Bringing Our Infill/Middle Housing Model Down South – Where Should We Look?

Question

Hey everyone,

I’m based up in Ontario, Canada, where our team’s been focused on infill development and middle housing—mainly building 3–4 units per residential lot by taking advantage of new zoning bylaws. Think side-by-side 4-unit builds, detached or attached, totaling 8 units per build.

This has worked well here, but I’m looking to bring our model down to the U.S.—specifically looking at South Carolina or Texas right now. I know the zoning, density rules, and even construction economics can be totally different state-to-state, so I’m not assuming our exact strategy translates directly.

Curious to hear from anyone actively building in those areas—or anywhere in the U.S.—where small-scale multifamily infill is being encouraged. Which markets are embracing gentle density? Where are cities actively pushing for missing middle housing?

Would love to hear what areas are worth diving deeper into. Appreciate any thoughts!

Bruce Lynn · Answer

I may stand corrected....Dallas may be looking at options to do exactly what you want to do.

https://candysdirt.com/2025/05/05/dallas-opens-the-door-to-low-intensity-density/?

Seems like the city moves slowly sometimes or even if they implement new rules that seem to address the issue, they don't always change all the rules.  They'll do stuff like requiring off street parking, or still implement lot coverage ratios or something that make them say, sure it is allowed, but in reality there are no lots that meet all the requirements.

Bruce Lynn · Answer

Kind of interesting a place that came to mind was Denison TX, but about a year or two ago they implemented a rule that you could not build MF (duplexes) in single family neighborhood.  Unfortunately that's what the economics support.  The old big lots, don't really make new build single family economics work, but that's what the powers that be want.

Might try Sherman.  There are plenty of lots and many other people have done this.  You also might try finding some of the bigger lots, like maybe 1-5 acres and perhaps subdividing into multiple lots for multiple builds.

You are right that many of the laws are changing to somewhat encourage this, but sometimes not all the laws change to support it.  For example if they still require off-street parting for 4 units, that can be an issue, or if they maintain coverage ratios.  This will also probably change over time.

I think sometimes it may also be good to work with smaller cities around some of the bigger cities.  They want their tax base to grow and you deal with less people and less administration vs the big slow cities like Dallas.

Good luck and best wishes.

Terrance Teague · Answer

@Trevor Hough

No worries at all, I’m happy to help however I can. You're asking the right questions.

You're spot on that Dallas–Fort Worth is a strong and growing market. While there’s definitely been a lot of development in recent years, job and population growth continue to keep pace.  Over the next 10 years, I believe DFW will remain a solid market as long as you're buying right and have great partnerships.

In terms of rental rates, vacancy rates, and cap rates, in DFW, these ranges can vary based on the submarket, and neighborhood.

Feel free to reach out anytime!

Trevor Hough · Answer

Hi Terrance,

Thanks for the reply! Dallas–Fort Worth was actually high on our list. It seems like a strong market. Do you foresee it getting saturated over the next 10 years—with more development than job growth—or do you think it's a healthy mix?

I noticed you’re a property manager—what are some of the current rent ranges you’re seeing for middle to higher-end units? Specifically for 1, 2, and 3-bedroom units with in-suite laundry, separate heating/cooling, 2 baths on larger units etc.? I’ve seen online that vacancy rates are around 6–7%—does that seem about right?

Also, what kind of cap rates are you seeing on these types of middle housing projects? Around 7%?

Sorry for the barrage of questions—you just seem really well-versed in the local market and I appreciate the insights!

Terrance Teague · Answer

Hi Trevor,

Great to see you're exploring ways to bring your middle housing model to the U.S. and possibly Texas!

I highly recommend looking into the Dallas/Fort Worth (DFW) market here in Texas. Several cities and suburbs within DFW are beginning to welcome missing middle housing, especially areas focused on housing affordability. Texas zoning can vary by municipality, but there are pockets where  multifamily development are gaining momentum.

Cities like Dallas, Arlington, and Denton are all worth a closer look.

Construction costs here are generally lower, and Texas has no state income tax, which is attractive from an investor's standpoint. Plus, with DFW's rapid population and job growth, there's real demand for multi-unit housing that fills the gap between single family homes and large apartment complexes.

Feel free to reach out if you want to discuss further!

Trevor Hough · Answer

Hi Terrance,

Thanks for the reply! Dallas–Fort Worth was actually high on our list. It seems like a strong market. Do you foresee it getting saturated over the next 10 years—with more development than job growth—or do you think it's a healthy mix?

I noticed you’re a property manager—what are some of the current rent ranges you’re seeing for middle to higher-end units? Specifically for 1, 2, and 3-bedroom units with in-suite laundry, separate heating/cooling, 2 baths on larger units etc.? I’ve seen online that vacancy rates are around 6–7%—does that seem about right?

Also, what kind of cap rates are you seeing on these types of middle housing projects? Around 7%?

Sorry for the barrage of questions—you just seem really well-versed in the local market and I appreciate the insights!

Bringing Our Infill/Middle Housing Model Down South – Where Should We Look?

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