Invest in a Midwest Multifamily Building

Invest in a Midwest Multifamily Building

The housing shortage in the U.S. has now reached more than 4 million units, and persistently high mortgage rates and affordability concerns are limiting the number of buyers on the market. This difficult buying environment is leading more people to rent, with U.S. apartment occupancy rates rising in the first quarter, and supply is becoming constrained, tipping the balance towards landlords. Multifamily completions reached a 4-decade high in 2024, but construction has stalled since then, with multifamily starts dropping every quarter and now sitting at nearly 80% below where they were at their peak. This trend could benefit owners of multifamily apartment buildings in both the short and long-term, particularly in well-located markets.

Why Invest in Multifamily Real Estate?

Multifamily real estate offers investors consistent cash flow and the upside of value appreciation, which tends to come from two sources. First, cap rate compression, which tends to occur when interest rates fall, which they are projected to do in the coming years. Second, from rental and net income growth, which savvy owners can maximize with value-add improvements and operational efficiencies. Private multifamily investments can potentially offer several other timely benefits to self-directed investors. 

During volatile periods such as the one we find ourselves in currently, multifamily may outperform other asset classes due to the essential nature of the underlying asset. Stocks and other highly liquid asset classes may move closely with inflation readings, earnings reports, and other headlines. But everyone needs a place to live, and that tangible demand can drive cashflow even in uncertain times. Multifamily investments also can act as an inflation hedge, as rents tend to rise with inflation and operators can take advantage through efficient lease management and operations. Private real estate investments also have the potential to offer “pass-through” tax benefits to investors, including bonus depreciation and accelerated depreciation to create “passive losses.” 

Within the multifamily asset class, Class B assets are a particularly attractive option, and have been outperforming Class A and Class C assets. A disproportionate share of new construction were luxury, Class A assets, leading to an undersupply of Class B buildings, which tend to have value-add potential and can be acquired at a discount to replacement cost. With rental demand rising alongside inflation and affordability concerns, Class B properties are positioned to benefit from the current macroeconomic environment.

However, it can be difficult for investors to access the asset class, with the high cost of entry, and a lack of institutional-grade opportunities. Lightstone DIRECT aims to change that.

Who is Lightstone DIRECT?

Lightstone DIRECT is a new investment platform created by Lightstone, one of the largest privately held real estate investment firms in the U.S. Founded in 1986, Lightstone has a portfolio of roughly 25,000 multifamily units, 15+ million square feet of commercial and industrial properties, and more than 5,000 hotel rooms across the country, with a total value of more than $12 billion. They own more than 14,000 units in the Midwest, and more than 10,000 units in Michigan. Prominent holdings include the 66-story Manhattan luxury condominium building 130 William Street, the 430-unit Brooklyn luxury apartment building 365 Bond Street, and award-winning Moxy hotels in New York, Miami, and Los Angeles.

Lightstone was founded by David Lichtenstein, who built the company from a single-family investment in 1986 into a multifaceted, institutional real estate owner/operator that has played in all the major CRE asset classes. In 2012, David partnered with Mitchell Hochberg, who has decades of experience developing residential, commercial, and hospitality properties. After four decades, David remains CEO of Lightstone and Mitchell is the current President. Both David and Mitch were recognized on Commercial Observer’s 2025 Power 100, and Lightstone has been named one Crain’s Best Places to Work in NYC the past three years.

Now, through its Lightstone DIRECT arm, the company is inviting the public to co-invest in single-asset multifamily and industrial assets – the very same that Lightstone pursues with its own capital. Lightstone DIRECT will offer individual investors direct access to institutional-grade real estate investments across asset classes, deals that have historically eluded individual investors. Hidden Lakes is their first multifamily opportunity, following a successful industrial real estate deal that was their initial offering.

Why invest with Lightstone DIRECT?

Lightstone DIRECT gives investors the opportunity to invest alongside Lightstone, an extremely successful real estate operator with a decades-long track record of performance. Over its dozens of realized investments across 27 states and numerous asset classes, Lightstone has achieved a 27.6% IRR and a 2.54x multiple on invested capital (MOIC) on deals exited since 2004*. In 2025, Lightstone’s multifamily portfolio averaged 94% occupancy, posted 2.7% rent growth, and delivered 5.8% NOI growth, outperforming national averages**.

Their in-house property management team is based in Michigan, and their portfolio includes more than 10,000 units in Michigan accumulated over more than two decades, underscoring their high level of expertise in the state. This allows them to identify superlative deals, such as Hidden Lakes, and operate it with maximum efficiency. Investors will also be supported by in-house accounting and operational teams.

Every Lightstone DIRECT project has been sourced and diligenced by Lightstone’s team of experts, and is vetted by the same investment committee and has met the same requirements as all of Lightstone’s investments. Lightstone itself will invest a minimum 20% of the equity into each Lightstone DIRECT deal, and oftentimes will invest a considerable amount more.

Up until now, investors wanting access to these types of investment opportunities have had to choose between crowdfunding and direct-to-sponsor platforms or semi-liquid private REITs. Beyond the relative lack of experience and track record of many of these platforms, they are generally reliant on investor money to close deals. Lightstone DIRECT has the benefit of a strong balance sheet and it bears repeating that their deals would be closed with or without outside investment. While REITs can offer investors access to a large portfolio of assets, they don’t offer investors the ability to pick and choose their projects, and are often pressured to deploy capital quickly and overpay for assets. Lightstone DIRECT can afford to be selective and has the resources and capabilities to move quickly when opportunities arise.

With Lightstone DIRECT, there is no middleman, and everyone’s incentives are aligned. Investors get the benefit of decades-old institutional infrastructure to manage the projects, and Lightstone sources more capital to invest in more projects, expanding their portfolio further. The fee structure is simple and transparent, with no hidden charges, ensuring that Lightstone wins when you win.

Co-invest with an established institutional player

Investing in multifamily real estate is a great option, as long as it is the right building in the right market with the right operator. Lightstone DIRECT is offering investors a rare chance to get equity exposure in a large-scale multifamily property, while benefiting from their decades of experience identifying strong investment opportunities and operating these types of properties.

_{*As of 12/31/25}

_{**Past performance does not guarantee future results. All investments involve risk. Visit lightstonedirect.com for a full set of disclosures.}