Properties with between two and 49 units are 54 percent of all rental housing in the U.S., according to a new report. Many of these buildings, though, are between 30 and 50 years old.
The Urban Land Institute broke down the recently released Understanding the Small and Medium Multifamily (SMMF) Housing Stock, which examined challenges to develop new small and medium-sized rental properties in many metro areas.
Developers have figured out that they get a higher return on investment with large, high-end, and luxury apartment projects.
“Overall, a 50-unit project requires about the same amount of development work to execute as a 150-unit project, but the margins for the developer on the 50-unit project are lower and the cap rates/valuations are also generally lower,” says Curt Gunsbury, owner of the Solhem Companies.