Our Strategy — Groundswell Assets

Safeguarding the capital of our investment partners is at the core of Groundswell Assets’ mission. Our sole focus is on multifamily properties and our strategy is to simplify navigating the improvement of A and B Class apartment communities in primary, secondary, and tertiary markets nationwide. Historically, multifamily has been the least volatile real estate asset class during downturns while still offering strong upside potential during up-cycles. Within multifamily, choosing within the A and B classes provides for attractive investment opportunities due to the imbalance between the growing demand and the limited new supply of these units.

Our Acquisition Criteria

The following criteria is used to identify undervalued multifamily properties for acquisition, value optimizations, management and disposition.

MARKET SEGMENTS

Age: The 18–35 year old market segment is 22% of the U.S. population
Income: Renters who earn $80,000 or more annually
Price: Where rent is 30% or less of the median income
Retiring Baby Boomers are scaling down and enjoying maintenance-free multifamily living

PROPERTY CRITERIA

Multifamily residential apartments
Pitched roof construction preferred
Occupancy above 80% with the exception of properties that require renovation, providing properties are well located and present value-add opportunities
Built in 1990 or newer

TARGET VALUES

Size and Price: 100+ units in the $9MM – $50MM range
Returns: 20% Average Annual Return
Minimum Debt Service Coverage ratio of 1.25
Type: B- to A+ properties located in B to A areas
Location: Emerging market areas with indicators for imminent and long-term economic growth

Emerging Markets

Choosing the “right” multi-family apartment complex to acquire is a critical aspect of Groundswell Assets’ investment strategy. We are diligent in our exploration and focus on opportunities in emerging markets, where jobs and local economies show favorable demand characteristics, i.e., job and population growth, demographic shifts, supply absorption rates and positive local legislation.

Markets with supply constraints receive most favorable underwriting. Markets with signs of oversupply such as surplus land, changes in zoning and increases in building permits are avoided.

Value-Add Strategy

Think of it as a business rather than a building. The more income it generates, the more it is worth. When we purchase an apartment complex, we are looking for specific opportunities to increase the cashflow in different areas. These are called “Value Add” Properties.

Key Indicators for a Value Add Property:

Mismanagement by owner
Poor supervision of property management companies
Deferred maintenance
High vacancy rates
Below market rents

How we add value:

Improve curb appeal by revamping the landscaping, adding dog parks, carports, BBQ zones etc. — residents will pay more when a property is in better condition and has amenities.
Purchasing a property that is 10% (or more) under current market rents, giving us the opportunity to increase rents, which immediately increases the value of the property.
Implement a water and sewage bill-back system to charge residents for actual usage — offsetting expenses and increasing cash flow.
Improve unit interiors with fresh paint, new appliances, countertops, and floors.
Adding a digital pay laundry facility to the complex.
Offering residents below market rents.

Path of Progress Strategy

In the Path of Progress is where the greatest amount of building and development are currently happening, or soon to be.

A PATH OF PROGRESS IS WHERE:

Properties rapidly shoot up in appreciation
Majority of new construction is going on
Families and individuals are moving into the area

Investing in the Path of Progress yields the greatest returns in a short period of time.

Active Acquisitions

Groundswell Assets is aggressively seeking to acquire value-add apartment communities in Texas & nearby states.

Target Markets: Anywhere in Texas and specific metros across The Sunbelt Region
Size: 100+ units but will consider less in certain markets
Class: B to A in B- to A+ areas
Purchase Price Budget: Preferably in the $5M–$50M range
Value enhancement via re-positioning, correction of deferred maintenance, and improved professional management & revenue/cost control

Send us your potential acquisition opportunities: info@groundswellassets.com

SELLER INQUIRY FORM