Within the next five years, Swapnil Agarwal wants to see his two real estate companies collectively double in headcount and reach $1 billion in revenue.
The founder, CEO and managing partner of Houston-based Nitya Capital and Karya Property Management expects the companies’ multifamily portfolio to grow to at least 20,000 units within the next five years. To get there, he wants to stay flexible.
Agarwal founded both companies in 2013 after working at a real estate investment firm in Hong Kong for seven years. While the city’s Class A apartment market saw a lot of activity at the time, Agarwal zoomed in on the city’s Class B and below apartment market.
“When we first started in 2013, it was a relatively new strategy,” Agarwal said. Before, apartment owners didn’t think they could achieve rent growth in Class B apartments even after renovations, he said.
But as a former tenant of Class B apartments, Agarwal knew different. When he moved to Houston as a teen with his family from India, they settled into an apartment complex in Alief.
“I realized a lot of amenities and services were lacking, and as a tenant we didn’t mind paying more,” Agarwal said. “We just needed a nice, clean, safe place to live.”
In 2017, Agarwal had almost 500 employees companywide and about $125 million in revenue for the two sister companies. Karya Property Management ranked highest among Houston companies on Inc. Magazine’s 2018 Inc. 5000 list.
In the corporate structure, Nitya Capital is the private equity arm that acquires assets, raises capital and acts as the managing member and general partner, while the company’s other investors act as limited partners, Agarwal said. Karya Property Management then serves as the property management company, running operations on-site for the companies’ 51 properties across Houston, Dallas, Austin and San Antonio.
When Agarwal buys a property, he estimates spending about $6,000 to $8,000 per apartment, changing out the flooring, countertops, paint and appliances. Depending on the apartment location, he expects rent bumps between $50 to $125 per month on average.
Along with interior upgrades, the company usually adds in some community programming such as free swimming lessons or ESL classes for tenants. The management company lets tenants pay rent online or through money order from a store and takes online maintenance requests, notifying them when the work is done.
“These things may be normal in a Class A apartment complex, but you’d be surprised to know it pretty much didn’t exist [in Class B apartments],” Agarwal said.
As the city’s Class B apartment market attracts the eyes of more investors looking to park capital in Houston, Agarwal knows the key to success is to stay flexible and nimble.
The team is currently working on a property management software program to eventually license to other companies and came up short in an auction to buy Houston-based Neighbors Legacy Holdings Inc.’s portfolio of freestanding emergency rooms.
Nitya Capital is in the works to acquire its first property outside of Texas, a high-rise building in downtown Salt Lake City, Utah. The company currently owns two commercial properties, the 250,000-square-foot Nitya Tower (formerly known as Norfolk Tower) off Greenbriar near U.S. 59 and its 26,000-square-foot office headquarters at 8901 Gaylord. Looking ahead, Agarwal could see the companies pursue land development as well.
“We don’t look at ourselves as just a real estate company,” Agarwal said.