The classic 60/40 mix – 60% stocks and 40% bonds – is often the standard for building a balanced investment portfolio. But stocks and bonds can swing at the same time, leading portfolios down a steep decline when they do.
Because of this risk, many investors are rethinking the standard formula to add multifamily real estate to their investment portfolio because of its ability to smooth out swaying stocks and bonds.
Stocks offer growth with a high level of risk.
Bonds offer stability with less risk, but, also, more commonly with less overall growth.
Multifamily real estate offers something in between: steady cash flow backed by a real, tangible asset.
Unlike equities, multifamily real estate values aren’t driven by daily market sentiment. Instead, they’re supported by rent payments and long-term demand for housing (which, in fact, will never diminish, since people always need a place to live).
That means when stocks drop or interest rates move, multifamily doesn’t necessarily move in the same direction.
In investing terms, that’s called low correlation, and it’s one of the keys to reducing overall portfolio volatility.
Let’s walk through a sample allocation that illustrates this combination in theoretical practice as well as the potential outcomes it brings:
Modeling the Difference of Portfolios With and Without Multifamily Real Estate
Let’s say Portfolio A uses the traditional 60/40 mix:
- 60% stocks
- 40% bonds
And Portfolio B diversifies with multifamily:
- 50% stocks
- 30% bonds
- 20% multifamily
In plain terms: adding multifamily helped investors earn about the same (or slightly more), but with fewer ups and downs along the way.
What the Outcomes Look Like
Here’s what tends to happen when multifamily is added to the mix:
- Returns remain steady.
Historical data shows multifamily real estate investments experience less volatility and greater long-term growth potential. For example, during the Great Recession of 2008, the multifamily sector returned 5.2% while the S&P 500 dropped 37%. - Volatility decreases.
Because multifamily doesn’t follow stock market swings, the overall portfolio experiences smaller dips during economic downturns. - Income becomes more predictable.
Multifamily generates ongoing rental income, offering consistent cash flow even when public markets are unstable.
For investors focused on both long-term growth and stability, this combination can strengthen overall portfolio performance without adding unnecessary complexity (or volatility).
Your Partner in Multifamily Real Estate Investment
CEP Multifamily focuses on the same attributes that make multifamily powerful in portfolio models:
- Targeting workforce housing, where rental demand stays strong across market cycles.
- Pursuing long-term holds, which naturally smooth out short-term volatility.
- Maintaining strong property operations, to protect cash flow and returns.
These three pillars support our ability to provide stability, income, and measured growth inside our investors portfolios.
Ready to Diversify Your Investment Portfolio?
Diversification is about adding the right mix of investments — not just more. Modeling multifamily into a balanced portfolio can show investors firsthand how it improves both resilience and performance over time.
Get in contact with our team if you’re ready to reap the benefits of adding multifamily to your own investment portfolio.
