Acquiring real property, developing existing properties and planning new construction projects can all be smart investments. Those looking to add to their portfolios or make the best use of current holdings need to look carefully at market conditions and projections for future demand.
Frequently, developers and construction companies in the residential sector focus on higher-end facilities. They want to develop units that they can rent for the highest monthly payments possible. However, only a small subset of the population can afford prestige rental units. Those working in lower-paid professions or living on a fixed income after retirement frequently need housing but cannot afford expensive, large dwelling units.
The development of micro apartments has become a hot topic and can be a way for developers and property owners to optimize the buildings they already own and the facilities they intend to construct.
What is a micro apartment?
A micro apartment is similar to a traditional studio apartment. It offers limited amenities and space while meeting the basic needs of those who require residential facilities. It has few divisions of space and fewer square feet than traditional apartments.
Micro apartments can be under 400 square feet in some cases, allowing property owners to convert existing apartments into multiple micro apartments or individual offices into dwelling units. Having more dwelling units at a building means more sources of income, even if the monthly payment per unit is somewhat lower.
Additionally, with more tenants, scenarios where individual occupants default or fall behind on rental payments have less impact on the viability of the business model overall. Those moving to an area, living on a limited budget and downsizing as they prepare for retirement may find micro apartments particularly appealing.
Landlords can likely expect high levels of demand for smaller rental units, especially in areas where the market rate for rental housing is competitive. Looking at ways to offer affordable housing can lead to a host of benefits including consistent demand and also the cooperation of municipal authorities who are eager to provide options for lower-income constituents.
Exploring various development and redevelopment opportunities can be beneficial for those interested in the commercial real estate sector. Micro apartments may represent a viable opportunity for those looking to capitalize on the constant demand for affordable housing.