood it’s in that week.
Multifamily real estate, on the other hand, pays you while your investment grows. Monthly or quarterly distributions? That’s passive income in your pocket today—not 30 years from now.
Take a look at this side-by-side.
Infographic: 401(k) vs. Multifamily Real Estate
| Feature | 401(k)/IRA | Multifamily Real Estate |
|---|---|---|
| Liquidity | Limited before 59½ | Typically 3–7 year hold period |
| Control | Low | Moderate (depends on the deal) |
| Cash Flow | None | Monthly or quarterly payments |
| Tax Advantages | Deferred | Depreciation & sheltering |
| Inflation Hedge | Weak | Strong |
| Tangible Asset | No | Yes |
What About Taxes?
This one’s a no-brainer. Multifamily investing is one of the most tax-efficient strategies out there.
Here’s why:
- Depreciation lets you reduce taxable income without reducing actual cash flow
- Cost segregation accelerates those deductions
- 1031 exchanges let you defer capital gains taxes
- Loan paydown builds equity, tax-free
Compare that to your 401(k), where:
- You pay taxes when you withdraw
- Required Minimum Distributions (RMDs) kick in at age 73
- You have no real way to influence your tax exposure
Multifamily wins hands down in the tax department.
What If the Market Tanks?
If the stock market crashes, your 401(k) usually drops with it. No matter how diversified your mutual funds are, you’re still tied to Wall Street’s roller coaster.
Multifamily real estate, especially in solid markets, holds up far better. People always need a place to live, even during economic downturns. And when you invest in well-managed, cash-flowing apartment buildings, your returns aren’t just based on appreciation—they’re backed by rent checks from real tenants.
Not to mention, inflation actually helps real estate values and rents climb.
Let’s Look at Real Returns
Over the long haul, multifamily real estate has delivered 10–15% annualized returns—often higher when value-add strategies are in play.
Compare that to the historical stock market average of 7–8% after inflation.
Oh, and don’t forget: those real estate returns often come with far less volatility and actual cash in hand.
Chart: Real Return Comparison
| Investment Type | Average Annual Return | Access to Cash | Volatility |
|---|---|---|---|
| 401(k) | 7–8% (after inflation) | None before 59½ | High |
| Multifamily Real Estate | 10–15% (annualized) | Quarterly | Low–Medium |
Let’s Talk Legacy
Ever try to pass a 401(k) to your kids? It’s not simple. IRAs can have complicated inheritance rules. And don’t get us started on the taxes involved.
Real estate is much easier to transfer, and with proper planning, it can pass to your heirs tax-free through stepped-up basis. That means your kids won’t owe capital gains taxes on the appreciation if they inherit your properties.
That’s what we call building legacy wealth.
Is Multifamily Real Estate Perfect?
No investment is risk-free. Real estate comes with its own challenges—like tenant turnover, market shifts, and rising expenses. But when you invest with experienced operators, those risks are managed through solid underwriting, conservative projections, and proactive asset management.
At Follow The Deal, that’s exactly how we invest. Our mission is to help high-performing professionals put their capital into real estate assets that generate cash flow today and build wealth long-term.
So, Why Choose Multifamily Over a 401(k) or IRA?
Let’s sum it up in plain terms:
- Cash flow now vs. maybe later
- Tax benefits today vs. tax surprises later
- Tangible assets you can see vs. paper assets you can’t control
- Protection against inflation instead of watching your dollar shrink
- Direct ownership with real returns vs. riding the Wall Street wave
If you want to build real wealth, gain more control over your financial future, and create passive income you don’t have to wait decades for—multifamily real estate might just be the better bet.
