Appreciation of 3-4 unit multifamily buildings

3 Replies

Hello BP Members in the DMV,

In the D.C. area, do multifamily buildings of 3 or 4 units tend to appreciate at the same rate as a stand-alone house? Or, given that the eventual buyer probably be an investor, perhaps these multifamily buildings appreciate a bit slower and according to the rent it can generate? If the answer varies between D.C., Northern Virginia, and Maryland, please elaborate how. For context, I am creating criteria for my first investment property and am trying to decide how much cash flow I should “require” for a multifamily building of 3 to 4 units.

Thank you in advance!

Danny

In general they appreciate faster. Its a supply and demand issue. Not only is supply of multifamilies incredibly low in the region, the number that actually exists is shrinking as they get carved up into condos.

@Russell Brazil is 100% correct.  The small multifamily space in Washington DC is extremely low in inventory, and more importantly quality inventory that drives the rents that are necessary to create acceptable returns.  I do believe they will be the most valuable asset in the district in the next 5-10 years in primetime locations.  

Thanks again, that makes sense. From my experience as a renter and chatting with house hackers, the room-rental market places a premium on public transportation access. However, demand for a quality apartment at market price with competent management exists virtually every urban neighborhood.