Hearthfire Capital's Investor Sentiment Survery: 2022

As our company, investors, and partners continue to navigate an economic and investment climate of uncertainty, we believe that the most important method to determine the opinions and strategies that are of importance to investors is to ask directly.

We are pleased to deliver the results of our inaugural Investor Sentiment Survey. This survey was sent out broadly to our mailing list and various other forums including LinkedIn, BiggerPockets, and several Facebook investor communities. While we attempted to cover audiences outside of our direct investor community, it is acknowledged that our networks are mostly real estate investors. The results are based on 56 completed surveys who were asked for their general investing and real estate market opinion based on an outlook of 6-12 months.

You can view the entire survey by clicking the image below.

Overall Summary

The overall theme in the results is not surprising, by which 58% of respondents have a Negative outlook for the economy over the 6-12 months. Although negative, most are still extremely bullish on Real Estate (65%). Although the market sentiment is negative, 78% of respondents expect a continued Opportunity for personal investments, of which 65% of respondents expect to come from Real Estate. Equities, Cash, and Crypto are expected to be the worst performing assets, representing over 80% of the 6 asset classes asked.  

With regard to the current inflationary climate, over 57% of respondents indicated that they expect to increase their allocation to Real Estate investments, while 27% indicated that inflation has no impact on the allocation of their investments to real estate. Rising Interest and Cap Rates have a combined 56% response rate of no impact or slight reduction in capital allocation, while the Geopolitical climate indicates an overwhelming no impact (73%) for most investors. 

Projected Cash Flow (29%) and overall Operator Track Record (29%) are what most investors deem as most important when evaluating a real estate investment opportunity, while IRR (53%) was the overwhelming least important factor. 

When it comes to markets, Job Growth (25%) and Population Migration (25%) are most important, while Geographical Region (45%) and Employment Diversity (29%) are the least.

The investment strategy that is most preferred was overwhelmingly tied to Value-add, which is growth focused, but with moderate risk (55%), while the least preferred was Core assets, which are strictly income focused with less debt (53%).

When it comes to real estate, the asset classes that most are interested in investing include Self Storage (81%), Large Multi-Family (77%), and Industrial (73%), while Retail (49%) and Office (47%) are the least. Most respondents agreed that Self Storage is a good hedge against inflation (69%), but interestingly enough (55%) of investors have no exposure to the asset.

Closing

The attached data and results of this survey are intended to provide our team and community with a good representation of a real world view of the markets. We expect to continue to use this insight to best align our strategies to continue to provide investment opportunities that aim to not predict the market, but to make wise investments that balance risk with outsized returns that are backed by hard assets. 

If you would like some additional thoughts and commentary from me personally regarding the survey, my view of the market, or our investment thesis in general, click here to schedule a call.