A report from the CoStar Group found that there were 5.6 million inexpensive market-rate apartment units in the U.S.
Bloomberg reports that these cheap, unsubsidized apartments can be good deals for renters on a budget, but also developers looking to flip a profit. For instance, a 61-unit complex in Portland, Ore., was purchased by a developer who plans to renovate the building, add features and amenities, and charge higher rents.
These apartments tended to be older buildings with low-end finishes. Apartments in central, transit-oriented locations got the most interest from developers.
But the old age of cheap market-rate apartments is a double-edged sword for poor renters. Owners of aging apartments that can’t command high rents don’t have a lot of incentive to make improvements, creating a housing stock that becomes less habitable over time. Cheap apartment units in improving neighborhoods, on the other hand, can be attractive targets for value-add investors—who make repairs and increase rents.