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Multifamily Minute Reader Reflections: Which Data Matters the Most?
We asked more than 40,000 multifamily and apartment investors what trends are the most important when buying a property. Here's what they said.
Start Your Application and Unlock the Power of Choice$5.6M offered by a Bank$1.2M offered by a Bank$2M offered by an Agency$1.4M offered by a Credit UnionClick Here to Get Quotes!There are a lot of market data points out there to consider when pulling the trigger on a multifamily acquisition.
Occupancy. Rent growth. Development activity. Property value growth.
And that's only looking at traditional market metrics — many other metrics are equally (if not more) important, from crime rate to population growth to average earnings figures.
Then, of course, you've got data you'll need to examine specific to any property itself, from rent rolls to maintenance costs and so on.
That's a lot of data to talk about, though — so in the latest issue of the Multifamily Minute, I just asked you about the big ones.
Survey Results
And here's what you said:
Data | Percent of respondents |
|---|---|
Historical rent growth | 33% |
Projected rent growth | 15% |
Units under construction | 4% |
Vacancy trends | 7% |
Property value trends | 32% |
Other | 9% |
There are a couple intesting dynamics that surfaced here.
First, I don't sense anywhere near the panic over vacancy that most multifamily market reports and news sources keep highlighting, over and over and over again. Yes, vacancy is on the rise, in part due to the heap of construction activity going on.
But that may not matter to many multifamily owners and operators. Sure, more vacant apartments near your property may put a temporary slowdown on rent growth, but as with all things: This, too, shall pass. As long as you're taking good care of your property and your residents, you likely won't have anything beyond some short-term challenges.
Second, history trumps a crystal ball any day. More than twice as many of our respondents said that historical rent growth matters a great deal more than any future projections.
Why? It's simple, really. Future projections are imperfect and error-prone by nature, where history tells us how markets have responded to challenging times in the past.
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Last time, I'd asked you about your focus on renovations and property upgrades. The main point here is that it's usually far more cost effective to be proactive with improving your building than to wait until it needs to be done right now (which is invariably at 3 A.M. on a Sunday).