Why do some cities have lots of small multifamiy properties....

5 Replies

......and others do not? Look at Boise ID. Duplexes (and triplexes and quadplexes) are about as common as hens teeth. Look at Bangor ME. There are tons of small multis. There are a lot of examples like this throughout the country, it’s not just and east and west thing. Thoughts?

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I think it depends on housing demand and city permitting laws. Supply and demand most likely. 

@Pat Jackson Not sure about the rest of the country but most of the small multi's here are large 100+ year old SFH's that were converted to multi's at some point in their lives, probably at a time when a shift in demand and more relaxed zoning laws made it easy to do so.

@Pat Jackson It's a fair observation. I am in Southern Maine and we have markets like Scarborough that have almost no small multifamily units and then areas like Biddeford that have tons of them. It has to do with a lot of factors, but I am finding mainly population composition. In a market with lower overall incomes you tend to have more renters, which means the demand for those units is much higher so the returns can be much higher (especially if you convert like @Ryan Murdock mentioned). In other markets with higher incomes, you see more owners and the demand for rentals is low except for at the entry level where apartment buildings are better because they are cheaper to construct on a per SF basis so you can take lower rents for smaller units and make it work. 

That is a big reason why analyzing the market and its socioeconomic and demographic trends is so important, those trends can tell you everything about what to expect. 

It's pretty simple. Demand = supply. Look to history to see where working-class populations condensed into cities with strong working class industry during industrialization (late 1800s to early 1900s). I can speak to Maine history and say that where you see multis in Maine... mostly in areas with mill work (paper, textile, canneries, etc.). As @Ryan Murdock mentioned, most multi housing stock in Maine is older single families that were long ago converted to multi-family buildings to support the demand for affordable housing near the mill work. I imagine the story is similar in most areas of the country. 

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