Our USA Investment Strategy
Targets a growing and underserved niche in the mid-market multifamily segment, taking a value-add cash flow approach with a better community lifestyle focused on the U.S. workforce demographic.
- "Sweet Spot" Multifamily Deal Focus that are 90%+ occupied and provide already monthly cashflow are ridiculed and completely overlooked by institutional investors, bringing us tremendous opportunities.
- We focus on B- and C-class multifamily apartments with upgrading opportunities in emerging U.S. markets that can be repositioned with a community lifestyle management approach for the rapidly growing workforce.
- Focus on the strategic acquisition, upgrading, and operation of value-add multifamily properties in emerging landlord-friendly U.S. markets such as Texas, Atlanta, and Central Florida, ideally near a hospital and shopping.
- Improve operations, hire a local operating team with experience in transforming operational problems, know how to effectively enforce physical improvement, and have knowledge of turning around properties that suffer from and/or have capital constraints.
- Work with a local operating team with experience with a five-year exit strategy, whether by selling or refinancing an accumulated, stabilized portfolio to another investment group or institutional investment company.
In 2010 we - Marcel Rutz & Saskia Strasser - started our investment journey by investing in condominiums and single family houses, mainly in Europe, Asia and the USA. In 2016 we started to be interested in multifamily and since 2017, thanks to a local network, we are now involved in 15 deals with almost 5000 doors.
In the passive sector, our involvement in rental real estate, we monitor ongoing multifamily projects and evaluate potential deals in booming and stable U.S. markets and follow them throughout their investment cycle. We have extensive experience in communications, speak multiple languages, study investment summaries, PPM's, deal and market analysis, and maintain a robust network with a variety of reputable and trusted local project partners.
Our ambition is to participate in the acquisition of a new project with more than 100+ units each year and leave a sustainable footprint of modernized middle-class apartment communities at affordable rents.
Marcel T. Rutz was Speaker at Immopreneur 2017 in Frankfurt and 2016 on the Property Investor & Homebuyer Show London.
- Niche Investment Strategy. Capitalizes on a growing and underserved niche to apply for workforce housing with added community lifestyle value for the tenants.
- Focused Acquisition Strategy. We focus 100+Units B & C Off-market & listed Apartment Properties in landlord friendly states with value-add opportunity
- We focus on an experienced local Management Team. Acquisition, asset management and redevelopment experience in repositioning multifamily properties for U.S. workforce demographic
- Strong Industry Fundamentals. Favorable industry and economic conditions have created optimal investment timing. Favorable real estate and business-friendly environment lead to optimal investment timing in emerging U.S. markets
- Geographic Focus. Landlord-friendly emerging US Markets such as the Texas Triangle, Central Florida, Atlanta, etc. Strong demand for U.S. middle-market multifamily units is supported by leading population and job growth in targeted markets.
- Target Exit Returns. The business plan should show an NOI increase of over 80% and a sales price of 15-30% above the renovated purchase price. The average cash on cash return (NOI - interest - amortization) / equity, we would like to see at 10%, resulting in a minimum total return of at least 80% and an IRR of 15-20%.
Marcel is Postcast Host of Stars & Stripes US Multifamily Apartment Investing Podcast; Download on iTunes
- Property Size:100 units and greater
- Property Value: $5-$40M
- Median HH Income (1-mile): $40K or greater
- Target Occupancy:85% or greater
- Cash-on-Cash Returns: 8%+ CoC Returns
- Total Returns: 1.7-2.0x Equity Multiple
- Internal Rate of Return (5 YR): 13%+
- Texas Triangle, Central Florida, Atlanta, and other landlord-friendly up trending markets
- Stabilized Cash Flow with Value Add potential (Hybrid)
- Middle-Class Workforce
- Near Hospitals
- B or C+ Class in A or B Class Areas
- No Crime Area
- Uptrending Area
- Minor rehab
- Low Rents
- Low Occupancy
- Deferred Maintenance
- Lousy Asset Management
- Mismanaging Property Management
- Near to shopping center (f.e Walmart)
- Near to Jobs, Transport, and Highway
Co-Investing Track Record (the US only)
5'936 Doors (As of 12.2021)
- 30/11/2021: 1070 Units (5 Property Portfolio), The Chronos Portfolio
- Vistas of Pinnacle Park (332 Units, 599 West Davis Street, Dallas, Texas)
- Savoy of Garland (144 Units, 608 Rowlett Road, Garland, Texas)
- Huntington Ridge (198 Units, 821 South Polk Street, Desoto, Texas)
- River Oaks (180 Units, 2000 Country Club Road, Wylie, Texas)
- Mariposa Villas (216 Units, 1531 Duncanville Road, Dallas, Texas)
- 23/08/2021: 324 Units, Rosemont On El Dorado, Webster, TX
- 09/06/2021: 1331 Units, The Westchase Portfolio, Houston
- 29/08/2020: 288 Units, 10X Living at Panama City Beach, Florida
- 29/08/2020: 531 Units, Columbia Town Center, Columbia, Maryland
- 29/02/2020: 360 Units, The Retreat at PCB, Panama City Beach Florida
- 29/02/2020: 294 Units, Addison Place, Naples, Florida
- 21/02/2019: 354 Units, Surround Apartments, 4299 Pleasant Run Road, Irving, TX 75038
- 09/11/2018: 310 Units, Maravilla, Ex-Rush Creek 2650 West Northwest Highway, Dallas
- 26/10/2018: 432 Units, Interlace (Cielo Ranch) 3801 Gannon Ln, Dallas, TX 75237
- 20/09/2018: 67 Units, Milagro Apartments, 3064 Las Vegas Trail, Fort Worth, TX 76116
- 21/08/2018: 122 units; Ravenwood Apartments, 2333 Escalante Ave, Fort Worth, TX 76112
- 19/06/2018: 142 Units, Villas Garden; 2730 Fyke Rd, Farmers Branch, TX 75234 (19.06.2018)
- 30/04/2018: 123 units; Prairie Court/Ex-Carrier Arms 531 S Belt Line Rd, Grand Prairie, TX 75051
- 16/03/2018: 140 Units, Silversmith Creek Apartments, 7211 Crane Avenue, Jacksonville
- 11/03/2018: 48 Units, The Park at Woodlands Apartments, Houston
- 13/01/2017: 27 Units, The Plantation, 1201 Austin St., Wichita Falls, Texas (Horror Story)
- 30/12/2016: Triplex, 3830 Deal Street, East Chicago, Indiana (Horror Story)
- 19/10/2016: Duplex, 1252 Semmes Street, Memphis (Horror Story)
- 07/12/2015: Single Family House, 15511 Pebble Lake Drive, Houston Texas
Marcel T. Rutz was Co-Author of "Das System Immobilie" a German Real Estate Book of Thomas Knedel.
Typical Investment Lifecycle
Unmatched Competitive Advantage: "Wow-Effect"
We expect our on-site team to position the property to create a lifestyle by applying the 5-step Integrated Positioning Initiative, or IPI system. This 5-step system is designed to improve and optimize the operational and financial performance of an apartment complex. A general step-by-step guide follows:
- Step 1: Discovery: establish the facts about the property and the market. Evaluate and assess the property, the market, the competition, and the customer using customized diagnostic tools.
- Step 2: Exploiting the position: positioning the property in the market to maximize the income of the housing unit. Exploiting underserved needs, deviations, and gaps in the market. Develop strategic positioning strategy and set up for integration.
- Step 3: Integrate competitive positioning strategy: integrate the new strategy into all functions of the business unit. Train staff on the new strategy, improve promotional materials to reflect the new positioning, and implement the action plan.
- Step 4: Customer relationship management program: Establish a database marketing system. Implement an aggressive program of rental resident referrals, customer care, and retention.
- Step 5: Strategic Alliances Program: Establish and implement a referral system in the local market and business community. To successfully integrate any property into a local market, a procedural method is required. This process is based on the concept of finding gaps in that specific target market. These gaps are weaknesses that can be exploited by positioning our property to provide a solution to the weakness or gap we have identified.
After following the five steps above, the team needs to find that gap in the market and position the property toward a specific target market. A Lifestyle niche. Each lifestyle niche can be different. Senior residents will want certain things that students don't want. For example, seniors want to learn new things, so holding meetings with speakers talking about history, retirement, and medical health will be very popular. Students on the other hand would rather engage in video game tournaments, dating games, and coffee gatherings. Shaping our amenities and services towards that target market will create a positive unique lifestyle for the property and community where residents will stay longer and pay more.
College Students Living Problems:
- Tight budget
- Meet people
- Busy with school and work with little free time.
Our Community Living Solutions:
- Free roommate program
- Free wireless internet
- Free coffee bar
- Game room
- Dating game
- Video game tournament
- Study room with clubs and groups
- 24 hr business center.
Seniors Living Problems:
- Limited budget
- Active lifestyle due to feeling of less time/years remaining in life
- Safety and security
- Missing Companionship
Our Community Living Solutions:
- Free education seminars
- Activity director. Guarded gated community
- Daily social breakfast. Bingo, bridge & poker night
- Free transportation to doctors, groceries, etc.
- Social clubs & committees.
Single Parents Living Problems:
- Busy schedule
- Tight budget
- Managing kids
- Complex life with little balance.
Our Community Living Solutions:
- Free school transportation
- Free after school program
- Free community center
- Social activities and clubs
- Playground & sports
- Dating game
- Game and video room
- Refreshing Gym, Pool, Jacuzzi
Niche Culture Tenants (f.e Hispanics) Living Problems:
- Managing family and friend gatherings
- Managing the large household family size
- Speaking better English
- Cooking space & equipment
- A social gathering place for stay at home moms
Our Community Living Solutions:
- Community activity center
- Computer room
- English speaking lessons
- Large stove in kitchen with open space
- After school program for kids
- Large room for social activities
- Playground & BBQ area
- Soccer field instead of Basketball court
WHY THE USA?
- Population Growth. A number of secondary markets are seeing a jump in population as people follow the jobs. This is particularly true in Texas, with rapid growth in Houston, Austin, and Dallas-Ft. Worth, fueled by the technology and energy sectors. Increased development and infrastructure improvements provide opportunities for investment.
- Strong Economy. The U.S. economy is the most stable and open in the world, and attracts buyers from countries where the situation is much more volatile. Foreign investors can operate with relative freedom in the U.S.
- Real Estate Prices are Skyrocketing in other Countries. With the skyrocketing of real estate prices in places like Munich and Frankfurt, Toronto, Hong Kong, Paris, and Amsterdam. Zurich is a new addition to the bubble risk zone. Use the UBS interactive Global Real Estate Bubble Index to track and compare the risk of bubbles in 25 cities around the world.
- A Buyer’s Market. Prices are currently very low in U.S. commercial properties. They’re down 30% overall from their peak, and this makes U.S. commercial real estate the best bet for international investors, as well as an attractive option for domestic buyers. There can be no doubt that it’s a good time to invest in commercial real estate in the U.S. Its long-term stability and attractive inventory keep it at the forefront of international investment and continue to present opportunities that seem too good to pass up. If the projections turn out to be right, the Texas Triangle’s population will surge more than 19 percent during the 15-year span — from 18.14 million in 2015 to 21.65 million in 2030. To put that into perspective, the New York City, NY, metro area has about 20.18 million residents. In other words, if the Texas Triangle is treated as one humongous metropolis, rather than four separate metro areas tethered by highways and airways, it’s on track to eclipse the size of the Big Apple. Nonetheless, a 2008 report by urban planning professors and students at Texas A&M calls the Triangle “one of the most dynamic urban regions in the nation,” rivaling both New York and L.A. If the Triangle’s population grows as foreseen, the megaregion will become even more dynamic -- and crowded.
- Renting is the new American Dream. For a long time, having one's own house was considered the epitome of the American dream. But that has changed: More and more Americans are choosing to live in a rented apartment of their own free will. For This gives investors promising prospects. A growing number of residents no longer regards living for rent as a short-term phase but choose to rent the apartment completely conscious, because this form of living allows a more flexible lifestyle than homeownership.
- Free of government intervention. In addition, the US housing market is largely free of government intervention is. While in Germany, the public sector is using the rent brake and other instruments regulating the housing market, comparable regulations in the USA are only found in some cities and also there only in certain cases. As a rule, the owner is, therefore, free to charge rent in line with market rates. The rental agreements usually run for one year; after twelve months.
Marcel T. Rutz and Saskia M. Strasser with Grant Cardone (Ainmnatcon 2018)