Multifamily properties are residential buildings with multiple units. Investing in multifamily construction can be an excellent way to earn a significant and reliable return. These properties can range from small properties with only a few units to large, high-rise buildings with potentially hundreds of tenants.

Especially common in densely populated areas, multifamily buildings are popular with everyone from first-time buyers to retirees to wealthy buyers seeking premium condominiums. Understanding the various types of multifamily housing and current opportunities can help you make wise choices about investing in multifamily construction.

Is Multifamily Commercial or Residential?

This common question is one of the first parts of understanding multifamily construction. These properties are residences; however, they are treated as commercial construction and investments in most cases. This is because they are usually a commercial undertaking intended primarily to earn a return rather than provide a home for the owner. This line can sometimes get blurred, especially for small properties.

Multifamily Construction Types

There are many types of multifamily housing. If you want to invest in multifamily construction, it will be one of the following four types of projects.

Duplexes, Triplexes, and Quadplexes

These are the smallest variety of multifamily properties. They are buildings with either two, three, or four units. These can be developed when a homeowner renovates a large home into two or more smaller units. In some cases, the owner may live in one of the units while renting or selling the other.

Alternatively, these types of properties are also developed as new construction. Again, this may be with the intention of living in one unit while earning some income from the other units.

Condominiums

A condominium building is a type of multifamily property in which the ownership of the building is divided by unit. As a new construction project, condominiums are built to sell the individual units to homebuyers. Therefore, they are often designed and built with a specific lifestyle in mind, such as young professionals or retired persons. Condominiums offer a great way to invest in real estate, especially for first-time buyers. They provide the advantages of multifamily communities with the opportunity to own. Condos can also be rented to tenants.

Apartment Buildings

Apartment buildings are owned by a single entity, and each unit is rented to different tenants. About one in five Americans live in a multifamily rental property such as an apartment building. Although duplexes, triplexes, and quadplexes can be built as small apartment buildings, this term usually refers to those with a larger number of units. This is a popular type of multifamily construction thanks to the reliability of long-term rental income.

Townhouses

Townhouses are a type of terraced housing (residential buildings attached to their neighbors, usually in a continuous row). They have small footprints and three or more floors, in many cases.

Many townhouses were initially built as medium-density housing intended for single-family usage. However, they are frequently modified to create two or more units. Some modern townhouses are designed as new construction as multiunit properties. However, this is a less-common arrangement.

Types of Multifamily Property Structures

Multifamily structures can also be classified by their size and property type. There are three size categories and one functional category.

Low-Rise Multifamily buildings

Low-rise multifamily buildings are typically defined as those with four floors or fewer. They are common in suburban areas. In many cases, low-rise buildings are organized as apartment complexes with multiple buildings. However, they also can be a single building. In many cases, these structures offer ample parking due to the ratio of apartments to the building footprint.

Some examples of low-rise multifamily buildings include townhouses, duplexes, senior housing, and garden-style complexes. Some complexes may include a combination of condominiums and apartments.

Mid-Rise Multifamily Buildings

This category of structure is usually defined as having between five and nine floors. Mid-rise buildings can be found in urban areas and suburban communities. They tend to be popular because they can offer a high ratio of units to the amount of land without requiring the enormous construction costs of high-rise buildings. Therefore, they tend to offer excellent returns on investment.

These are common as urban apartment buildings, condominium buildings, college housing, and senior housing. Residents often like these buildings for offering nearby amenities.

High-Rise Multifamily Buildings

The final size-based category is high-rise buildings, those with ten floors or more. They are almost exclusively located in cities, usually in downtown areas. They offer very high housing density. Historically, these have only been common in large cities, but they are growing in popularity in mid-size cities as well.

High-rise buildings are used as luxury apartments, college dormitories for large universities, and long-term hotels. The construction costs and standards are more substantial for high-rise buildings. However, they can provide excellent returns.

Mixed-Use Multifamily Buildings

Mixed-use buildings are those that contain both commercial and residential spaces. Commonly, the first floor is reserved for stores, and the higher floors are used for apartments. This is common in all sizes of structures and can be seen in suburban and urban areas. Some high-rise buildings may have office spaces on some floors and residences on others.

Trends in Multifamily Housing

The prevailing trend in multifamily housing is its growing popularity. People want to have convenient access to the attractions and opportunities of cities. Multifamily properties offer a chance to buy or rent in areas with high population density.

Many people are looking for smarter, healthier, and more inclusive communities. For example, residents tend to place a premium on having a fitness center. They also appreciate buildings that are designed to be environmentally friendly.

Additionally, tenants want to find properties that harness technology. Wi-Fi in common areas, smart devices, and other modern conveniences are very popular.

Multifamily Construction Opportunities in the DMV Area

The D.C.-Maryland-Virginia region offers some great opportunities for multifamily real estate investment. The region has a combination of urban and suburban areas that can allow for every type of multifamily construction. Plus, the ever-growing importance of Washington helps to ensure that there is regular demand for new housing.

With the help of one of the best multifamily construction companies, you could invest in the area. You don’t need to break ground on the next high-rise building. Even if you want to renovate an old townhouse into a triplex, you can potentially earn a significant return on investment.

Contractors’ Role in Multifamily Development

Every construction job needs someone to take charge of the building process. Multifamily construction companies can act as contractors for real estate investments. They are responsible for providing the materials, labor, and equipment; this may also involve bringing in specialist subcontractors. However, the contractor is the party that is ultimately responsible to you (the owner) for ensuring that the work gets done.

Tech 24 Construction is a DMV-area construction company, leading new construction, build-outs, remodels, and more since 1998. Contact us today to learn how we could help you get started in multifamily construction.

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