By Ashley Wilson
Combining factors like migration trends, economic diversity, job growth, low unemployment, and recession resilience, here are the five most promising multifamily markets for investors in 2025. Each market has a unique blend of these strengths, making them robust options for steady demand and long-term growth.
1 Dallas – Fort Worth, Texas
Why It’s a Top Pick: Dallas-Fort Worth (DFW) shines due to its strong job market, affordable cost of living, and impressive migration numbers. With an influx of approximately 90,000 people in 2024, DFW is one of the fastest-growing metros in the country. The area’s job market is highly diversified, including finance, tech, manufacturing, and logistics. Major employers like Toyota, JPMorgan Chase, and American Airlines provide job security and high wages, while Texas’s business-friendly policies continue to attract both companies and residents. DFW’s mix of suburban and urban housing options meets a broad range of preferences, driving demand for both single-family homes and multifamily rentals.
Investment Highlights: High net migration, low unemployment, economic diversity, strong population growth, and affordability.
2 Phoenix, Arizona
Why It’s a Top Pick: Phoenix has been a migration hotspot, attracting those moving from
high-cost states, especially California, in search of affordability, job opportunities, and a desirable climate. In 2024, Phoenix gained over 75,000 new residents through net migration alone. The city’s diversified economy spans healthcare, technology, finance, and education,
which provides stability and mitigates the risks associated with economic slowdowns. Multifamily occupancy rates and rent growth have been strong, making it a solid market for rental demand.
Investment Highlights: High migration rate, diversified economy, attractive climate, population growth, and affordable housing compared to West Coast markets.
3 Austin, Texas
Why It’s a Top Pick: Austin combines rapid growth with low unemployment and a tech driven economy, making it a resilient and attractive market for investors. With a jobless rate below the national average and strong growth in tech, healthcare, and government
sectors, Austin has been an anchor for both large companies (like Tesla and Apple) and startups alike. The city’s quality of life, coupled with no state income tax, makes it a relocation destination for professionals from more expensive metros. Austin’s housing demand continues to soar, with steady population growth contributing to rent appreciation.
Investment Highlights: Tech industry growth, low unemployment, job diversity, tax advantages, and strong migration trends.
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4 Charlotte, North Carolina
Why It’s a Top Pick: Charlotte’s strong economic foundation in finance, coupled with a growing presence in technology and healthcare, gives it both stability and growth potential. Known as a major financial hub with the headquarters of Bank of America and Truist Financial, Charlotte also has a growing tech sector. Net migration growth in 2024 reached over 40,000 people, and the city’s cost of living remains relatively affordable compared to many coastal markets. Charlotte’s diverse economy and appeal to both families and professionals keep rental demand high, providing a stable investment landscape.
Investment Highlights: Economic diversity, affordable living, strong job market, high migration, and financial industry hub.
5 Nashville, Tennessee
Why It’s a Top Pick: Nashville continues to attract new residents due to its thriving healthcare, education, entertainment, and tourism industries. In 2024, the city saw a net migration gain of approximately 35,000 people. The city’s healthcare sector, anchored by HCA Healthcare, is a major employer, providing recession-resistant stability. Nashville’s vibrant cultural scene, combined with a low cost of living and tax advantages, makes it popular with both young professionals and families. The strong demand for rental housing and limited housing supply creates a favorable environment for multifamily investments.
Investment Highlights: Resilient healthcare industry, cultural appeal, steady population growth, affordability, and high demand for rental properties.
CONCLUSION: WHY THESE MARKETS ARE PRIME FOR MULTIFAMILY
INVESTMENT IN 2025
Each of these top markets—Dallas-Fort Worth, Phoenix, Austin, Charlotte, and Nashville—have
seen some softness as of late due to new supply concerns. However, 2025 is predicted to have
significantly less new supply reigniting the demand for these markets.
Further, all of these markets have a mix of low unemployment, economic diversity, population
growth, and strong migration trends. Together, these factors offer multifamily investors a stable
foundation and the potential for cash flow and appreciation. For those looking to invest in areas with a strong balance of growth and resilience, these five markets represent some of the best multifamily investment opportunities in 2025.
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By John Triplett
Zillow predicts in 2025 that rent concessions will decline and more rental properties will become pet-friendly.
“Apartment renters enjoyed a relatively friendly market in 2024, at least compared to the record rent growth seen in 2022,” Zillow said in the report.
While landlords in parts of the country have seen rents decline slightly in 2024, the report says “the share of rental listings on Zillow offering a concession — such as free weeks of rent or free parking — is at a record high.” However, the company “expects renters will not have as much opportunity to negotiate for that free month of rent by the end of 2025.”
The multifamily-construction boom is the primary reason for the rise in concessions. More multifamily units are hitting the market than at any time in the past 50 years, pushing property managers to compete for renters. “Those fireworks are predicted to fizzle in 2025, especially in the second half of the year,” the report says.
Pet-friendliness will become nonnegotiable for property managers
The report notes that renters are getting older, and they are not putting off “adulting” milestones such as moving in together or getting a pet before they buy a home.
The median age of a renter has risen to 42, and they are settling into the renter lifestyle. Fewer renters considered buying this year, as renting is more affordable in some markets.
With 58% of renters having a pet — up from 46% before the pandemic — “it is no wonder that nearly half said they passed on a particular property because it was not pet-friendly. In today’s more competitive rental landscape, not allowing pets may put property managers behind the eight ball,” the report says.
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Other highlights from the report:
- Here is where we get to the report’s bold predictions for 2025. Zillow sees Americans increasingly embracing small homes and attached options. Affordability may be the cause, but a trend toward higher densities is undeniable.
- The report projects a 2.6% home price change for 2025. That is a solid and manageable number. And there will be at least some shift in favor of buyer negotiating power, though that will be regional, such as in the southwest.
- The company highlights its “BuyAbility” feature as one way buyers can navigate the often-tricky interplay of prices and mortgage rates to help them figure out precisely what they can afford.
See the full list of 2025 Zillow predictions here
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By Brad Beckett
A new report from Redfin says renters are moving less than ever, with a third staying in the same home for at least 5 years. They say the soaring cost of buying a home has pushed many to stay put for longer and the high cost of moving has also discouraged renters from moving regularly. To produce their report, Redfin analyzed 2023 renter tenure data from the U.S. Census Bureau.
“Monthly mortgage payments have nearly tripled over the past decade, preventing many renters from being able to buy a home…Rents spiked during the pandemic, but have stayed relatively flat over the past two years as home prices and mortgage rates continued to climb. That has encouraged renters to stay in the same home, where they are less likely to face major rent increases. The recent construction boom has also led to a record number of new apartments hitting the market, keeping rents down and setting 2025 up as a renter’s market where more Americans will choose to rent, or remain renters.” Said Redfin Senior Economist Sheharyar Bokhari.
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Some key points:
- 33.6% of U.S. renters have lived in the same home for at least five years, up from 28.4% a decade ago.
- Nearly one in six (17%) renters had lived in the same property between 5-9 years in 2023.
- Baby boomers stay put the longest, with more than a third having been in their rental at least a decade.
- Gen Z renters move the most, with more than half having lived in their current home for less than a year.
- Renters move most often in Denver, Austin and Salt Lake City.
- They stay put longest in New York, Los Angeles and Riverside.
Click here to read the full report at Redfin.
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Provided by Bigger Pockets
I don’t know when the next recession will strike. It could come over the next year, or in five years from now.
But I do know that sooner or later, another recession will rear its ugly head. And I don’t want my portfolio to collapse when it does.
Every month, I meet online with dozens of other investors to vet a new passive real estate investment, as an organizer of SparkRental’s Co-Investing Club. When we vet investments together, we consider risk first and foremost. And one of the risks that we consider is, “How would this investment hold up in a recession?”
While no investment is 100% recession-proof, some real estate investments perform better than others in recessions. So which investments offer the best protection if the economy takes a turn for the worse?
1. Multifamily With Some Form of Rent Protection
If a tenant is lucky enough to score a rent-controlled unit that goes for hundreds less than the going market rate, they’ll move heaven and earth to keep it. They won’t default on rent until they’ve exhausted every possible path to paying it.
But rent-controlled units offer just one example of many. In the Co-Investing Club, we invested last year in several properties that set aside 50% of the units for affordable housing. The operator partnered with the local municipality and agreed to cap rents based on local median incomes for those units—in exchange for a property tax abatement. The tax savings adds far more cash flow than was lost on market rents.
Those units have a waiting list to this day, and in a recession, they’ll still likely maintain 100% occupancy.
In another case, we invested in a “Section 8 overhang” deal, where the operator bought a Low-Income Housing Tax Credit property, and used a loophole in LIHTC regulations to replace all the tenants with Section 8 voucher holders. They keep the tax credits, collect full market rents, enjoy a government guarantee on most of the rental income, and have an avid renter base that doesn’t want to lose their voucher benefits by defaulting. It, too, will do just fine in a recession.
These are just a few examples of rent-protected units that become even more coveted in a recession.
2. Tenant-Owned Mobile Homes
To begin with, mobile homes offer the ultimate affordable housing, and tend to do just fine in recessions. But investors can protect themselves from rent defaults even better by renting mobile home lots for homes they themselves own.
Fewer of these renters default, because lot rents are cheap, and it’s so expensive to move a mobile home. And if a renter does default, it’s easier for park owners to evict them from a land lease than a typical residential eviction.
Keep an eye out for mobile home park investments specializing in tenant-owned homes, rather than renting out park-owned homes.
3. Student Housing
In recessions, many young adults opt to skip the bad job market and go back to school. That keeps demand for student housing high, even in recessions.
Just make sure you protect against all the usual risks of student housing investments, such as property damage and higher turnover rates.
4. Self-Storage
In the Great Recession, the only property type that didn’t suffer losses was self-storage.
Why? Because in recessions, people tend to either downsize or move in with family or friends. Both options leave them with less room for their stuff. They need somewhere to put their Furby collection, so they rent a storage unit.
Unfortunately, many local markets have become oversaturated with self-storage facilities in the years since the Great Recession. Before investing as a fractional owner in a storage facility, do your homework on the local market and competition.
5. Healthcare Facilities
People still need medical care, regardless of the economy. That provides recession resilience to some healthcare facilities.
Some—but not all. Sure, patients still visit the cardiologist after a heart attack, but fewer people go in for cosmetic and other elective surgeries. If you want recession protection, look for healthcare facilities that service the fundamentals.
Assisted living facilities can also prove recession resilient, depending on the segment of the market they service, and the local competition. Look for facilities with a long waiting list, indicating plenty of local demand relative to supply. That demand will likely soften in a recession, as some families consider moving in together rather than enrolling their loved ones in a nursing home.
6. Some Industrial Properties
When it comes to recessions, not all industrial properties are created equal.
Data centers, for example, do just fine in recessions. If anything, people spend more time at home sitting in front of their computers during recessions.
Likewise, industrial properties that manufacture necessary consumer goods like toilet paper hold up well.
But those that specialize in luxury goods or elective services? Expect them to struggle in a downturn.
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Diversification vs. Concentration
I have no idea what the next hot asset class will be, or the next hot market. The same goes for the inverse: I don’t know which properties will struggle in the years to come.
Trying to get “clever” or to time the market are fool’s errands. Every time I tried to get “cute” with my investments, I lost.
Nowadays, I invest $5,000 each month in real estate, as a form of dollar-cost averaging. I now own a fractional interest in around 3,000 units, spread across the U.S., in every property type. I invest as simply one more member of SparkRental’s Co-Investing Club, spreading small amounts of money across many markets, property types, and operators.
As I get to know an operator better, I’ll invest more with them. But in the beginning, it helps to invest small amounts before betting the proverbial farm.
Remember, recessions hit different cities differently. Some experience deep depressions, with sweeping job losses and business closures. Other cities see virtually no change at all, or even grow. Diversifying geographically helps you reduce your overall recession risk.
What Real Estate Investments Do Poorly in Recessions?
Class C and D multifamily properties that charge market rents tend to see spikes in rent defaults and vacancy rates in recessions. The same goes for many retail properties and office buildings. Some businesses go under in recessions, and others consolidate or switch to remote work and servicing.
House flipping and wholesaling businesses also struggle in recessions, as home prices drop. If the after-repair value drops by 5%, that can wipe out the entire profit margin on a flip or wholesale deal.
High-end vacation rentals often sit vacant in recessions. Fewer families can afford to spend five figures for a week in Cape May, so they plan more reasonable vacations while the budget is tight.
Finally, watch out for deals financed with short-term debt, and those with thin cash flow. In a recession, investors need the ability to ride out the bad market. That means they need longer-term financing and strong cash flow so they don’t find themselves losing money each month. If you have the luxury of time, you can wait out the rainy season until sunnier days come along.
Read up on these additional risks that our Co-Investing Club checks for as we vet passive investments as a club. You can’t eliminate risk entirely, but you can certainly find asymmetric investments offering low potential risk and high potential returns.
The Upside of Recessions for Real Estate Investors
On balance, recessions are no fun for anyone, real estate investors included. But they do come with several silver linings.
First, interest rates plummet. That makes it cheap to borrow, letting investors refinance high-interest debts or buy new properties with low-interest loans.
Speaking of buying, property prices tend to dip. That creates plenty of bargains for investors intrepid enough to keep buying while everyone else panics. In 2009, the average home price dropped to $208,400. Bet you wish you could buy average homes at that price today!
Recessions also clear out some of the less-capable competition, who had been over-bidding and otherwise overcrowding the market.
Like the forest fire that clears the underbrush and makes way for new trees to grow, recessions are painful but necessary. Just make sure you plan for them so they don’t burn down your portfolio, like they have for so many other investors.
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Provided by the Rental Housing Journal
Property management and the essential role of policies, written communication and procedures for the year ahead.
As the new year begins, property management professionals have the opportunity to reflect on foundational practices that ensure both compliance and operational excellence.
Among these, few aspects are as critical as robust fair housing policies, well-defined procedures, and professional written communication.
The Importance of Fair Housing Policies and Procedures
Fair housing policies and procedures serve as the backbone of any property management operation, regardless of the size of the portfolio.
They provide a clear framework for staff to understand their responsibilities and adhere to fair housing laws, ensuring consistent application of these principles across the board. Moreover, well-documented policies act as a vital defense mechanism during fair housing investigations, demonstrating that actions taken were in line with established guidelines.
For property management companies of all sizes, the creation of a basic fair housing policy is non-negotiable.
However, it is not enough to simply draft a policy and let it sit idle. These documents must be living resources, regularly reviewed and updated to reflect changes in legislation or operational needs.
In addition to a general fair housing policy, companies should implement specific procedures addressing reasonable accommodations and modifications. These procedures must clearly outline the steps for processing requests and define the roles of staff members responsible for decision-making.
To ensure these policies are accessible and actionable, many companies utilize a centralized policy manual.
This resource serves as a go-to reference for staff, housing key documents such as fair housing policies, reasonable accommodation procedures, and supporting forms. Regular training sessions are critical to reinforce the importance of these policies and ensure all employees understand their role in maintaining compliance.
The Role of Written Communication in Fair Housing Compliance
In the property management industry, written communication is not merely transactional; it is a direct representation of your company’s brand and commitment to professionalism.
Emails, letters, and even social media responses all fall under the umbrella of marketing and must align with fair housing principles. As such, every written response must be crafted carefully to avoid potential issues of discrimination or misrepresentation.
One area where this is particularly critical is in responding to inquiries about unit availability.
Consistency in responses is essential to prevent any appearance of favoritism or bias. For example, if two prospects inquire about the same unit, the responses they receive should not differ in ways that could be perceived as discriminatory.
All leasing professionals should be equipped with standardized language to address these situations, ensuring a uniform and compliant approach.
Another consideration is the tone and content of written communication with residents.
Professionalism must be maintained at all times, even when dealing with difficult or hostile situations. Emails represent an official form of communication, and as such, they should be approached with the understanding that their contents may later be scrutinized in legal or regulatory contexts.
It is critical to remain composed, clear, and respectful, avoiding language that could escalate tensions or be misinterpreted.
Balancing Efficiency and Personalization in Written Responses
While templates and canned responses can improve efficiency, their use must be approached with care.
Generic responses may be suitable for common inquiries, but personalized communication is necessary for more nuanced or unique situations.
A failure to adapt responses to the context can leave residents or prospects feeling dismissed, potentially damaging the relationship and raising questions about the company’s commitment to fair housing principles.
This is where training becomes invaluable.
Staff must be equipped with the knowledge and judgment to discern when a situation requires a tailored response. Ongoing training programs should address not only the technical aspects of fair housing compliance but also the soft skills necessary to bring a human element to written communication.
This balance between professionalism and empathy is what distinguishes truly effective property management operations.
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Preparing for Success in the Year Ahead
The start of a new year offers the perfect opportunity to review and strengthen your company’s policies and communication practices.
Begin by conducting a thorough audit of your fair housing policies and written communication guidelines. Identify any gaps or areas in need of refinement, and make it a priority to address them.
It is equally important to engage your team in this process. Gather feedback from staff on the challenges they face when applying policies or crafting responses, and use this input to inform updates and training programs.
Establish a schedule for regular policy reviews and training sessions to ensure these foundational practices remain top of mind throughout the year.
Finally, remember the power of written communication as a tool to build trust and foster positive relationships.
By prioritizing consistency, professionalism, and a human touch, your team can set the tone for a successful year while reinforcing the company’s commitment to fair housing compliance and exceptional service.
Conclusion
In the property management industry, success is built on a foundation of strong policies, clear procedures, and professional communication.
As the new year begins, take this opportunity to reaffirm your commitment to these principles. By investing time and effort into refining your fair housing policies and enhancing written communication practices, you can navigate the complexities of property management with confidence, fostering trust and compliance in every interaction.
Let this year be one of growth, consistency, and renewed dedication to excellence.
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By Grant Drzyzga
In the winter of 2013, I found myself shivering in my college apartment, a hair dryer running beside me as a makeshift heater. The heating outage lasted three nights. Frustrated yet curious, I visited the property management company’s office—not to complain, but to learn. I asked if I could shadow their operations under the guise of a “class assignment.”
What I discovered was chaos: stacks of disorganized paper and fragmented, outdated software systems. The inefficiency was glaring, and it sparked a vision that would later become Revela: a unified platform designed to optimize property management and create a seamless experience for property managers, investors and residents. Fast forward to today. Revela is helping property managers and real estate investors tackle the challenges of a rapidly evolving industry. As we look ahead to 2025, the trends shaping the property management landscape are clear.
Here’s how you can navigate these changes and position yourself for success.
1. Mandatory Renter’s Insurance: Protecting Your Assets
One of the most significant trends we’re seeing is the tightening of insurance requirements. In high-risk markets like Detroit and St. Louis, insurance carriers are mandating that residents carry renter’s insurance as a condition for insuring the property. This places an additional burden on property managers to track compliance and manage lapses. This trend underscores the importance of staying ahead of compliance issues. Maintaining 100% compliance with these insurance requirements will safeguard against claim denials and protect your assets from unforeseen risks.
How to Prepare:
- Track Policies Proactively: Platforms like Revela can automate
the monitoring of tenant insurance policies, notifying you
instantly if a policy lapses. - Update Lease Agreements: Include clauses that allow for a
damage liability waiver, ensuring continuous coverage even if a
tenant’s policy lapses. - Integrate Solutions: Work with partners to streamline policy
underwriting, binding, and tracking through your management
system.
2. Acquisition Growth Amid Lower Interest Rates
With interest rates projected to decrease, the pace of acquisitions is likely
to accelerate in 2025. Property management companies have a unique opportunity
to capitalize on the surge in transactions by aligning themselves with brokers, investors,
and lenders.
By tailoring your efforts to investor preferences and fostering relationships, you can position your company as a vital partner in the acquisition process.
How to Prepare:
- Vendor Partnerships: Build a strong network of vendors and
brokers to simplify transactions and add value to your services. - Targeted Outreach: Proactively identify opportunities
that match your investors’ “buy box” criteria—a set of
parameters that determine what makes a property a desirable
purchase. For example, many investors prioritize geographic
concentration to achieve operational efficiencies.
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3. Harnessing the Power of Data
Data has always been the cornerstone of good decision-making, yet the property management
industry often lags in this area. Disconnected systems and incomplete datasets make it difficult to understand the full picture.
When my co-founder, John DeSilva, and I built the first version of Revela, we spent many sleepless nights focusing on how to make data actionable for property managers and investors. Today, our all in-one platform empowers you with insights, so you can make better decisions and identify growth opportunities.
How to Prepare:
- Centralize Your Data: Use a platform like Revela to aggregate operational and financial
information. This provides a complete view of asset performance. - Leverage Predictive Insights: Advanced analytics can help you identify trends, like when
investors have enough equity to reinvest or when expenses are out of alignment. - Enhance Transparency: Open communication with investors about key performance
metrics can build trust and alignment.
4. Meeting Rising Investor Expectations
Over the past decade, the gap between casual and professional investors has narrowed. Whether managing single-family homes or multifamily units, investors increasingly expect property managers to provide more than just operational oversight.
Investors are looking for property managers who bring a strategic mindset to the table, not just day-to day management.
How to Prepare:
- Define Success Early: Align with investors on clear goals, whether that’s achieving a
specific return percentage or optimizing cash flow. - Stay Educated: Keep up with market trends and regulatory changes to maintain your edge
as a trusted advisor. - Provide Value-Added Insights: Go beyond NOI (Net Operating Income) to help investors
understand how debt, equity, and operational strategies impact their portfolios.
THE PATH TO SUCCESS
The property management world of 2025 is not the same as it was a decade ago—or even five
years ago. Insurance mandates, increased acquisitions, data-driven strategies, and rising investor expectations are reshaping the landscape. But these changes also present immense opportunities for those willing to adapt.
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Source: Beach Front Property Management
ADUs (Accessory Dwelling Units) and tiny houses have become distinctive living solutions in compact living. Understanding these options’ differences is crucial for downsizing or seeking an alternate living space.
ADUs are additional living units on the same property as the main house. They can be converted garages, basement apartments, or separate cottages. ADUs allow homeowners to expand their living space and generate rentals while maintaining the privacy of both units.
On the other hand, tiny houses are compact living spaces intentionally designed to be small and efficient. These houses often feature a minimalist lifestyle, where every inch and corner is maximized for functionality. Their features of affordability and sustainability make them a popular choice for those seeking a simpler lifestyle.
In this blog, we will discuss and explore the differences between these housing units and which compact house suits you.
What is an Accessory Dwelling Unit?
An ADU is a secondary housing unit entirely separate from the main house on the property. ADUs generally have private entrances and have living space, bathroom, kitchen, sleeping room, and eating area. It has everything a main unit has but in a compact style. These living spaces are referred to as granny flats or backyard cottages. These units are mostly garage conversions or basement apartments.
ADUs are gaining wide popularity for their potential to make extra income and add value to the property.
What is a Tiny House?
A tiny house is a compact but fully functional home, usually not more than 400 square feet. Inside this miniature house, you find cleverly designed furniture and storage solutions to make the most of every inch. Tiny Houses can be built on wheels for mobility or a foundation, like traditional homes.
They are cost-effective to buy and maintain in comparison to regular-sized houses. The main concept behind these compact homes is to simplify living and focus on what truly matters to you.
10 Differences Between ADU and Tiny House
Are you using the terms ADU and tiny house interchangeably? You may be surprised that these units differ in definition and function. Here is a list of 10 differences that can help you understand how these housing options stand apart:
1. Size
ADU:
ADUs are generally larger, with more living space. It ranges from a few hundred to over a thousand square feet(other than the main house).
Tiny House:
Tiny houses are quite small in comparison to other housing options. It usually ranges from 100 to 400 square feet.
2. Purpose & Location
ADU:
ADUs are built on the same property as the main house. It usually serves as an additional living space for family members or to earn rental income.
Tiny House:
Tiny houses are often standalone and mobile. Its main purpose is efficient minimalist living. It can be placed on various properties or in tiny house communities.
3. Mobility
ADU:
ADUs are stationary structures. Once constructed, it cannot be moved.
Tiny House:
Tiny houses are typically built on trailers. It makes them mobile and easy to relocate whenever required.
4. Regulations
ADU:
ADUs are subject to local zoning regulations. They are designed to be permanent structures and serve as an additional space in existing property. So, they require permits and compliance with rules by local authorities.
Tiny House:
Tiny houses are often built on wheels or trailers, complicating their legal status. Although having a tiny house in most areas is legal, some places have legal restrictions.
5. Carbon Footprint
ADU:
ADUs can be eco-friendly but may have a larger carbon footprint due to their living space and utility requirements.
Tiny House:
Tiny houses are designed with fewer resources. A home that needs to be moved is usually built with different efficiency standards than a permanent house. It results in a small carbon footprint.
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6. Incentives
ADU:
In California, the California Housing Finance Agency (CalHFA) operates an ADU grant program that reimburses a said amount in pre-development costs for qualified builders.
Tiny House:
In the case of tiny houses, no such schemes or reimbursements exist for the builders or homeowners.
7. Lifestyle
ADU:
ADUs cater to a more traditional lifestyle, accommodating families or long-term residents.
Tiny House:
Tiny houses are best suited for minimalistic, eco-friendly, and mobile lifestyles.
8. Costs
ADU:
ADUs can be more expensive to build due to their larger size and utility connections.
Tiny House:
Tiny houses are generally cost-effective to build and maintain.
9. Ease of Resale
ADU:
These homes are seen as the future of affordable living spaces. Building an ADU adds to the overall value of the property. So, ADU homes are worth the investment and easy to resale.
Tiny House:
The resale value of tiny houses depends on market demand and location. It is difficult to resell tiny home property because not everyone finds the small space comfortable.
10. Ease of Navigation for Older Adults
ADU:
ADUs incorporate features like wide doorways, ramps, grab bars, and step-free entrances, making them accommodating for older adults or anyone with mobility challenges.
Tiny House:
Due to their compact size and loft beds, tiny houses may pose significant challenges to older adults’ mobility and navigation.
Pros and Cons of Tiny House
Tiny houses offer compact and minimalist lifestyles that are appealing to many. But like any other housing option, it also has a list of pros and cons.
Pros of Tiny House
- They are quick to build.
- They are cost-effective to use and maintain.
- They are minimalist, reducing clutter.
- They are a good option for a bachelor or a family of 2-3 members.
- They offer mobility to its residents.
Cons of Tiny House
- Putting a tiny house at permanent foundations requires a permit, which can be challenging.
- They are often too small to comply with the zoning laws.
- They are considered recreational vehicles (RV) by the law, subject to RV codes and taxes.
Pros and Cons of ADUs
ADUs are gaining significant attention as compact housing options. These secondary living spaces are often found in the same space as the main house. It comes with its own set of advantages and disadvantages. Here is the list:
Pros of ADUs
- They are customizable.
- They are available in a variety of sizes.
- They are more complicit with zoning laws.
- They can increase property value.
- It can be used for multi purposes, like rentals, hobbies, to accommodate expanding family, etc.
Cons of ADUs
- They are usually more expensive than tiny houses.
- They are built on permanent foundations and can’t be moved.
- They have more utility expenses.
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By Leah Maher
The multifamily rental market is evolving with changing tenant demographics, technological advancements, and changing work dynamics, not to mention that a ton of new construction is about to wrap up. This shift presents new opportunities for property managers to leverage
the demographic data and today’s innovative technologies to enhance their operations, increase foot traffic, and improve tenant retention.
THE IMPACT OF NEW APARTMENT SUPPLY ON THE RENTAL MARKET
A record number of multifamily units are set to hit the market this year. In 2022, building permits were issued for 707,000 multifamily units, the highest number since 1985. Projects initiated two years ago are now reaching completion. As a result, 2023 saw the most apartments enter the market since 1987. And 2024 is on track to surpass those numbers. Several factors are driving this increase in construction. Low interest rates in the early 2020s made financing more accessible for developers, while strong rental demand and rising rents
incentivized new projects. The surge in new apartment supply is already having a noticeable impact on rent prices and vacancy rates, which demonstrates the economic relationship between supply and prices. For investors and developers, these trends highlight the importance of carefully considering local market conditions.
EVOLVING TENANT DEMOGRAPHICS AND PREFERENCES
As noted in the previous section, markets with the most available multifamily properties are seeing a decline in rental value, which equates to more choice for the renter when selecting a home. To make sure your rentals are beating the competition, let’s discuss the insights we can deduce from renters’ demographic trends.
Gen Z’s Growing Influence
The majority of households are headed by adults under the age of 35. Crazy as it sounds, the oldest Gen Z’ers are nearing 30 years old. As a dominant force in the rental market, Gen Z’ers
are more likely to seek out properties with eco-friendly features, smart home technologies, and shared spaces that foster social interaction.
To attract and retain Gen Z renters, property managers should focus on:
✓ Providing self-touring options for interested renters, such as InstaShow
✓ Implementing robust digital platforms for communication, maintenance
requests, and rent payments
✓ Offering flexible lease terms and move-in options
✓ Creating Instagram-worthy spaces and amenities that appeal to social
media-savvy tenants
✓ Emphasizing sustainability initiatives and green building practices
✓ Providing high-speed internet and tech-enabled amenities throughout
the property
Remote Workers
Remote work opportunities have skyrocketed since the pandemic, significantly impacting rental property design and amenities. To meet the demands of remote workers, property managers are also focusing on:
- Upgrading internet infrastructure to
provide reliable, high-speed connectivity - Offering private meeting rooms and
business centers - Creating outdoor workspaces with Wi-Fi
access - Implementing package management
systems to handle increased deliveries
Increasing Number of Older Renters
While most renting households are headed by adults under 35, the 65+ age group is becoming the fastest-growing renter cohort in the United States. With specific needs and preferences that differ from younger demographics, they often seek:
- Accessibility features and single-level
living - Community spaces that promote social
interaction - On-site fitness centers and wellness
programs - Proximity to healthcare facilities and
public transportation - Enhanced security measures and 24/7
maintenance support
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NEW BUILDS COME WITH NEW TECH: HIGHER RENTAL VALUE AND MORE REMOTE WORK OPPORTUNITIES FOR PROPERTY OWNERS
With 2022’s new construction finally market ready, most new builds come equipped with the latest technology. Built-in tech means higher rental value, better chances of attracting quality tenants, increased automation for property managers, and more opportunities to effectively manage multifamily units remotely.
Rise of Smart Home Features in Rentals
Smart home technologies offer convenience and energy efficiency to tenants while providing valuable oversight and notifications to property managers. Popular smart home features in rental units include:
- Smart thermostats for energy management
- Keyless entry systems, smart locks, and access control management
- Voice-controlled lighting and appliances
- Smart security cameras and doorbell cameras
These technologies not only attract tech-savvy tenants but also offer property managers improved security, reduced energy costs, and remote monitoring capabilities. Smart home features can lead to higher rental rates and increased property values, making them a worthwhile investment for many property owners.
ADOPTION OF AI AND MACHINE LEARNING IN PROPERTY MANAGEMENT
Artificial intelligence and machine learning are transforming property management practices, adding security amid the rise of real estate scams, and offering innovative solutions for various aspects of operations:
- Tenant screening: AI algorithms can
analyze applicant data quickly and
accurately, reducing bias in the selection
process. The latest touring software
verifies identities by comparing real-time
selfies to government issued IDs, also
captured in real time. - Predictive maintenance: Machine
learning models can forecast equipment
failures, allowing for proactive
maintenance and reducing downtime. - Energy optimization: AI-powered
systems can adjust building systems in
real time, maximizing energy efficiency. - Chatbots for customer service: AIdriven chatbots can handle routine
inquiries, freeing up staff for more
complex tasks
DIGITAL TOOLS CHANGING TENANT COMMUNICATION AND PROPERTY MARKETING
The adoption of property management software and apps is revolutionizing how property managers interact with tenants and market their properties:
- Online portals for rent payments, maintenance
requests, and lease management - Virtual reality tours for listings, and self-tours for
increased traffic and secure access management - Social media integration for community engagement
and brand building - Data analytics tools for market analysis and
performance tracking
These digital tools provide 24/7 access to services, streamline communication, and offer valuable insights into tenant preferences and behavior.
As technology continues to evolve, its integration into rental properties will likely deepen, offering new opportunities for innovation in the multifamily sector. Property managers who embrace these technological advancements will be better positioned to meet the changing needs of tenants and stay competitive in an increasingly digital marketplace.
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Provided by Bigger Pockets
According to data from Realtor.com, Q4 saw a promising stat: Sellers were coming off the sidelines and listing their homes. Listings were up 6.1% in December from the previous year, the largest year-over-year gain since June 2021. Should this continue, it could mark a loosening of the market, specifically the so-called “lock-in effect.” In short, it means more investments to buy and sell and a return to normal conditions we haven’t seen since before the pandemic.
Bolstering this is news that active listings were up more than 23% in mid-December from the prior year, and new listings growth remained robust.
Dana Bull, a real estate consultant and agent with Compass, told CBS News:
“I have somewhere between 15 and 18 sellers who are thinking about listing this spring, which is the most that I’ve ever had going into the new year. What’s been going on is most of these people have been considering selling for the past 18 months, but they’ve been in this holding pattern and wanting to wait and see what is going on with interest rates. At this point, they’re not deciding that they cannot wait for external factors to be optimized, and they need to make their move. I think we will see a decent-sized uptick in inventory—nothing too crazy, but people are getting off the fence.”
It’s a welcome relief from the ongoing fight to lower interest rates, which are incredibly still hovering just below 7%—even after the Federal Reserve’s recent rate cuts.
Buyers and Sellers Are Tired of Waiting
“It’s certainly not good news for homebuyers when mortgage rates get bumped up,” Lawrence Yun, the National Association of Realtors chief economist, told the Wall Street Journal. Sales have started to gain momentum in the past few months as buyers and sellers run out of patience waiting for lower rates and come to the market regardless, he added.
Also concerning for buyers is the steady uptick in home prices. However, after a stagnant real estate market since 2022, when the Fed began a series of 11 rake hikes, the increase in volume leaves investors with an interesting conundrum: Accept that rates will not go down, buy now, and lock in for future equity appreciation and rent increases despite neutral or even negative cash flow in the short term, or wait and pray for a rate reduction.
Home Prices Will Fall in 2025, Rise in 2026
Investment giant Morgan Stanley predicts that nationally aggregated home prices are likely to fall 2% in 2025.
“We believe the housing market, and home prices in particular, are on a healthy foundation,” Jim Egan, Morgan Stanley’s head of housing market research, told ResiClub, as reported in Fast Company. “We by no means view this as a correction in [national] home prices—just the dynamic introduced by increasing inventories, allowing home price appreciation to dip below 0%.”
Morgan Stanley predicts that after a year of zero appreciation, home prices will start appreciating by 3% nationally in 2026.
More Homes for Sale Could Help Lower Prices
If increased homes on the market, in conjunction with stubbornly high rates, results in a softening of home prices, as Morgan Stanley predicts, 2025 could be an opportune time for investors to buy. Flippers could start a rehab project and sell in 2026, when prices increase.
In addition, even with a projected 11.7% increase this year, the number of homes for sale will still lag pre-pandemic levels by 23%, according to Realtor.com.
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How to Make the Most of the 2025 Market
Buying now, during a relatively quiet market in anticipation for things to heat up in 2026, could be a good strategy, but only if you are prepared. Here are some things to bear in mind.
Analyze your financial position
Buying an investment for tax benefits and long-term appreciation makes sense if you have a well-paying, stable job and can absorb low cash flow. Just make sure you are not losing money every month.
What are your investment goals?
If you intend to do the BRRRR method with low cash-flowing properties and have sketchy personal finances, you are setting yourself up for a big fall. Slow and steady wins the race in this current market with so many unknowns—unless you are sitting on a pile of cash.
What is your risk tolerance?
If the thought of coming out of pocket to pay a mortgage on an empty building or covering an unforeseen expense keeps you up at night, the stress of owning a rental isn’t worth it. You would be better off house-hacking a property you are already paying a mortgage on or looking for a cheaper property in a decent area that you can buy for cash and forgo the sleepless nights.
Flip homes you can afford to hold on to
Expecting a quick sale of your remodeled McMansion in 2025 might be risky. If you are in the flipping business, stay low to the ground. With high interest rates, the market for more affordable homes will be more plentiful than that for larger homes.
Unless you can afford to absorb the carrying costs, think small. Look to buy at a discount and sell in 2026, when house prices are expected to rise.
“We have been witnessing the death of the starter home for the better part of a decade,” Brittany Webb, director of research at the National Housing Conference, told CNET. “That’s made it particularly difficult for first-time homebuyers to find affordable homes in areas where they want to live.” This is a promising sector for flippers to explore.
Pay attention to the effect of the LA wildfires
The LA wildfires are bound to have a sizable impact on real estate in 2025. With 100,000 people displaced and many working class, the demand for rental housing will be huge. This latest tragedy will only exacerbate the state’s housing crisis. Look at markets to serve the affected LA community—those who have to stay in the area, as well as those looking to leave.
Final Thoughts
2025 appears to be a year for consolidating and preparing for 2026, so don’t expect a frenzied buying and selling market. As more properties come on the market, picking and choosing the best deals to carry you over into 2026, where you can sell or refinance, is a savvy strategy.
There are too many unknowns to make wider predictions—how the incoming presidency will affect the economy and interest rates, what will happen to inventory, whether there will be a labor shortage for construction, and how geopolitics will affect the supply chain and construction costs. Therefore, with so much up in the air, playing it safe is the best policy.
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By Patrick Marin-Finn
Securing a commercial loan for an apartment building can be a complex process, but understanding the typical requirements that banks look for can help streamline your application and increase your chances of approval. Whether you’re a seasoned investor or just entering the commercial real estate space, meeting the specific criteria set by commercial lenders is crucial to securing financing. Here are some of the most common requirements banks have for lending on apartment buildings.
1 Property Type and Purpose
The first consideration for any commercial loan is the type of property being financed. Banks typically focus on well-maintained, income-producing buildings. The loan application will be evaluated based on the property’s ability to generate consistent rental income, which serves as the primary source of repayment. In addition to the property’s size, banks will evaluate its
location. Properties in high-demand rental markets or areas with strong economic fundamentals are seen as less risky investments for lenders, which may also lead to more favorable loan terms.
2 Down Payment / Equity Requirements
One of the major factors commercial banks consider when lending for apartment buildings is the borrower’s equity contribution. This down payment, also known as the equity investment, is seen as a sign of the borrower’s commitment to the investment. Some banks may adjust these requirements depending on the borrower’s experience and the specific characteristics/income of the property.
3 Liquidity Requirements
In addition to the down payment, commercial banks often require borrowers to have a certain level of liquidity on hand. This ensures that the borrower can cover unexpected costs, such as repairs, vacancies, or other financial setbacks, during the loan’s term. As a rule of thumb, banks typically expect borrowers to have liquid assets equal to around 10% of the loan amount available. This liquidity requirement helps mitigate the risk of default in the event of unforeseen issues that might impact the property’s cash flow. For example, if you are securing a $5 million loan, you might need to have $500,000 in liquid reserves, such as cash, stocks, or other easily accessible assets. Having sufficient liquidity demonstrates financial stability and reassures lenders that you can manage the property effectively.
4 Experience in Real Estate
Commercial lenders place significant importance on the borrower’s experience in real estate investment, particularly when dealing with multifamily properties. Lenders are more likely to approve a loan for an investor with a proven track record of managing similar properties successfully. This includes experience in acquiring, managing, and operating apartment buildings. If you’re a new investor, banks may still lend to you, but you might need to bring on a more experienced co-investor or property manager to strengthen your application. Lenders will also evaluate the level of management expertise you have in place for the property. Having a reputable property manager or management company can be a key factor in getting the loan approved.
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5 Creditworthiness and Debt Service Coverage Ratio (DSCR)
Your credit score is another critical element in securing a commercial mortgage. While commercial loans are generally based more on the property’s income potential than on the borrower’s personal credit, a strong credit score still plays a role in determining the loan’s interest rate and terms. Most banks prefer borrowers with a credit score of at least 680, though higher scores may be required for larger loans or more competitive terms. Another important factor is the Debt Service Coverage Ratio (DSCR), which measures a property’s ability to cover its debt payments. Banks typically look for a DSCR of 1.20 or higher, meaning the property
generates at least 20% more income than is required to cover debt payments. A higher DSCR indicates that the property is more likely to generate consistent cash flow, which reduces the risk for the lender.
6 Appraisal and Property Inspection
Before approving a loan, banks will require an independent appraisal of the property. This appraisal determines the market value of the apartment building and ensures that it is worth the loan amount. In addition to the appraisal, lenders may also request a property inspection to assess the condition of the building, identifying any potential maintenance issues that could affect the property’s long-term value.
CONCLUSION
Securing a commercial loan for an apartment building requires careful planning and preparation. Understanding the key requirements from commercial banks—including liquidity, down payment, experience, and financial metrics like creditworthiness and DSCR—can help ensure a smooth loan application process. If you’re unsure about meeting these requirements or navigating the commercial loan landscape, it may be helpful to work with a commercial mortgage broker who can guide you through the process and help you find the best financing options for your needs.
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