Introduction
Even in a higher interest rate environment, one corner of the real estate world is showing unexpected strength: small multifamily housing. This investment strategy has grown so popular that in 2023 alone, lenders originated over 36,000 mortgages for 5+ unit properties, totaling around $246 billion in volume. From 10-door garden apartments to 40-unit walk-ups, these deals reflect growing appetite from real estate investors betting on income-producing assets.
At the center of this trend are “10-door mortgages”—a shorthand for loans secured by buildings with 10 or more rental units. These properties are a sweet spot: large enough to scale, small enough to manage. The question is: who’s taking out these loans, and where is this activity concentrated?
Multifamily Money Maps
Data from the Home Mortgage Disclosure Act (HMDA) and Freddie Mac’s Small Balance Loan (SBL) program paints a clear picture: activity is highly concentrated in a handful of metropolitan areas.
The states with the highest volume of 5+ unit originations—California, New York, Texas, Florida, and Illinois—are also home to the country’s densest rental stock. Within those states, key metros dominate the leaderboard, including Los Angeles, New York City, Chicago, Dallas, San Diego, Miami, Washington D.C., Boston, and Seattle.
But what makes these cities 10-door magnets? And which ZIP codes within them are leading the charge?
Los Angeles, CA
From Koreatown to the San Fernando Valley, Los Angeles is filled with low-rise apartment buildings that hit the 10–40 unit sweet spot. Many were built in the mid-20th century and are ripe for renovation, repositioning, or long-term buy-and-hold strategies. Southern California also includes other top-tier multifamily markets like Orange County and San Diego.
Chicago, IL
Chicago’s two-flats, three-flats, and low-rise walkups have long attracted investors. Freddie Mac lists the city as a top SBL market, and Illinois ranks high in 5+ unit loan counts. With stable renter demand and an abundance of small multifamily stock, Chicago offers both affordability and scale.
Dallas-Fort Worth, TX
With surging population growth and business migration, DFW has seen a wave of investor activity. Neighborhoods like 75206 (Lower Greenville) are hotbeds for rehabbed or newly built multifamily assets. Texas’s status as a landlord-friendly state adds further appeal.
Miami & South Florida
Miami Beach’s 33139 ZIP code is iconic for its art deco buildings, short-term rental potential, and extremely high renter density—over 50% of all housing units are multifamily. Investors here benefit from strong rent growth and no rent control.
Washington D.C. Area
Submarkets like Northern Virginia and Prince George’s County (MD) support steady investor demand thanks to a constant inflow of renters and a stable job base. The region also benefits from a high number of 5–20 unit properties, which investors target for their cash flow and accessibility.
Atlanta, GA
Investors have increasingly flocked to Atlanta’s suburban and secondary markets. With a relatively lax regulatory framework, a growing population, and rising rents, Atlanta is quickly becoming a favorite among out-of-state buyers looking for better yields.
Phoenix, AZ
Phoenix has emerged as a top multifamily investment city, thanks to a mix of Sunbelt migration, pro-landlord legislation, and new development. Arizona’s eviction laws and limited rent controls create a hospitable environment for long-term cash flow investments.
Why These Markets?
The clustering of 10-door mortgage activity isn’t random. It’s shaped by four key factors:
1. Population Growth & Migration
Fast-growing cities in the Sunbelt attract not only residents, but investors chasing yield. With strong job markets and housing demand, metros like Dallas, Phoenix, and Atlanta offer the kinds of occupancy and rent growth that make small multifamily properties perform—even in a rising rate environment.
2. Landlord-Friendly Laws
Investors are increasingly selective about where they buy, and local laws make a huge difference. Texas, Georgia, and Arizona rank as some of the most landlord-friendly states—offering lenient eviction processes, low property taxes, and no rent control. These dynamics enable landlords to adjust pricing and control costs, leading to better long-term returns.
By contrast, areas like New York and California may deter some investors due to tighter rent regulations—but high rents and deep rental markets still keep them on the map.
3. Rent Yields and Demand
The rental math must work—and in places like Miami, Dallas, and Atlanta, it does. Rents have grown faster than prices in many of these cities, creating favorable rent-to-price ratios. Meanwhile, ZIP codes in more stable markets like Chicago still offer consistent cash flow thanks to established renter populations.
According to Bankrate, there are over 49.5 million rental units in the U.S., and investors are laser-focused on neighborhoods with strong rental growth and low vacancy rates.
4. Available Inventory
Simply put: some cities have more 10-door properties. Older metros like Chicago, Philadelphia, and parts of the Northeast have longstanding multifamily stock built in the early 20th century. In newer growth areas like Texas or Arizona, developers have delivered modern 5–20 unit buildings that cater to renters looking for affordability just outside city centers.
Why It Matters
Understanding where and why 10-door mortgages are issued shines a spotlight on broader real estate trends:
- Investor Behavior: Today’s investors are highly professionalized. Many are building portfolios of 5–20 unit buildings and seeking out ZIPs with stable tenants, landlord-friendly laws, and scalable property types.
- Policy Implications: The clustering of investor activity in affordable multifamily stock raises concerns in some cities. Could institutional investors be outcompeting local landlords or first-time buyers? Municipalities are beginning to track these patterns closely.
- Market Strategy: For lenders and borrowers alike, knowing which ZIP codes are seeing the most loan activity can shape everything from underwriting practices to acquisition strategy.
What This Means for Borrowers and Lenders
For borrowers, especially repeat investors, understanding the landscape helps in several ways:
- You can target ZIPs with solid returns and rent growth history.
- You can better navigate local laws and optimize your operations.
- You’re more likely to secure financing in areas that lenders are actively targeting.
For lenders like CertainLending, this data is gold. It helps refine loan products, risk models, and borrower outreach. It also shapes decisions around where to deploy capital and which borrowers represent long-term value.
Conclusion
A 10-door mortgage isn’t just a loan—it’s a bet on a neighborhood, a rental market, and a city’s trajectory. And based on available data, those bets are being placed most heavily in a few powerful metros: Los Angeles, Miami, Dallas, Chicago, and Atlanta, among others.
Whether it’s a 1930s walk-up in Chicago or a South Beach fourplex, these properties are becoming core assets for a new class of professional landlords. And as multifamily financing evolves, the interplay between investor appetite, local regulation, and housing demand will only grow more complex—and more important.
