Rental Residential Buildings or “Multifamily” are the result of a natural process in urban growth: population increases, rising interest rates (and therefore more restrictive purchase conditions), and very low vacancy rates. All of these create the perfect breeding ground for a developer to decide to retain ownership of all the units built, instead of selling them to individual buyers as is usually the case.

This business model comes with its own design, construction, financial, and operational particularities. In this post, we’ll go over 4 Key Lessons from Multifamily (Rental) Buildings from my experience in New York.

DISCLAIMER FOR DEVELOPERS: You must be absolutely P-A-S-S-I-O-N-A-T-E about the tenant—even if that means a slight increase in your initial budget. The long-term rental experience of your tenants is critical, as it directly affects tenant acquisition, lease renewals, and rental growth.

With that said, let’s get started.

1. Create community

Think of the building as a new “neighborhood” where lifelong friendships can be built. It’s important to foster an active sense of community through apps or announcements in common areas. Invite tenants to join in activities like cooking classes, dance lessons, or fitness sessions. Offer BBQ, poker nights, and karaoke events. Organize open-air movie nights, dog training sessions, or special events, etc.

All of this, of course, requires well-planned common areas. For larger buildings, the efficiency ratio (net leasable area vs. total built area, excluding parking) is typically around 70–75%. That means up to 25% can be allocated to shared spaces and amenities.

2. Functional and eco-friendly trash rooms

Don’t be afraid of garbage chutes—on the contrary, install organic waste compactors in a room on the ground floor near the service exit.

Each floor’s trash room should also include small recycling stations (paper/cardboard and plastic are the most common). These areas should be serviced by a dedicated freight elevator and staff responsible for collection, operation, and cleanliness.

“But that takes away from rentable area!” Again, think from the customer experience and do your part for the environment. The results will come.

3. Package storage rooms

Nothing worse than a lobby cluttered with boxes. Instead, set up a designated area for deliveries, where packages can be stored temporarily and picked up by tenants within a set time frame.

Make sure to install 24/7 surveillance cameras and a management software system to organize packages efficiently. The global trend points toward even more online shopping—so be ready.

4. Operating expenses

In your financial model, include realistic figures for maintenance, repair, and renovation, accounting for annual increases due to inflation and labor costs.

A bad property management company can destroy your reputation in seconds with just a few poor Google Reviews. So take the time to sit down with several companies and choose the one that best fits your rental expectations.

Finally, before making any decision, always ask yourself: “How would I want to live?” That will give an exact idea of how invest your money in the project.

Thanks for reading this far. Sending a big hug your way!