Visionary Entrepreneur Brings Operational Excellence to Multifamily Acquisitions
Specializing in overlooked B and C properties, Swapnil Agarwal’s investment and operations arms add value through renovations, a human touch and the latest property management solutions
Swapnil Agarwal has not forgotten the first place he lived after moving from India to the Houston area at age 15.
“It was a dreary, run-down apartment complex where you could tell the management didn’t care at all,” he recalls.
Years later, you’ll find Agarwal at the helm of a burgeoning company that acquires and transforms neglected Class B and C properties, turning them into solid moneymakers while treating residents with respect.
While his Nitya Capital pilots the investment ship, Agarwal’s operational entity, Karya Property Management, leverages the latest RealPage software solutions to inject excellence into every component of site operations – from leasing, to invoicing and purchasing, to utility management, maintenance and beyond.
Seizing an opportunity
In 2013, Agarwal left his enviable job as an investment banker to pursue a dream: applying his expertise in finance to improving multifamily properties with upgrade potential, for the benefit of both investors and residents.
“At the time, everyone was focused on sparkling new buildings,” says Agarwal. “Older complexes just aren’t as glamorous or popular to invest in, but I saw so much potential in giving them facelifts and running them better. Also, not everyone has the money to live in those fine new apartments; most people live in modest ones, and they need a nice place to live too, as my family did when we first arrived here.”
Another dynamic was working in his favor: depressed oil prices. Investors simply weren’t interested in looking at the Houston market until the local economy got better, meaning competition to buy properties has been low despite Agarwal’s feeling the city would inevitably rebound. “There have been bargains that continue to this day, though the window is beginning to close,” he says.
Sprucing things up
Nitya Capital’s first acquisition was a Class D property stripped of appliances and without even AC. Agarwal was onsite personally for three months learning operations from the ground up and implementing changes. Within a short time, NOI had increased from $65,000 to $95,000 per month, and occupancy from 65% to 90%. “This was my proof of concept – that there was a lot of untapped potential in these undervalued Houston properties even without an oil recovery,” Agarwal says.
From this modest beginning, Nitya Capital has grown to own 30 properties in Houston and Dallas comprising over 8511 units. Over 250 investors have bet on the company thus far and received handsome returns.
With some exceptions, the general investment strategy has been to acquire properties with potential, invest around $5,000 per unit on renovations and then raise rents gently – giving residents a great deal of new value for a modest additional cost. The properties have also added amenities such as after-school programs and parties to build a sense of community. “We give them a far nicer place to live while keeping rents affordable, and of course this increases occupancy, retention and ROI,” says Agarwal. “Everyone wins.”
Better through technology
Agarwal is a strong believer in the power of software to transform site operations, driving productivity and cost savings that go directly to the bottom line. “Our business model is built on more than fixing up apartments and raising rents,” Agarwal explains. “Part of the reason we’ve been able to deliver great returns to investors is that we run a very tight ship at these properties, and it’s software that allows us to do it.”
Karya Property Management, wholly owned by Nitya Capital, employs the entire RealPage software “stack” including business intelligence, performance analytics benchmarking, leasing, accounting, payments, invoicing, resident management, facilities, purchasing, websites, utility management, payment processing, contact center and more. Agarwal believes a single-vendor solution pays off in terms of smooth integration and data sharing between functions as well as the ability to work with a single company to solve challenges rather than several.
Asked to provide an example of technology enabling efficient operations, Agarwal points to marketing and leasing. “From initially attracting a lead all the way through to a signed lease, there are so many opportunities to cut costs and labor while boosting occupancy,” he says. “Today’s online marketing technology helps you generate more and better prospects at the lowest cost, and stay on top of them so they don’t fall through the cracks. It also enables paperless online application and screening that’s convenient for applicants and a big time-saver for onsite staff, freeing them for more customer-service oriented tasks.”
Other critical benefits to the RealPage suite in Agarwal’s eyes are the business intelligence, performance analytics, benchmarking and reporting that help Nitya Capital make profitable decisions and keep investors informed. “We can share financials, look at market trends and competitor activity and create custom reports that offer real insights into problems and opportunities,” he says. “As a former investment banker I’m not afraid of numbers and I really appreciate having deep visibility into the portfolio.”
The investment Agarwal has made in technology is just as much about the future as it is about squeezing maximum value out of his current portfolio. “RealPage is helping us build a scalable technology foundation that will grow smoothly with us so we don’t experience disruption as we expand,” Agarwal explains. This growth is happening now, and quickly. At the end of 2016, Nitya acquired six Houston properties from a Canadian company in a single deal, and has its sights set on more acquisitions in both Houston and Dallas. Other markets are possible as well in the near future.
“Unless you’re doing very quick flips, there’s a lot more to this business than investing wisely,” concludes Agarwal. “When you’re holding the properties, you need to always be looking for ways to reduce costs while boosting income and occupancy, and more and more this comes down to technology. Those who exploit it most effectively will be the winners in multifamily going forward.”