Should You Add Single-Family Properties to a Multifamily Portfolio? Ron Cadman Says Yes

Multifamily property investment can generate significant wealth in a relatively short time. So, why add single-family rentals into the mix? In the following article, Ron Cadman discusses the benefits of maintaining a diversified real estate investment portfolio. Ron Cadman is co-founder of Investar USA.

Multifamily rental investments are among the best assets for wealth generation. If you have multifamily property in your portfolio, the tax benefits, regular cash flow, and control over the value of your investment makes you well-positioned to earn substantial long-term returns. Nevertheless, you may want to add single-family properties to your investment package, too. Here are a few reasons why.

Single-family units are easier to sell than multifamily.


While multifamily rentals are excellent revenue generators, having single-family properties can be a boon if you ever need to sell. Because single-family has a much lower barrier to entry than multifamily, there is a far larger pool of buyers.

Older people prefer single-family units.


Older renters are among the most stable. They are more likely to have steady income, they typically stay in the same home for the long term, and they tend to be low-maintenance tenants. If you want to attract a solid, low-turnover tenant pool, it's wise to have single-family units available.

Many older consumers who want to downsize are attracted to single-family units. Although they may prefer the ease and cost-effectiveness of renting – they don't have to worry about maintenance or property taxes – they also prefer a single unit dwelling to a home in a densely populated multifamily property.

Diversification is a good thing.


If you want to diversify your portfolio, single-family rentals are a wise investment. If an economic downturn hits the city where your multifamily property is located, having single-family rentals in another market could save you from taking a major financial hit.

Ron Cadman has been a real estate investment consultant for more than 30 years.

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