Withholding monthly payments is certainly not the only mechanism for extracting reasonable behaviour from the landlord, and in fact the law related to withholding rent payments is different in every jurisdiction and typically has many complicated conditions and exceptions. The availability of that remedy may also depend on the terms of the lease. Please carefully study the law applicable in your jurisdiction before considering this proposed course of action.
Assuming the landlord is solvent, an alternative way of conducting business is simply to continue to pay the rent on time, and then assert any claims you might have by sending a letter to the landlord setting out the legal basis for those claims and the damages that you are requesting therefor. You can then negotiate a settlement of the claims, or, if that process breaks down, you can file suit.
That said, I still agree that paying a year upfront should warrant a larger discount than the stock market, and certainly larger than 3%. The transaction is more comparable to a loan than to a broad US stock market equity investment insofar as you may be able to recover the money in the future if something goes wrong, but how much you can recover will depend on the creditworthiness of the landlord. The loan is also essentially unsecured. (The only "security" is the right to live in the property, but as Shane points out, there are various contingencies that could reduce the value of that right.) So, in order to decide what discount you should accept, you should evaluate the landlord's credit record, financial assets, income level, and educational and professional background just as if you were any other unsecured lender and determine what interest rate you are comfortable with. The landlord will probably not disclose that information to you, so you'll have to ballpark it, but 3% sounds far too low, and even 8% is probably on the low side of what you should accept.