Where Should I Build A Multi-Family Residential Unit In Waco, Texas?

With steady population growth, rising rental demand, and multiple revitalization efforts underway, the city offers strong potential for multi-family residential development. But not every area of Waco is equally suited for this kind of investment. Choosing the right neighborhood can directly impact your occupancy rates, rental yield, and long-term success. At Merck General Contracting, we’ve built commercial and residential structures across the region and understand how to help developers capitalize on the right location. Here’s your comprehensive guide to where—and how—to build multi-family housing in Waco, Texas.

Why Waco Is Primed for Multi-Family Development

Waco’s population has grown steadily over the last decade, driven by its central location between Dallas and Austin, its affordability, and the presence of key institutions like Baylor University and several healthcare systems. As more people move to the area for work, education, or retirement, demand for flexible and affordable housing continues to rise. Rental rates are increasing but still remain lower than in major metros, making Waco an attractive alternative for renters and investors alike. In 2024, the median rent for a two-bedroom apartment in Waco was approximately 20% below the Texas state average. With the right market conditions and city support for infill development, now is the time to act.

Zoning and Building Considerations in Waco

Before breaking ground on a multi-family project, you must understand Waco’s zoning structure. Most multi-family development falls under R-3 (Medium Density Residential) or R-4 (Multi-Family Residential) zoning districts. These zones allow for duplexes, triplexes, quadplexes, and apartment complexes, depending on lot size and city code. Some commercial zones like C-2 and C-3 may also allow mixed-use developments with residential units above ground-floor retail. Each zone carries different setback, height, parking, and density requirements. It’s critical to engage with Waco’s Planning Services Department to verify zoning eligibility and ensure your proposed density aligns with the Unified Development Code.

In some cases, you may need to apply for a zoning variance or pursue a Planned Unit Development (PUD) to achieve your vision. Merck General Contracting works closely with local engineers, architects, and city officials to streamline this process.

Top Neighborhoods for Multi-Family Development in Waco

1. Downtown Waco – The heart of Waco is experiencing a major renaissance. With investments in the riverfront, Magnolia Market’s ongoing influence, and Baylor University just blocks away, Downtown is ideal for luxury apartments, student housing, or mixed-use developments. While land may be limited and costly, rental rates are higher and walkability attracts young professionals and tourists alike.
   

2. East Waco – Once underserved, East Waco is now one of the city’s most promising zones for revitalization. Community organizations and the city are investing in infrastructure, local businesses, and housing. Land is more affordable, and demand for housing is rising. This area is ideal for workforce housing, duplexes, or small apartment buildings.
   

3. South Waco (near Loop 340) – With access to I-35 and strong commercial activity along Bagby Ave and New Road, South Waco is well-positioned for mid-sized multi-family developments. Several shopping centers and employers are located nearby, and the area has a mix of established neighborhoods and newer developments. It’s ideal for apartments with amenities and family-focused communities.
   

4. China Spring and Speegleville – Located to the northwest, these suburban areas are growing rapidly, attracting families and professionals seeking quieter lifestyles with access to city conveniences. Larger tracts of land and lower permitting hurdles make this area attractive for townhomes, duplex clusters, or small apartment communities.
   

5. Lake Air & Woodway Area – These well-established residential zones offer excellent school districts, strong property values, and access to major medical employers. Multi-family developments here should focus on upscale units with long-term tenant appeal. This area is best suited for low-density multi-family developments with premium finishes.
   

Factors to Consider When Choosing a Site

When determining where to build, look beyond zoning and land cost. Here are several other critical factors to evaluate:

• Tenant Demographics: Are you targeting students, families, retirees, or professionals? Downtown appeals to younger renters, while suburban areas attract families.

• Proximity to Employment Centers: Areas near Baylor Scott & White, Providence Hospital, and Baylor University will always have housing demand.

• School Districts: Families often prioritize quality school districts, making areas like Midway ISD and China Spring ISD more attractive for multi-family housing.

• Transit Access: Proximity to major roads, public transportation, and bike-friendly routes can influence desirability and rent prices.

• Crime Rates: Lower-crime areas help support higher rents, long-term tenancies, and reduced insurance costs.

• Infrastructure Readiness: Confirm that utilities, drainage, and access roads are already in place or can be added without significant delay or expense.

Construction Design Tips for Long-Term Success

The most profitable multi-family properties are built with tenant comfort and operational efficiency in mind. At Merck General Contracting, we recommend:

• Flexible Floor Plans: Offer a mix of 1-bedroom, 2-bedroom, and 3-bedroom units to appeal to a wider audience.

• Energy Efficiency: Invest in insulation, HVAC efficiency, and low-flow water fixtures. These lower utility costs, which tenants love, and may qualify your project for tax incentives.

• Durable Finishes: Choose materials that look high-end but hold up to frequent turnover. LVP flooring, quartz counters, and modern cabinetry provide longevity and visual appeal.

• Amenities That Matter: A gym or clubhouse may not be necessary in smaller builds, but dog parks, green spaces, and package lockers add serious value with minimal maintenance.

• Security and Lighting: Proper lighting, cameras, and secure access systems improve tenant safety and help attract renters.

Financing and ROI Considerations

Waco's affordability makes it an attractive place to finance multi-family builds. Local banks, credit unions, and state-level programs like TDHCA often offer competitive rates for housing projects, especially those targeting moderate-income tenants. Infill projects and those near public transit may also qualify for incentives or tax credits. Understanding the balance between construction costs, rental rates, and long-term maintenance is key to a successful investment. Our team can help you scope your project to maximize ROI from design through completion.

Conclusion

Waco is full of opportunity for multi-family developers—but success depends on building in the right place, with the right plan. From Downtown revitalization zones to fast-growing suburbs like China Spring, Waco’s diverse neighborhoods offer a range of possibilities for every type of investor. The team at Merck General Contracting has the local experience, permitting knowledge, and construction expertise to bring your vision to life. If you’re ready to explore multi-family development in Waco, we’re ready to help you break ground.

Contact Merck General Contracting today to start planning your next multi-family project in Central Texas.