Purchase of a residential complex as a long-term investment strategy
Case Study: Success through transparent business transactions at eye level
The well-maintained residential complex in Dortustraße with nine houses and 53 residential units is located in the Dortmund district of Westerfilde, northwest of the city center, in the immediate vicinity of the Rahmer Wald nature reserve and with good transport links to the city center. MÄHREN AG acquired the residential complex at the beginning of 2021. What makes such a property interesting for a real estate company and why did MÄHREN AG win the bid?
Dortmund: the largest city in the Ruhr region
Dortmund is one of the most interesting cities in Germany. The urban center is part of the Rhine-Ruhr metropolitan region with about eleven million inhabitants, the largest city in the Ruhr area and is considered the administrative, commercial as well as cultural center of the eastern Ruhr area.
Formerly known primarily for steel, coal and beer, Dortmund is now, after many years of structural change, a service and technology location and center of the insurance industry and retail. With the largest canal port in Europe, the city has a connection to important seaports on the North Sea.
What is MÄHREN AG’s business case for acquiring such residential complexes?
We see the purchase of such residential complexes as a long-term investment strategy. As a property owner, we take care of the maintenance of the structural substance and initiate proper management.
Tobias Förster, Head of Transaction: “We plan to manage the property in Dortustraße over the long term and are happy if the tenants remain with us for the long term as well. Luxury renovations or condominium sales are not planned.”
The previous owner had personally managed the residential complex for over twenty years. For example, there was no janitor and no winter service. Now he wanted to put the property in professional hands. Area Immobilienmanagement GmbH, a business unit of MÄHREN AG, took over this task. Here we benefit from synergies of our joint company network.
We often create additional living space, for example by converting attics or adding an extension, or we upgrade the property by creating tenant gardens. Here, too, we benefit from the synergies of our own business unit, MÄHREN Development GmbH, which takes care of our construction activities. Regular income is generated through rent payments and the rent increases already stipulated in the lease agreements, as well as through the rental of the additional rental space we have created.
Residential complexes and larger contiguous real estate portfolios with more than 50 units is one of the asset classes we prefer to acquire. We are always happy to receive suitable offers.
Förster: “We regularly experience such cases: A private owner would like to sell his residential property to a serious buyer, because the care, maintenance and management of the property is costly and ties up a lot of resources. We are very happy to cooperate with private owners and have already conducted numerous trustworthy transactions. Often, these are classic apartment buildings or residential complexes.”
Business philosophy: uncomplicated business partner
We bring numerous documents up to date for almost every property acquired. Often, after many decades, structural certificates are missing, rental agreements are incomplete or no longer up to date, and documents cannot be found.
Förster: “We acquire residential properties even if the necessary documents are not complete. They can all be retrieved afterwards. It’s not for nothing that we are regarded as one of the most uncomplicated business partners in the industry. We’re a little proud of that.”
Our success factor: business transactions at eye level
Real estate business is people business. Of course, it’s always about location, building fabric, development opportunities, rent levels and, above all, purchase prices – but real estate is primarily passed on from person to person. And who do you prefer to do business with? With sympathetic, honest partners at eye level.
That’s why our investment team attaches great importance to transparent, direct and honest business dealings. In the case of the residential complex in Dortustraße, the initial contact was through a broker. This was quickly followed by direct contact with the owner and concrete sales negotiations.
We were on site quite quickly, were able to get a precise picture of the property and were able to submit a concrete offer within a few days. That is what distinguishes us: We usually act and decide quickly and without complications.
Förster: “In the case of Dortustraße, we were lucky to find a very sympathetic and constructive owner. Business partners like that suit us, because that’s what we value.”
Our goal: Expansion of business relations in the Rhine-Ruhr metropolitan region
We are delighted with the acquisition of the residential complex in Dortmund and count it as one of our most important purchases in the recent past. In the future, we will be happy to enter into further successful business relationships in the entire Rhine-Ruhr metropolitan region. Because: We like the region, we like the people of the region – and we love residential real estate.
Our purchase criteria
Which properties we prefer to acquire in which regions
