In 2004 Russ Krivor decided to start his own property investment company. Headquartered in Aventura, Florida, DLC Residential offers fully integrated investment opportunities in the multifamily development arena. DLC Residential’s in-house general contracting team works with acclaimed architects and engineers to create high-quality residential communities, translating into maximum returns for investors.
“We are our own general contractor on all of our projects,” says Krivor. “This has really been one of the keys to our success as we have been able to create better returns than our competitors. We are also able to save a significant sum on hard costs, which allows us to achieve higher cap rates and internal rate of return [IRR] on all of our deals.”
After his third year of college, Krivor decided to take a leave-of-absence and traveled to Fort Meyers, Florida, to explore an investment opportunity which greatly intrigued him. From his experiences growing up around construction jobsites managed by his uncle and brother, Krivor was familiar with the homebuilding process. “I felt very confident in my ability to build homes,” says Krivor. “After that trip I decided to give it a try and started my own company.”
During his Fort Meyers trip, an ambitious and determined Krivor rented a model home from a defunct builder and started his own home building operation. “I was hoping to sell eight or nine homes,” says Krivor. “I ended building and selling 168 of them.” After selling the last home in 2007, Krivor became aware of the impending downturn in the housing market that would soon hit the country. His foresight of the industry would lead him to focus on rental real-estate. “I loved the concept of high-quality urban rentals with great amenities.”
Adapting to the market
As a part of the millennial generation, Krivor had observed that millennials were not as interested in buying condos or homes as they were in having mobility. The millennial generation is all about lifestyle and quality of life,” Krivor explains. “We’re responsible but we’re also more interested in experiences than possessions. Additionally, the Millennial generation looks to try out living in different cities and working in different professions before they settle down in one place.
Therefore, they are going to rent much longer than previous generations.” Through market research Krivor discovered that millennials concern themselves with amenities far more than space. “They want to be able to go to the pool or to the golf simulator or be able to play basketball right on site,” he continues. “They’re more concerned with on site entertainment than how big their living room is. We have really been able to capitalize on that.”
During the past five years, DLC Residential has built approximately 2,000 apartments. The company recently invested in property in Texas where it has developed two of its finest communities. Dolce Living Grand Harbor in Katy and Dolce Living at Rosenberg in Rosenberg, Texas, offer one-, two- and three-bedroom high-end apartments. Following Krivor’s philosophy of providing high-quality amenities, Grand Harbor and Rosenberg include an indoor-outdoor resident entertainment venue, indoor basketball court (at Rosenberg), a billiards room, a fitness center and yoga room, a Wi-Fi business center and a resort-style pool. Additionally, the Katy Mills mall is situated directly across from the Dolce Grand Harbor project.
Krivor claims that the success of his company is ultimately attributed to accountability. “We work in a culture where it is okay to make mistakes but everyone takes responsibility for it and we do whatever we have to do in order to correct it,” says Krivor. “We think outside of the box and have top-quality assets. As long as you acquire your assets properly, at the right time and you construct properly you will see a profit, you tenants will be happy and everybody wins.”
Entering the residential building and management industry presents a number of challenges in itself, but starting a business four years before the collapse of the housing market is an entirely different story altogether. In the time of the economic downturn DLC Residential faced obstacles such financing and raising capital. As a new player in the industry, DLC Residential found that in a time of financial crisis, investors were primarily interested in working with well-known developers. “We also had a tough time because I’m young and not everybody took me seriously,” says Krivor. “It really took a lot of hustle to convince the banks, private equity shops and investors that all the things they thought worked against us were actually assets to us and our clients.”
In measuring the success of DLC Residential, Krivor takes into account two primary factors. As a property investment firm, Krivor wants to see dividends for his investors while comparing occupancy and rates compared to other developers. “First and foremost is the IRR that our investors are coming out of each project with,” Krivor explains. “Where our rents and occupancy are at shows how diligent we are at selecting sites and how much attention we pay to our build-out. It also expresses the quality of our assets. Ultimately it all comes down to investor value.”
Establishing a real estate company at such a young age has provided Krivor with an opportunity to learn about and create multiple investment opportunities. A passion for the industry has allowed Krivor to create a business in which he can be proud of the results. “The way we are able to treat our employees gives me a lot of pride,” says Krivor. “Also, the quality of life that we provide for our tenants is very important in creating the value for our shareholders.”
With solid cash flow from its existing assets, DLC Residential is able to keep its operation at a comfortable size. In regards to shareholders value, the company will remain disciplined about its investment approach. “If it means we have to thin out our project pipeline for a year or two then we’ll do that,” Krivor explains. “We don’t have to develop something just to stay in business.”
Due to the company’s low overhead and disciplined investing approach, Krivor is committed to developing on the best locations within the urban and suburban core. This will result in highly sought-after locations that boast walkability to retail centers, restaurants, entertainment venues and office spaces. “There has been a massive shift toward walkable lifestyle oriented communities like this so people can avoid having to drive,” Krivor explains. “Additionally, the return to the urban core by companies and residents across the United States has created exciting opportunities to redevelop downtown areas and first-ring suburbs across the country.”
The urban population in 2014 accounted for 54 percent of the total global population, up from 34 percent in 1960. The global urban population is expected to grow approximately 1.84 percent per year between 2015 and 2020, 1.63 percent per year between 2020 and 2025, and 1.44 percent per year between 2025 and 2030.
The success that DLC Residential has experienced will allow the company to become selective as it continues to build its portfolio in the near future. Moving forward, the company plans to remain a boutique development and multifamily holding company. “We’re going to select assets and land parcels that we and our investors can get excited about,” says Krivor. “We’re certainly going to continue grow and develop quality product.”
Krivor remains optimistic about the future of the industry. While the economy continues to recover, DLC Residential maintains an edge in the industry by operating its own in-house general contracting team. “This really allows us to save money on construction,” says Krivor. “We’re then able to invest that money back into the quality of our product.”
As the companie continues to grow, DLC Residential will remain a leader in creating high-quality living spaces along with residual dividends for its investors.