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Why Multifamily Real Estate is the Ultimate Cash Flow Business
Methods of Prosperity newsletter no.107: Sean Allen Fenn (personal anecdote)
Sean Allen Fenn
July 03, 2025
Rich people acquire assets. The poor and middle class acquire liabilities that they think are assets.”
Most creative people don’t make creating generational wealth a priority.
They make their life harder by not focusing on money.
They get into the wrong business.
But after careful consideration, I found what works for me.
And yes, anyone can do it.
Let me explain it this way, I’m first and foremost a musician. I’m an artist. I’m an entrepreneur. How good I am at any of those things is another story. After decades of ignorance, I discovered one thing to be true.
It’s not what you do that matters as much as what you own. That is, you must own assets or you will never gain financial freedom. This is a fact. Not my opinion.
The reality is, no matter how hard you work, you must capture the fruits of your labor. In other words, you have nothing if you have no store of value. Which can take the form of bitcoin, gold, stocks, bonds, equity in a business, or real estate. It can even be fine art.
So I had that realization, but I still had a problem to solve. That is: cash flow.
My first entrepreneurial adventure, Artlyngo, didn’t have cash flow. I also own SAFE New Media. Most media companies rely on advertisers for cash flow. There had to be another way. Which made me wonder.
What if, instead of starting from scratch and building cash flow, what if we buy it?
My father is a real estate professional. He’s been working in real estate in some capacity since the 1980’s. He worked for companies on the asset management side since 1979. At least one of those companies was a Multifamily real estate syndicator. They bought apartment buildings and hired him to manage them. He knows that business. I grew up as the son of an asset manager.
Around the summer of 2023 it hit me.
Multifamily real estate – apartments of 100 units – is the perfect cash flow business. Why?
Unlike other products and services, it has another layer stacked on top: access.
Think about it. What kinds of businesses exist? There are only four.
1. product
2. service
3. membership or access
4. money lending
The problem with most products and services is demand. There might not be a demand for unicycle riding bowling pin jugglers.
But there is ALWAYS a demand for rental apartments.
Sure, there are a lot of factors (see below).
It’s a combination of always-present housing need with access-layer value. Which creates a resilient investment class. One that should continue attracting capital and generating steady returns.
It’s now less likely for most people new to the housing market to be able to buy a single family home. Rental income is one of the only sources of income which beats inflation. As an asset class, there are very few good alternatives to Multifamily real estate.
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I like you,
– Sean Allen Fenn
PS: Economic, Social, and Technology factors are explained below.
Methods of Prosperity newsletter is intended to share ideas and build relationships. To become a billionaire, one must first be conditioned to think like a billionaire. To that agenda, this newsletter studies remarkable people in history who demonstrated what to do (and what not to do). Let me know how I can help you out. For more information about the author, please visit seanallenfenn.com/faq.
Economic Factors
Housing Affordability Crisis
Record home prices: Single-family home prices hit an all-time high of $412,500 in 2024, up 60% since 2019 Boston Fed
Mortgage rate barriers: 30-year fixed rates around 7-7.5%, making homebuying expensive and keeping potential buyers in rental market
Income-price gap: Nearly half (49%) of U.S. households can't afford a $250,000 home NAHB
Supply shortage: The U.S. housing market was short 4.9 million housing units in 2023 Brookings
Construction Decline Creating Scarcity
Multifamily construction falling: Annual deliveries dropped 30% in Q1 2025; forecast to decline 42% from 2024 to ~400,000 units in 2025
Pipeline contraction: Under-construction pipeline shrunk from 1.16 million units in Q1 2023 to 650,000 units by Q1 2025 (42% drop)
High financing costs: Elevated interest rates made development financing expensive, causing construction starts to plunge to decade lows
Rental Market Fundamentals Strengthening
Vacancy declining: Overall vacancy began falling from 8.3% peak, projected to drop below 8.0% by year-end 2025
Rent growth returning: After stagnant growth in 2023-2024, rents are projected to grow 2-3% in 2025 as supply tightens
Record absorption: First-quarter 2025 net absorption reached ~130,000 units as demand outpaced supply
Social/Demographic Factors
Generational Housing Patterns
Gen Z driving demand: Now the primary source of new rental demand, with 7.9 million renter households in 2022 Harvard JCHS
Millennial transition: While moving toward homeownership, millennials still represent 16.2 million renter households at peak
Baby Boomer return: Aging boomers (78M people) downsizing from homeownership back to rentals for accessibility and reduced maintenance
Lifestyle and Social Trends
Delayed homeownership: Gen Z and millennials delaying marriage, having smaller households, preferring flexibility
Urban/suburban amenities preference: Younger generations value walkability, social spaces, and lifestyle amenities
Mobility preferences: Renting provides flexibility for job changes and lifestyle adjustments
Immigration and Migration Patterns
Net immigration surge: ~2.3 million net immigrants in 2023, driving nearly 1% population growth
Young adult demographic: Immigrants tend to be ages 20-40 with high rental propensity
Regional migration: Continued migration to Sun Belt and tech hubs spreading rental demand
Income and Housing Cost Dynamics
Cost burden crisis: Record 22.4 million renter households (50%) spend more than 30% of income on rent
Middle-income squeeze: Cost burdens rising fastest for households earning $30,000-$74,999 annually
Higher-income renters growing: Number of renter households with $75,000+ incomes rose 43% since 2010
Technology Factors
PropTech Revolution
Smart building demand: Gen Z and millennials seeking in-unit technology like smart thermostats, locks, and access controls
Market growth: Smart Home market projected to reach $154.4 billion in 2024 with annual growth rate of 9.3% through 2033
Operational efficiency: Property tech improving building operations, security, and tenant experience
Remote Work Impact (Evolving)
Hybrid work trending: 24% of new jobs offer hybrid arrangements as of 2025, up from 9% in Q1 2023
Space requirements changing: Remote workers need larger living spaces with home office capabilities
Geographic flexibility: Technology enabling location-independent work, supporting migration to affordable markets
Digital Infrastructure Demands
High-speed internet essential: Reliable connectivity now a basic amenity requirement
Smart amenities expected: Younger renters prioritizing buildings with app-based services, package management, and digital concierge services
Data analytics: Property owners using AI and analytics to optimize pricing, maintenance, and tenant satisfaction
Market Implications
The convergence of these factors creates a “perfect storm” for sustained apartment rental demand:
Economic pressure keeps potential homebuyers in rental market longer
Demographic waves provide continuous stream of new renters
Supply constraints from reduced construction create scarcity
Technology enhancements make rental living more attractive and efficient