Multifamily Minute Reader Reflections: The Best Approach for Investing in 2023
We surveyed our 40,000 subscribers to see if investing in upgrades or purchasing properties is the way to go this year.
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In our Jan. 17 Multifamily Minute email, we asked our approximately 40,000 readers where they felt the best place to invest was for this year: whether by upgrading existing properties or by buying one or more apartment buildings.
Survey Results
Buying new apartment communities was the clear winner, with just shy of 75% of total responses. About a quarter said they were planning for no major acquisitions or expenditures. Interestingly — almost no one said they were planning to do renovation work as part of their multifamily investment strategy.
View the full table of results below.
Type of Investment | Percent of Respondents |
|---|---|
Acquiring one or more properties | 73% |
Renovating units or common areas | 3% |
Replacing major parts of a building | 0% |
No major acquisitions/expenditures planned | 24% |
Lack of Upgrades?
As much as I'd love to talk about the large cohort of investors seeking new properties, I think it's more interesting to look at the area most of our respondents stayed far, far away from: major improvements and upgrades.
I believe there are a few reasons for this. Let's explore them all below.
1. Value-Add Investments Are Riskier
This one's true, broadly speaking, and most investors look to decrease their risk profile with an impending recession. Further, implementing some long-overdue improvements on a dated property may not always hit the investor as their particular investment strategy — to many, it's just how you should responsibly own and operate any apartment building.
2. You Can't Always Anticipate Major Expenses
It's not too surprising nobody said they were planning to replace a major part of a building in the survey. After all, if you have to replace a building's roof, you're going to do that — not first figure out if it's the best type of investment strategy for your property. Though, pro tip: It is. It's super challenging to rent units that don't have a roof.
3. Acquisitions Are More In Focus
Finally, many of our respondents aren't likely summarizing their multifamily investment strategies with a single choice. It's far more likely that every investor — especially those who own multiple assets — will tick all of the boxes above to varying degrees.
That said, acquiring a building is generally a far larger investment than renovating some common areas or replacing an HVAC system. It makes sense, then, that few would tick this box as their highest priority.
Really, that last one's on me. I should have let the survey take multiple answers.
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Our Previous Survey
In case you didn't see it, last week we asked our readers what types of markets they're targeting for investment this year. Read our analysis of the results.