If you're looking to invest in a multifamily property, you may have noticed that they are scarce in most parts of the country. Fortunately, the North East has a lot of them. Connecticut, in particular, is a great place to buy 1-4 unit investment properties.
Favorable Price to Rent Ratios
Connecticut offers favorable price-to-rent ratios for landlords. This means that the amount of rent you can charge is high relative to the purchase price of the property. In fact, according to Zillow, the median rent for a 1-bedroom apartment in Connecticut is $1,150, while the median home value is $246,200. This translates to a price-to-rent ratio of 17.4, which is higher than the national average of 16.4.
Rent Subsidies
Another advantage of owning a multifamily property in Connecticut is the availability of rent subsidies. The most common subsidy is the Section 8 voucher program, which assists low-income families in finding affordable housing. Landlords who participate in this program receive a guaranteed monthly payment from the government for the portion of the rent not covered by the tenant. Since the rent is guaranteed, it can provide a steady income stream for landlords. Many times, these rent subsidies pay slightly higher than non-subsidized renters.
Tenant Rights Activists
It's important to note that there are tenant rights activists in Connecticut who are attempting to get rent control enacted in the state. Rent control is a policy that limits the amount landlords can charge for rent. However, if rent control is passed, it will likely only apply to units with 5 or more units. This means that 1-4 unit properties may not be affected by rent control laws.
Multifamily Properties in Connecticut
Connecticut has a high concentration of multifamily properties, particularly in urban areas. According to the US Census Bureau, 27% of housing units in Connecticut are multifamily. This is higher than the national average of 17%. The high demand for multifamily properties in Connecticut can be attributed to a variety of factors, including its proximity to major cities like New York and Boston, as well as its strong job market.
Conclusion
Connecticut is a great place to buy 1-4 unit investment properties. With favorable price-to-rent ratios, the availability of rent subsidies, and the potential exemption from rent control laws, it's a smart choice for anyone looking to invest in multifamily properties. Additionally, the high concentration of multifamily properties in Connecticut means that there are plenty of opportunities for investors to find a property that meets their needs.