By: Jim Cunning

By his own admission, Frank Roessler, founder and CEO of Ashcroft Capital, can be something of a restless leader.

“One of the best parts of my job is having the ability to make constant improvements while striving for excellence,” Roessler said. “How can we continue to do things better? As a company, we’re always on a mission to streamline operations, improve our processes and create more efficiencies.”

Roessler founded Ashcroft Capital, a vertically integrated multifamily investment firm that owns and manages apartment communities across the Sun Belt, in 2015. In the nine years since, he and the leadership team have built a portfolio that consists of roughly 14,000 apartment homes and totals $2.6 billion in value.

The company’s ongoing quest for improvement has resulted in a unique procurement process that allows Ashcroft to renovate its apartment communities with greater efficiency and at a significantly reduced cost, Roessler noted. The innovative process benefits Ashcroft’s residents and investors, and provides the company with a true competitive advantage, he said.

Ashcroft typically acquires apartment properties that are in need of improvements. By renovating the homes in these communities, Ashcroft is able to provide higher-quality finishes for discerning renters and deliver strong risk-adjusted returns to investors, according to Roessler. 

Because renovations are at the heart of Ashcroft’s asset strategies, Roessler and his team decided they needed to optimize how they purchased the materials—light fixtures, ceiling fans, sinks, faucets, towel racks, etc.—used to upgrade their apartments. 

“When you buy from retailers, even in bulk, there’s obviously a strong mark-up,” Roessler said. “Also, you can’t control the frequent changes to quality or style of what is available through retailers. That changes all the time, and if it takes you two years to renovate a community, you can end up with mixed and matched materials inside of your homes. This leaves you without a uniform look and quality.

“And so we thought to ourselves, ‘Well, what can we do to better this process?’ And that led us to, ‘It would be great if we could buy from wholesalers directly for a number of reasons.’”

Roessler and the Ashcroft leadership team began researching and visiting manufacturers in east Asia, Vietnam and India. “We invested a tremendous amount of time and resources in making sure that our manufacturing partners were reputable, could build what we needed them to build and could deliver the product in the quantities that we needed them,” Roessler said.

After settling on its overseas partners, Ashcroft began building its own internal supply chain. 

The result is a centralized procurement process. The company purchases materials from overseas manufacturers in large quantities, typically nine to 12 months worth of material for the entire portfolio with each order. The materials are shipped in containers to an Ashcroft warehouse in Dallas, which is where Birchstone Residential, Ashcroft’s in-house property management firm, is headquartered. 

At the warehouse, the materials are unboxed and organized into kits. These kits contain every item needed for each unit’s renovation. Specifically designed to be narrow enough to fit through unit door frames, the kits are then delivered to the appropriate apartment home, ready for subcontractors to efficiently unbox and install everything. With the materials on hand, labor teams don’t need to go to a store because of a missing part and can focus on turning a unit quickly and efficiently. This saves on labor costs and also reduces vacancy loss. Roessler created a company, SureHome, to manage the procurement process for Ashcroft. 

“We’ve been doing this now for several years, and it’s been working very well,” Roessler said. “The quality of the interior renovations we do is extremely high, and we are renovating each unit in two to three weeks. We’re very proud of that turn time, and we’re also very proud to be providing our residents with such beautiful homes.”

According to Roessler, buying the materials directly from overseas manufacturers provides roughly a 30% discount on average when compared to buying in bulk from U.S. retailers. All else being equal, this enables Ashcroft to pass higher returns along to its investors.

Ashcroft’s procurement process also allows the company to circumvent international supply chain disruptions, as well as domestic disruptions such as hurricanes and other severe weather events.

“It’s quite challenging to streamline the process of renovating thousands of units as they become vacant,” Roessler said. “But we feel that we have done a very good job.”

Published by: Josh Tatunay