5 Multifamily Properties You Can Buy for Less Than $5 Million

The pandemic-induced migration to secondary and tertiary markets has generated new opportunities for multifamily investors to capitalize on rental income and generate a high return on investment.

Whether you’re looking to buy your first multifamily property or expand an existing residential portfolio, LoopNet’s editors have observed a range of potential options available at an attainable price point, so we put together a sampling of apartment buildings currently listed for sale on LoopNet under $5 million.

We looked particularly in markets that have had high rent growth and strong demand, like these top 10 markets for multifamily investment that LoopNet identified in 2021, and markets where rent growth is significantly outpacing that of the national average, giving buyers lots of runway for growth and investment return.

Sunbelt markets are shining — last year, average asking rents in four of the markets below met or surpassed the national average of $1,557 per one-bedroom unit for the first time, according to data from CoStar, the publisher of LoopNet.

So without further ado, peruse the below listings to get an idea of the apartment buildings that are asking less than $5 million today.

$2,360,000 — 1009 N 1st St, Phoenix

This 8-unit property, located in a high-demand and growing neighborhood in Phoenix, was recently updated in 2020 with new finishes and improvements, so it’s a turnkey property for buyers looking to start generating rental income quickly. The recent renovation preserved its mid-century modern charms, like the original entrance with ornate concrete pilasters, crosshead and pediment details, and floating second-story Parisian patios. The property consists of six studios and two one-bedroom units, pulling in average rents across the property of $1,300 per month each, and an estimated net operating income of $100,000 per year, according to an estimate from listing broker Newmark.

The boutique 1930s-built property is in the Roosevelt Row Arts District, which USA Today recently ranked as a “Top 10 Arts District in the US,” and is within walking distance to Arizona State University’s downtown campus, which hosts 13,000 students. Newmark noted that this is a rare opportunity to snag a property in Roosevelt Row, as few often come on the market.

The brokerage also said that this could work well as a short-term rental or Airbnb property: “The net result of [a short-term rental arrangement] leads to higher return and less day-to-day involvement for the owner. The uniqueness of ‘8 on Roosevelt Row’ checks all the boxes of the ideal short-term rental unit: location near neighborhood hotspots and walking distance to Roosevelt Row and Downtown Phoenix, coupled with a studio and one-bedroom unit mix with downtown city lights and mountain views. This type of property attracts nightly rates over $250 in the winter months and $150 in the summer months.”

Phoenix experienced significant rent growth during the pandemic as California residents chasing a lower cost of living moved there — since the fourth quarter of 2019, rent growth is up 29.2% compared to the national average of 12.6% over the same period, according to CoStar.

$4,550,000 — 1115 Ponce de Leon Ave, Atlanta

This recently renovated Atlanta apartment building has 17 units, 16 of which are one-bedroom units that an owner could rent out for an average of $1,750 per month — and the property has an average occupancy of 100%.

All units were recently upgraded with hardwood flooring, granite countertops, stainless steel appliances and private balconies for enjoying the warm southern weather.

Andy Lundsberg, listing agent and partner at Bull Realty, said this is a unique property because the seller is requiring the buyer to assume the existing Freddie Mac loan on the property at a 50% loan-to-value ratio (LTV). “That’s not exactly favorable in terms of LTV, but the buyer gets a better interest rate [at 3.79%] than they could get today with a new loan and a slightly higher cap rate than what the property would have sold for free of any debt,” he explained. “So, it’s ideal for a 1031 exchange buyer or someone who doesn’t mind the larger down payment requirement. It’s not an easy process, but it’s a chance to own a great vintage property in a highly desirable location”

Located in Atlanta’s Virginia-Highland neighborhood, the building is a few blocks from a hub of local restaurants and bars and is within walking distance from Ponce City Market and the Atlanta Beltline’s walking and biking trails.

“Virginia-Highland is one of the most sought-after neighborhoods in Atlanta with high barriers to entry, low vacancy and strong rents. Developed in the early 1900s, Virginia-Highland, or ‘VaHi’ as it is known by locals, consists of four distinct commercial ‘villages’ connected by short, walkable blocks lined with charming bungalow homes,” said the listing agents at Bull Realty.

Atlanta has been booming as a rental market over the last several years with continual year-over-year rent growth. According to CoStar, Atlanta apartment rents have risen 23.5% since Q4 2019, and the market includes a good stock of existing apartment buildings with low barriers to entry that will provide investors with value-add opportunities, price appreciation and rent growth.

$4,750,000 — 400 Kenniston Dr, Austin

Located a few miles from downtown Austin, this 24-unit property just went through an exterior renovation over the past year, which its leasing firm Muskin Commercial said included replacing the siding, upgrading exterior lighting, building fencing with controlled access gates, installing a security camera system, and installing steel planter boxes with irrigation and “drought-resistant” landscaping, among other upgrades.

The interior studio units, while modern, still have the potential to be upgraded by a patient investor looking for a higher rental upside. Financial analysis from Muskin noted that the property, which averages $1,200 per month in rent for the units and has an average occupancy of 92%, has a net operating income of close to $200,000 per year.

“Highland Flats has become an increasingly popular community due to the recent developments in the immediate area, and the studio floorplans are a highly desired unit mix near Austin’s largest [Austin Community College] Campus and related developments,” said Muskin, noting that the developing area just a half-mile away will soon bring over 1,000 new apartment units, 800,000 square feet of office, 150,000 square feet of retail and miles of trails to the neighborhood.

Rents in this neighborhood have increased 30% over the past 12 months, according to Muskin, signaling the city’s strong demand and continued rent growth. Austin has established itself as a bustling tech hub over the last few years as giants such as Tesla and Dell have staked their claim here, and renters from pricey California markets have flocked to the Texas city in search of affordability.

$2,400,000 — 505 N College Ave, Indianapolis

This is a chance for Indianapolis investors to purchase a unique and recently updated apartment building that combines sleek modern finishes with an early 1900s-era industrial character.

The building’s six units, renovated in 2017, all feature two bedrooms and two baths, with a history of being fully leased at a current average rent of $1,800 per month. The building includes eight parking spaces, but is located on College Avenue in a walkable and vibrant arts neighborhood with art galleries and studios, theaters, trendy restaurants, boutiques, music venues, and bars.

Indianapolis came across investors’ radars last year when it held its affordable rents while still pressing upward on rent growth, noted CoStar analyst Chris LeBarton in 2021. “Landlords see the great recent performance here, and there’s still runway ahead of them given the current asking rents.”

Interested buyers should note that this property is located in an opportunity zone for potential future tax benefits, and is part of a 1031 Exchange sale.

$1,640,000 — 7106 S Kissimmee St, Tampa

This vintage South Tampa apartment built in 1983 offers both turnkey units for immediate rental income and value-add potential. Several of the seven, two-bedroom units here have been upgraded with new cabinetry, granite countertops, and bathroom fixtures, though a few remaining units still can be renovated to increase value. All units have recently been wired for washer/dryer hookups and the concrete block construction building has central HVAC.

The building has a history of being fully occupied, and is 15 minutes from downtown Tampa and several other business districts in the city — driving job demand and growth. A highlight of the property is its “dynamic location near Westshore Blvd., where there is a significant amount of new construction in the immediate area,” said Avery Jordan, senior director at Franklin Street and lead listing agent on the property.

Tampa is seeing some of the highest rent growth in the country, increasing 31.4% since the fourth quarter of 2019, according to data from CoStar.