Nitya Capital's Strategy To Provide Affordable, Class-A Housing

Oversupply and slowing demand have Class-A multifamily leasing agents worried, but demand for affordable housing remains strong. We spoke with Nitya Capital CEO Swapnil Agarwal about how he's turning B and C complexes into A-style properties in the fight to provide more affordable housing and improve the lives of residents.

“Houston doesn’t need more Class-A apartments,” according to a 2016 Greater Houston Partnership report that cautioned developers about the timing for new apartment projects. But Agarwal, whose thinking about multifamily was influenced by growing up in Alief ISD, sees things differently.

Nitya Capital renovates and repositions Class-B/C properties with Class-A amenities and improves operations through its in-house property management company, Karya Property Management. Agarwal quickly realized his competitive advantage was not in his acquisition strategy or property management company, but rather his remodeling and construction team. Nitya has complete control of the renovation process, saving it hundreds of thousands, sometimes even millions, in construction costs. Those savings are passed down to tenants with leases ranging between 50% to 60% less per unit compared to newer Class-A units.

"There are two types of improvements we look to make, physical and operational efficiency. On the physical side, we use vinyl plank wood flooring, granite countertops, a new backsplash, stainless steel GE appliances and new crown molding. We improve the fitness center, the curb appeal, signage, paint color," Agarwal said. "It's important to be attracted from the outside, so we do great landscaping and new pool amenities. We look to improve the overall experience with better customer service, fulfilling work orders quickly and engaging the community with events. It's about making the tenants feel wanted."

For many residents, the change in engagement with ownership is entirely new. Agarwal said the care and attention brought to the value-add communities by Karya Property Management is often lacking in B and C communities. Agarwal is also implementing technology to assist residents with paying rents and filing work requests. 

Depending on the asset, the upgrades typically yield between $30 to $100 more per month, a sizable increase at B and C level rents. "We want to provide options. Not just increase rents across the board, making it a compulsory thing,"Agarwal said.

Last month, Nitya bought six Houston-area multifamily properties — the largest acquisition in company history. Last week, it announced two more property acquisitions, taking the firm to over half a billion in assets in less than five years. It now owns and manages 7,828 units and $550M in assets. Of the 27 properties in the portfolio, 25 are in Houston. Eight have been fully rehabbed; the rest are in various stages of conversion.

Agarwal expects 2017 to be a good year for Nitya and for Houston.

"2017 is promising with 22,000 jobs expected to be created in [the Houston] region due to our diversified economy. Over 400 people are moving into the city every day, and new commercial and industrial development [is] opening its doors for business, including the Amazon warehouse and Daikin campus,” he said at the Houston Apartment Association State of the Industry breakfast.