Alright, let’s be real—when most people think of investing, they default to the stock market. It’s what’s been drilled into us: “Just put money into an index fund and wait.” But you and I both know the stock market is a rollercoaster—wild swings, unpredictable crashes, and the kind of stress that makes you check your account five times a day.

 

If your goal is to build lasting wealth for your kids while keeping your sanity intact, let’s talk about why multifamily apartments are a less risky investment than the stock market. And I’ve got the numbers to prove it.

 

1. The Stock Market Is a Volatility Machine
If you’ve ever logged into your brokerage account and seen your portfolio down 10% in a day, you know exactly what I’m talking about. The stock market is subject to extreme swings, often based on things completely out of your control—Federal Reserve announcements, tech layoffs, geopolitical events, or just some billionaire tweeting nonsense.

 

Let’s look at the standard deviation of returns, which measures volatility:

• The S&P 500 has a standard deviation of around 15% historically.
• Multifamily real estate has a standard deviation closer to 7-8%, meaning it’s half as volatile.

That’s a huge difference. You don’t want to wake up one morning and see your retirement funds down 30% because of a bad earnings report from Apple.

 

Source: Investopedia on standard deviation and volatility

 

2. The Sharpe Ratio Favors Real Estate

Ever heard of the Sharpe ratio? It’s one of the most respected ways to measure risk-adjusted returns. Basically, it tells you how much return you’re getting for the level of risk you’re taking. The higher the Sharpe ratio, the better the investment.

 

• S&P 500 Sharpe Ratio (30-year avg): 0.39
• Multifamily Real Estate Sharpe Ratio: 0.90+

That’s more than double. In simple terms, you get way more return for the level of risk with multifamily than with stocks.

 

3. Stock Market Crashes Can Wipe Out Years of Gains
Let’s talk about actual stock market performance. The S&P 500 has averaged around 10% annual returns, but that’s only if you stay invested for decades and don’t get wrecked by a market crash.

 

Take 2008. The S&P 500 lost 38% that year. Investors who needed their money had to sell at a massive loss. Even the COVID crash in 2020 saw the market drop 35% in a single month before recovering.

 

Multifamily real estate?

 

During 2008, apartment investments only dipped around 6-7% in value and rebounded faster than stocks.
During COVID, multifamily assets continued generating rental income, and many markets actually saw increased demand for apartments.

 

4. Short-Term Gains in Stocks Are Minimal (Unless You’re a Lucky Day Trader)
If you invest in stocks, you typically have two ways to make money:

 

• Dividends – which are usually 2-3% per year if you’re lucky.
• Stock Price Appreciation – which is unpredictable and often slow.

Multifamily, on the other hand, generates cash flow from day one through rental income. Most apartment syndications offer:

 

• 6-8% cash-on-cash returns annually
• Total returns of 12-15% per year, including appreciation

And you don’t have to worry about timing the market or selling at the right moment to lock in gains.

 

5. Real Estate Is a Hedge Against Inflation
This is where multifamily apartments absolutely destroy stocks.

 

Inflation erodes stock returns over time. Even if the market grows at 7-10% per year, adjust for inflation, and your real return is much lower.

 

Real estate, on the other hand, thrives in inflationary environments. As inflation rises, so do rents. Property values increase because rental income increases.

 

Think about it—your tenants are basically paying you more over time just because the cost of living is going up. You won’t get that with stocks.

 

6. People Will Always Need a Place to Live
Tech stocks come and go. Remember MySpace? Blockbuster? Peloton? All darlings of the market at one point—now mostly irrelevant.

 

But people will always need housing. Multifamily real estate isn’t going anywhere. If you own a well-located apartment complex, it’s practically a necessity for people. No matter the economy, people still need a roof over their heads.

Even during downturns, demand for rentals stays strong because:

• People can’t afford to buy homes, so they rent instead.
• The U.S. is in a housing shortage—there aren’t enough apartments to meet demand.

Source: Harvard’s State of the Nation’s Housing Report

 

7. Tax Benefits Make Real Estate Even Safer
Investing in stocks? You get zero tax breaks. You pay capital gains tax when you sell, and dividend income is taxed too.

 

Real estate? Different story.

• Depreciation lets you write off property value, reducing taxable income.
• 1031 exchanges allow you to defer taxes when you sell and reinvest.
• Cost segregation lets you front-load deductions.

A stock investor might make 10%, but after taxes, fees, and inflation, they’re keeping much less. A multifamily investor might make the same or better and keep more because of tax advantages.

 

The Bottom Line
If you’re looking for stable, predictable wealth-building that won’t keep you up at night, multifamily real estate is a clear winner over the stock market.

 

Less volatility (lower standard deviation)
Better risk-adjusted returns (higher Sharpe ratio)
Cash flow from day one
Stronger performance in recessions
Massive tax advantages
A hedge against inflation

 

The stock market is great if you have 30+ years to wait and can stomach wild swings. But if you want consistent cash flow, stable returns, and long-term wealth for your kids, multifamily investing just makes more sense.

 

Helpful Resources
Standard Deviation Explained – Investopedia

Sharpe Ratio Explained – Investopedia

Commercial Real Estate as an Inflation Hedge – Forbes

Housing Report – Harvard

IRS Depreciation Guide – IRS

 

So, what do you think—ready to put more of your portfolio into real estate? Or do you want to grab a coffee and chat about a deal I’m looking at?