Hamilton Zanze has picked up its sixth multifamily property in San Antonio in under two years, calling the asset a good value for the money in the Texas market.

The Bay Area investor has purchased $2.8B in multifamily properties since 2001, focusing on underappreciated assets. Hamilton Zanze seeks out Class-B or better garden-style properties in urban infill areas, looking for attractive capitalization rates.

San Antonio ticks all the boxes, Director of Acquisitions David Nelson said. Local properties are posting a capitalization rate of between 5% and 6%, depending on the area of the city, making it look good compared to Austin, as well as Plano and Houston. Anything north of 4.75% is a good value.

"That really creates an opportunity for us to go in and distribute to our investors," Nelson said. "There's just less work that has to happen; whereas, the market in Austin is a lot more work."

Hamilton Zanze's latest purchase is Quarry Townhomes, a 150-unit, 89% occupied property on 6.5 acres in Alamo Heights. HZ's other properties in San Antonio are The Niche Apartments, Meridian Apartments, The Enclave at 1550 Apartments, Salado Springs Apartments and BLVD at Medical Center Apartments.

Hamilton Zanze's strategy is to be in the wake, rather than the middle, of the action in San Antonio's hotter development action. So rather than be in the Medical Center, Hamilton Zanze is near it. The periphery of Alamo Heights is a sweet spot for Hamilton Zanze, as is North Central San Antonio.

Finding the right price point is a challenge for new multifamily in San Antonio. Concessions often cut into profits. In many cases, San Antonio multifamily is trying to be a hipper, younger, cheaper version of Austin, especially since the price on home rentals is still competitive in the market.

The ideal candidate for future acquisitions for HZ would be moderate to higher-end property near USAA, off Wurzbach Parkway or Fredricksburg Road. Tenants are young, upwardly mobile and in stable careers, Nelson said. And the better hotter areas like Downtown or Pearl perform, the more it benefits all.

"There are concentric rings of development in a lot of Texas markets," Nelson said. "San Antonio has seen a lot of money getting poured into Downtown, and we love to see that. It means more value added in terms of new development across the city. The economic base is taking off, and we're going to see even more benefits for areas we've targeted."