By Cyrus Khadivi, regional vice president of sales, LoopNet Inc./Ten-X
For a Dallas multifamily investor considering where to allocate the next deployment of capital, the process and ultimate solution may be more complex than simply seeking the next acquisition.
Looking ahead to 2027, the options could range from competing for additional assets in Dallas, pursuing lower-cost alternatives in other parts of the market, making larger investments in properties currently in their portfolio or simply keeping cash on hand until a better deal comes along.
No matter what strategy the investor chooses, the deal execution will follow an extended period during which Texas multifamily owners have dealt with increasing debt rates, slowed rent growth in oversupplied markets and higher operating costs. Deals continue to happen, but investors are evaluating them with more attention to underlying fundamentals.
According to a new survey among U.S multifamily investors conducted by LoopNet Inc., about a third of survey participants are planning to focus on upgrades to add value to their portfolios and increase rents in the coming year. An equal number plan to keep extra money to weather market downturns, and roughly a quarter of investors plan to make no portfolio changes at all.
In contrast, only 15 percent of those investors are planning to look for new deals.
For Dallas owners, those competing priorities raise a straightforward question: where can capital work hardest?
The Dallas Price Gap Brings Another Layer
Current listing statistics help shed light on why location is so vital to these decisions.
LoopNet’s Dallas market and trend information highlights local multifamily listings with an average sales price of about $432 per square foot. Nearby, Garland has a per-square-foot asking rate of $166, while the average price per square foot in Richardson is $160. Because these prices are based on active listings and vary with inventory, they serve more as a directional metric than as a thorough measure of property value.
Even so, the difference illustrates the range of asking costs investors may encounter across one metro area.
A lower asking cost, on a per-square-foot basis, does not necessarily mean that a suburban property is a better investment choice. Condition, rental costs, occupancy, funding, competition, tenant demand — all of these variables can influence an investor’s decision-making process.
Dallas Investors Have More Than One Route to Growth
Expansion is not the only way to increase multifamily investment returns, and no one strategy is inherently better than the rest. What LoopNet’s survey results reveal are the variety of options multifamily investors are currently weighing.
The owner of an existing Dallas investment vehicle or fund can allocate capital into renovations, improvement of communal spaces or even the handling of operational challenges that will be useful to ensure tenant retention and optimal asset performance. Other investors will be holding cash and waiting for prices and financing conditions to change, while another subset will move forward with acquisition.
The contrast between improving returns from existing portfolio pieces and acquiring new ones is notable. Within the LoopNet survey, 27 percent of investors said they plan to fund renovation projects, and 17 percent said they plan to invest in improving existing net operating income and tenant loyalty. Compare that to just 15 percent of investors that plan to actively acquire new properties.
Renovation Is Part of the Growth Conversation
For an owner of an aging apartment complex who needs to think about the next step, the decision is much more immediate, with long-term consequences.
Is it better to deploy capital by acquiring something else or by remodeling existing units? Is there a need for repositioning, or will small tweaks to interior finishes, common areas and operations work better? Will deploying capital to improve the resident experience help with retention, or is it better to keep that capital for future acquisitions?
In the renovate-versus-acquire dilemma, experienced investors leaned toward the former: Among survey respondents with four or more years of investing experience, 31 percent thought renovation is important for the next 12 months.
Clearly renovation won’t be the right strategy for every property, but experienced investors are considering it as a strong lever to pull as they plan portfolio and asset growth.
Keeping Cash Can Be an Active Decision
Renovations share the top spot in the survey with another priority: liquidity.
Twenty-seven percent of investors expressed the intention to hold more cash during times of market trouble, while 25 percent would continue to keep their portfolio as it is.
Preserving liquidity can provide flexibility. As an owner, this means that you can be ready in case an attractive acquisition opportunity materializes. Or you can make unplanned capital investments on existing real estate or reconsider a deal because of the change in financing and pricing.
Investors who choose not to commit capital right away don’t necessarily give up on growth. They’ve just increased the bar for an opportunity to reach.
Selectivity Could Matter More Than Activity
Acquisitions aren’t disappearing: Fifteen percent of survey respondents listing acquisitions as an investment priority represents a fairly sizable segment of buyers.
The most important shift may be in how selective the investors have become.
An owner who has the option to renovate an existing asset, buy property in suburbs with healthy supply-demand balances, invest into something more expensive in Dallas or keep cash flow flexible— that owner has several choices, but limited capital to devote to them .
As 2027 approaches, the key issue for Dallas multifamily investors may well not be what to buy next but rather which investment merits the next dollar invested.