The Silicon Review
Dunross Capital Inc. is a leading real estate firm that acquires and manages multi-family properties in the Southeast USA. Dunross Capital co-invests in each property with their partners and manages all the construction during the renovation and upgrade process.
The headquarters is located in New York with the operations office located in Atlanta. Dunross Capital’s mission is to acquire, improve and operate apartment properties in places where population and employment growth is strong and working Americans need a safe and beautiful housing community at a fair price.
The company mainly works in two important segments of the renting population which include; The acquisition and upgrade of “Workforce” housing on Multi-family properties, and providing students and retirees safe, affordable and beautiful apartment communities.
In conversation with the Founder and CEO of Dunross Capital Inc., Michael Crow
What was the inspiration to set up the company?
I formed the Company to act as an owner rather than a consultant, and to build a new business model of “workforce housing”. We provide beautiful, safe, affordable apartments with first-class amenities, to our tenants that work and deserve a great place to live. We have now extended this model to students and retirees.
Brief us about the greatest challenges you have ever faced in this business.
The first acquisition was a 75-unit apartment property, where the inspection firm missed the serious structural issues. We were forced to spend a considerable amount of money not in the original budget, which required us to also refinance. We did however, make an ultimate profit on the investment since we attracted high quality residents post upgrade and renovation at higher rents. We learned our lesson and now we conduct our own inspections on new acquisitions, in addition to relying on third-party reports.
What are the business strategies that differentiate you from your competitors?
When Dunross Capital Inc. was founded, I started to build strategic partnerships with one of the largest third-party firms in the field of property management and construction management. After cycling through a few firms, we discovered that our team was best suited to deliver the required results in the transitional phase of the stabilization which includes construction, upgrades, and turning over the tenant base.Since then, we have made this move to self-management and the results have been excellent.
How is the company adapted to new trends and challenges affecting real estate?
Since the recession of 2008, and the overall flat returns in residential homeownership, an increased number of people have decided to rent rather than own. I believe that in the past, a typical American’s dream was to own their own home. However, after the housing collapse in 2008, younger generations and retirees are staying mobile, and downsizing. Also, since many of our tenants are hard-working blue and white-collar employees, it is really difficult for them to buy a house in major markets and major suburbs.
How does the company’s business model work?
Dunross Capital Inc. focuses on multi-family apartment properties averaging from 75-300 units, primarily in the Southeast region of USA. From our network of brokers and professionals, we select the sponsor, acquire older properties at 40% of the replacement cost, and then renovate and upgrade. Our tenants appreciate the great value in our residential apartment communities.
What are the main reasons to focus in the Southeast when you are based in New York?
We want properties located in areas of growth in both employment as well as population, and we believe that the major metro areas found around Georgia, South and North Carolina, Northern Florida and in some part of the Midwest qualify on all our criteria. The lower cost of living drives population growth as well as people are moving into these warmer regions and leaving the Northeast and colder parts of the country. And the jobs are following the same trend towards lower cost of operations in taxes, insurance and wages from the Northeast to the Southeast.
How is Dunross Capital Inc. structured?
We are a team of professionals that have known each other for an average of ten years. I have a great group with Simon Leach heading up property management, David Propis is in charge of Construction and Thomas Manglaviti responsible for all acquisitions. I am adding a key Executive this month to oversee the finance and accounting and also looking for someone to help with the legal and administrative matters.
Who are your capital partners?
Our partners are our actual owners in the properties. Our partners are family offices, high net worth individuals, and private equity firms. We are also focusing on sourcing partners from countries like Europe and India and expect that they will be a part of our capital partner group by the end of this year. And as I mentioned we invest in every deal with our Partners.
How is your Company working to become more efficient, green, and sustainable?
How about your social impact investing?
We have followed the lead with the government agency loans that offer incentives in reduced lending rates for “green construction”. We make sure that our properties are built with eco-friendly materials. On social impact investing, we also help people to get back to the workforce by working with groups that also offer financial help to working single parents and they also provide financial assistance and counseling for families recovering from trauma, or a disaster.
Where will you see yourself and the company in the next five years?
For growth and new markets, in addition to continued expansion in the Southeast, the markets that look attractive to me include first and second tier cities in Texas, the Midwest and the mid-Atlantic region. There are numerous apartments that are built in the past 40 years and the majority of the properties do require renovation and upgrades. With the demonstrated growth in employment and population, it will be a perfect market for us to move into and execute our business model. As a larger overall goal, I want our Company to own and operate 10,000 units representing $ 1 billion of assets under management, which is a 5 x increase from our current 2,000 units and $ 200 million.
Meet the brains behind the success
Michael Crow is the Founder and CEO of Dunross Capital Inc., and has over three decades of real estate and financial services experience. He has played a key role as a senior leader at Price Waterhouse, SVP and Deputy to Vice Chairman at Security Pacific Bank. Michael Crow holds a BS in Accounting with Honors, from San Diego State University, and from Harvard Business School OPM. He is also a real estate broker and CPA.
“American’s dream of a place to live in a great community is achievable regardless of income or status.”