Are you comparing a Louisville multifamily investment to “set-and-forget” stock market returns? Here’s what most real estate blogs won’t show you: The numbers reveal that a smart 7-unit multifamily deal in West Louisville often leaves the market in the dust—especially after taxes are factored in.
As an advisor who’s worked with investors through many Louisville market cycles, I’ll break down the real data, the unique levers you can pull in Louisville multifamily assets, and why even professional management can make real estate hands-on—sometimes for the better.
Why Louisville Multifamily Assets Belong in Your Portfolio
What the Numbers Say (And Why They Matter More Than Hype)
Scenario:
- Acquisition Price: $579,900
- Down Payment: $115,980 (20%)
- Fixed Mortgage: $463,920, 7%, 20 years
- Year 1 Gross Rent: $77,340—about $11,049 per unit/year (competitive for West Louisville)
- Rent Growth: 2% annually
- Expenses: 5% vacancy, 8% professional management, real-world repair, tax, insurance, and admin costs (all at 2% inflation)
- Annual Debt Service: $43,224
- Assumed Appreciation: 3.2% annually
Powerful Depreciation: Through cost segregation, this 7-unit Louisville multifamily property generates $35,000/year of accelerated depreciation deductions—totaling $175,000 over 5 years.
- For a 31% tax bracket investor, that translates to $10,850/year in actual tax savings—totaling $54,250 over 5 years.
- Result: Your net operating income (NOI) is essentially federal tax-free for several years.
Cash-out Refi and Growing Equity:
- Year 5 Value: $678,815
- New 75% LTV Loan: $509,111
- Loan Paydown in 5 Years: $393,257 remaining
- Cash-Out after Closing Costs: $108,854—tax-free
- Remaining Equity (25% stake): $169,704
The Wealth Stack: After Five Years
| Source | Total (5 Years) |
| Net Cash Flow | $60,926 |
| Federal Tax Savings | $54,250 |
| Cash-Out Refi | $108,854 |
| Remaining Equity | $169,704 |
| Total Wealth | $393,734 |
A Real Life Story:
Last year, I guided a local investor through acquiring a West Louisville multifamily property. What surprised them most? Their effective federal tax rate dropped dramatically, and their cash-out refinance funded another acquisition—without any taxable event. That’s how you build a true portfolio, not just a savings account.
Market Investing: The Numbers and the Hidden Cost of Simplicity
- Investment: $115,980 in a 10% average-return index fund (the S&P 500 has averaged close to this long-term, but annual swings can easily hit -20%/+30%: see source, Yahoo Finance 2024).
- 5-Year Value: $187,180
But When You Sell…
- Gain: $71,200
- Typical Federal Capital Gains Tax (20%): $14,240
- After-Tax Proceeds: $172,940
You can’t refinance, and you can’t defer taxes when accessing cash. Each time you sell, Uncle Sam collects.
Real Estate Involvement: Not “Passive”—But Worth the Effort
Let’s set expectations: real estate, even with outstanding professional management, will never be as hands-off as market investing. From occasional renovation decisions to reviewing rent rolls, some engagement is required. But that added attention gives you:
- Control over expense management, rent growth, and strategic improvements.
- Ability to directly influence NOI and appreciation (the “levers” market investors can only hope for).
- Unique access to tax-free equity through refinancing—something not possible in traditional market investing.
Why West Louisville Multifamily Holds a Strategic Edge in 2025
- Vacancy in professionally managed assets: Below 4% in Q2 2025
- Rent per door: $950–$1,100/month for 2-bed units
- Investor demand: Multifamily assets see regular multiple-offer situations—top buyers are those leveraging cost segregation for maximum after-tax cash.
Side-by-Side Summary: See What You Really Keep
| Net Cash & Tax | Tax-Free Cash-Out | Remaining Equity | Total Wealth (5 Years) | After-Tax Market Value | Asset Still Owned? | |
| 7-Unit MF | $115,176 | $108,854 | $169,704 | $393,734 | N/A | Yes |
| Market | $0 | $0 | $0 | $172,940 | $172,940 | No (after selling) |
Final Thoughts: Which Fits Your Goals (and Time)?
- Multifamily investing isn’t 100% passive, but with management and strategy, your after-tax yield and flexibility can’t be matched by the market alone.
- Depreciation means years of tax-free cash flow, compounding your wealth.
- Refinancing unlocks tax-free liquidity—you don’t lose part of your gains at every exit.
- The market is simple and requires little involvement, but capital gains and no mid-hold access to dollars limit your options.
- Both strategies ride cycles: diversification is wise for most portfolios.
Take Action and Build Smarter Wealth
- Book a portfolio review to model these numbers on your actual multifamily possibilities.
- Want deeper insight on cost segregation, acquisition strategy, or funding? Let’s discuss your plan, no obligation.
Ready to see what multifamily ownership could mean for your portfolio? Contact me today, or download the free West Louisville Investment Worksheet to start mapping your return.
“Jonathan Klunk is a licensed real estate agent in Louisville, KY with EXP Realty, as of this writing. This content is for informational purposes only and should not be considered legal or financial advice. Always consult a qualified real estate, legal, or financial professional before making decisions.”
