Metro areas in the Sunbelt have experienced positive net migration trends as people relocate within the US and abroad to the region. Over the past five years, population growth in our target MSAs was 1.7% while the rest of the US grew at 0.5%. These markets have a significant imbalance in supply to meet current multifamily demand. Therefore, our management company focuses on Sunbelt-located multifamily investment properties which are substantially unrenovated, with minimal deferred maintenance and where comparison to nearby properties would support rental rate premiums for renovated units. Currently, Nicholas owns 14 multifamily properties with 4,092 units of workforce housing located in markets across the Sunbelt including Dallas, Fort Worth, Houston and Tulsa.
Across America, Nicholas Residential has targeted markets in which we see the greatest potential for investment. In our target metro areas, the number of Class A apartment units has grown dramatically while Class B/C has decreased slightly since the fourth quarter of 2014. This, in combination with recent population growth, has increased demand for workforce housing while supply has remained essentially constant, driving rental rate growth. This shortage in workforce housing presents an unsaturated, attractive market for investors.
Increased demand for workforce housing and rental rate increases have created a unique and time-sensitive opportunity to acquire, renovate and reposition Class B units as Class A-/B+. As a result of our unique investment strategy, existing and future tenants see improvements to their quality of life, and our efforts bring positive change to the community. Some of this added value for tenants is captured through increased rental rates, which remain affordable. Following rental rate increases and during the renovation period, occupancy rates remain stable, resulting in increased NOI and higher property valuations for a given cap rate at exit.
To achieve optimal scale efficiencies and maintain favorable property management costs, target properties are able to offer sufficient scale as standalone investments or are located near other assets in order to achieve economies of scale. Our captive property management company controls operations, renovating and upgrading investment properties at low costs by utilizing direct labor to perform maintenance and renovations. Our operating playbook also creates additional revenue streams from service offerings and appliance rentals. Together, with our in-house management team, these strategies create value and optimize NOI for each investment.
Nicholas Residential has found a successful approach to property management that benefits investors and residents alike. Contact us to learn more.Contact Us
Nicholas Residential’s repeatable and differentiated approach enables us to maximize NOI for our investments.Investor Portal