Investment Strategy

Deploy capital with high conviction…

Cloud Capital acquires and repositions underperforming real estate assets. We target properties between $10-$30M in Texas with an emphasis on Dallas and Houston. We acquire exceptional, risk-adjusted assets with a compelling ownership story and coveted value-add characteristics. Our process allows us to find undervalued, off-market opportunities.

 

As an owner, investor, and operator, we are responsible for structuring deals, obtaining financing, asset operations and are intimately involved in every facet of the investment process from acquisition to disposition.

 

We pride ourselves on our industry relationships and the use of technology to improve our probability of successful investment. Investor’s choose to work with our firm due to our track record and honest communication.

“We identify properties that will generate cash flow and offer value creation opportunities to force appreciation.”

Investment Criteria

Cloud Capital has developed a unique and proven strategy to acquire multifamily assets that will offer compelling risk-adjusted returns to our investors.

01

ASSET CLASS
Multifamily

02

DEAL SIZE
$10-30M

03

UNITS
100+

04

VINTAGE
1975-2000

05

CHARACTERISTICS
- Compelling Story
- Below Market Rents
- Well Located
- Supply/Demand Imbalance

Investment Process

Cloud Capital sources, underwrites and acquires properties that fit our acquisition criteria and uphold our investment principles. We make offers on properties with a built-in margin of safety based on the following process. To learn more about how we mitigate our risk, please click here.

We have developed internal systems that identify deals in our target markets displaying predetermined characteristics of deals that fit our acquisition criteria.

At Cloud Capital, we focus our efforts on strategic broker relationships that allow us to have first look at off-market opportunities. By focusing on off-market deals, we are able to acquire at a lower basis.

Our growth is due to the strength of our relationships within the brokerage community. We value our relationships with our brokers deeply and appreciate the trust they have placed in our firm to close deals quickly.
Speed wins deals. At Cloud Capital, we are known for our fast response times. We underwrite and provide broker feedback within 48 hours of first look. Our team will often tour an asset within 48-72 hours of deal discovery and attempt to get a deal under contract within 10-14 days.

Investment Principles

We remain true to adhering to strict emotional discipline and refrain from overpaying for assets where we do not have a distinct, competitive advantage for outperformance.

We have skin in the game and invest directly alongside our investors to align interests. Our principles invest significantly in our deals because we believe it’s the best place to protect and grow our capital.

Our team scrupulously stress tests our underwriting assumptions with our proprietary models to ensure preservation of capital. We do not “reach for the stars” in order to attract capital with unattainable projected returns.

We use the appropriate amount of debt on each asset. Each asset’s unique business plan will dictate the amount of leverage and lending source. We do not use excess leverage to “engineer” returns.

We have cash reserve accounts for each asset to ensure we have access to liquidity during periods of economic contraction.

How We Add Value

The personality of each property is unique so we brand each project with a new name, look and story to enhance the appeal for future residents.
After closing, our asset and property management teams immediately begin executing our exterior and interior renovation strategy. The first item is to curb deferred maintenance items that the seller neglected. Next, our team moves to “appearance” related renovations including painting the exteriors, remodeling the leasing office, building pool area amenities, repaving cracked parking lots, building dog parks and upgrading the gym. Interior renovations include new vinyl plank flooring, installing stainless steel appliances, quartz countertops, and fresh interior two-tone paint completely revamping the properties’ interior units.
After renovating the interior units, we are typically able to increase rents by 10-20% for new residents who are looking for an upscale living experience. As property renovations continue, we will also increase pricing on existing leases around 5-8% as they come up for renewal.
After the rebrand, our marketing team builds out the remaining digital strategy creating a new website, social media pages, SEO, and online advertising to attract more residents to the property.

Prior to takeover, we review and re-negotiate all contracts, join a master policy to lower insurance premiums and obtain multiple subcontractor bids to obtain the lowest construction cost. We retain a property tax consultant to lower our property tax liability. For Utilities, we implement a water conservation program by fixing all leaks, installing low-flow toilets, and aerators on all faucets. To ensure our utility spend is optimal we use SmartValve and AlertLabs technology to provide up-to-the minute water usage data.

Every month, we host resident events to build tight-knit communities and offer our firm the chance give back to the residents.
After the asset is stabilized, we calculate which exit scenario will provide our investors will the highest risk-adjusted returns. Exit scenarios at our disposal could include a refinance to return investor capital or an outright sale. If economic conditions do not warrant a sale, we can transition the property into a longer-term hold to capitalize on cash flow.
Performance is our mission. Cloud Capital does not try to time the real estate cycle. We believe in buying and holding stable, cash-flowing properties with an adequate margin of safety built into our underwriting. This allows our firm to weather challenging economic environments and preserve investor capital.

Nathan Cloud

Managing Principal

Nathan is the founder and Managing Principal of Cloud Capital where he oversees Cloud Capital’s strategic vision, acquisition strategy and fostering capital relationships. Since 2020, he has been the leading Principal in over $28MM of multifamily acquisitions and $52MM with JV partners.

 

Before starting Cloud Capital, Nathan worked as an equity trader and portfolio manager for a proprietary trading firm in New York City. While on Wall Street, he developed both discretionary and algorithmic trading strategies for the firm’s portfolio.

 

Nathan is an experienced investor in both public and private markets and is now focused on executing Cloud Capital’s growth vision. Nathan resides in Dallas, TX with his wife Anna Beth and is a graduate of the University of Mississippi with a degree in accounting.