Horizontal apartments offer a new approach to multifamily housing. Instead of high-rise and dense apartment buildings, horizontal apartments feature single-story units built close, but not immediately next to each other. At first glance, horizontal apartments might look like a single-family residential home, but that’s not exactly the case. Factors like space-efficient design, professional property management, and market demand tied to horizontal apartment living can be key in your investment decision. So, let’s uncover what horizontal apartments are and how they are leading the Texas build-to-rent market.
Key Takeaways
- Horizontal apartments combine multifamily efficiency with single-family appeal.
- Strong occupancy and lower volatility in BTR horizontal apartments are supported by consistent leasing processes, transparent policies, and proactive property management.
- Operational efficiency, through standardized unit designs, fewer shared amenities, and simpler infrastructure, lowers maintenance and capital expenses.
The Rise of Horizontal Apartments in Texas
Drawing from our experience in property management services in San Antonio, we understand how renting continues to be the more accessible housing option for many. But what makes horizontal apartments particularly attractive? More importantly, what makes them a viable investment option? Aside from housing demand, investors look at horizontal apartments because of their cost control, flexible financing, land use efficiency, operational flexibility, and profitability.
Given Texas’s ongoing growth, the development of horizontal apartments offers a transformative solution to a range of persistent housing problems. However, the key element in horizontal apartments is that investing in one is reasonably accessible, even for individual investors, through strategies such as real estate sponsorship.
Now, to further strengthen the state’s bid for faster residential real estate development and income generation, horizontal apartment investments are built on the build-to-rent (BTR) framework. With uniform design and lower construction costs, tied with long lease duration and strong rental demand, investors now have a better understanding of the purpose and expectations of this asset class, putting it in the spotlight for future passive investment plans.
Why Texas Tenants Prefer Horizontal Units Over Traditional Multifamily
With the rising costs, renting is key to the ever-growing housing problem. Now, horizontal apartments present tenants with an alternative to traditional multifamily residential.
First, horizontal apartments remove shared walls by having compact individual units spread over a vast area. So, instead of a multistory residential building with apartments built wall-to-wall, above and below, tenants in horizontal apartments get tiny homes with private front doors and even a small outdoor space.
Aside from that, residents have access to shared community amenities such as parks, playgrounds, fitness centers, clubhouses, pools, and the like.
However, despite the independent, home-like feel, horizontal apartments enjoy the ease and convenience of professional property management. These professionals take on the task of handling common pain points like maintenance, repairs, and conflict. In essence, horizontal apartments not only compete purely based on rent prices or amenities. Instead, it champions long-term livability, encouraging longer tenancies and minimizing vacancy. For investors, this means lower income volatility and even better exit pricing.
Zoning for Density: Navigating Texas Municipal Codes for Horizontal Apartment Projects
A common concern in horizontal apartment projects is zoning. Particularly, how it works considering the unique multifamily and single-family setup of such developments. So, how do developers balance and navigate zoning for housing with the multifamily density, but with the single-family design? Generally, horizontal apartments in Texas fall under these zoning frameworks:
- Multifamily Zoning (MF Districts): This allows the development of single-story to low-rise construction within established or existing MF zoning categories.
- Planned Unit Developments (PUDs): Provide design flexibility and site efficiency by allowing custom lot sizes, modifications to parking ratios, and mixed products within a single community, all within reason.
Managing Spread: Operational Efficiencies in Low-Density Build-to-Rent Portfolios
In comparison, horizontal apartments are lower in density than high-rise traditional multifamily residential. On top of this, the horizontal spread of units often brings a concern regarding operational and management efficiency. Simply, the notion is that the more dispersed the units are, the harder it is to manage and maintain. However, that is not exactly the case. Instead, a well-designed horizontal apartment community takes spread into consideration and addresses potential issues proactively.
First, horizontal apartments enhance operational efficiency by leveraging repeating floor plans and unit specs. This means that there’s less friction in the construction phase, allowing faster building development. Then, it applies density in a way by clustering buildings adequately to shorten walking distance and improve land use efficiency. Having centralized maintenance points and clear service routes also enhances on-site operations.
In terms of operational costs, one of the benefits of horizontal apartments is that it features fewer common shared areas and amenities. The lack of shared hallways, corridors, and even elevators removes maintenance needs in such high-traffic areas. Therefore, the overall design of a horizontal apartment community allows for fewer large-scale system failures, less deferred maintenance, and a level of density that aligns with its controllable capital expenses.
The Exit Strategy: How Institutional Buyers are Pricing Texas Horizontal Assets
Did you know that the development of BTR homes has been on the rise since 2021? But while there is a gradual decline by the end of 2024, this just provides an opportunity for future developments, especially in 2026, as Texas’s population continues to grow.
Now, investors have a better understanding of BTRs to the point that effective income flow and even exit strategies are tried and tested. So, what do we know so far? At this point, we can say that BTR markets show stable occupancy through rate cycles, strong renewal-driven NOI growth through longer tenancies, and lower vacancy risk. In a sense, institutional buyers look at BTRs for their predictability. Even with slightly tighter cap rates, the expense control and stable occupancy performance allow for long-term revenue generation.
What’s even better is that horizontal apartment communities benefit from professionally managed operations. This means that investors can expect clean financials, well-documented maintenance programs, and a strong tenant management system. And with passive investment strategies, investors are given a great opportunity to generate income with minimal effort and lower risk.
How Bay Property Management Can Help
Texas and its suburban development, growing population, and housing demand open the doors for BTR horizontal apartment communities. Now an institutionally recognized asset class, investors can better gauge how horizontal apartments align with today’s local housing market. However, the success of these projects heavily relies on execution. This is where an experienced property management company, like us at BMG, becomes a critical value partner.
As experts in the local housing market, we can help ensure that these horizontal apartments experience stable occupancy, controlled expenses, and standardized operations. Interested? Contact us today to learn more!
