A vertical integration occurs when a company extends its operations within its value chain. What at one time were outsourced operations are brought in-house. For instance, at Primior we have in-house units for:
- Acquisitions & sales
Architecture & design
Asset & property management
These units can be utilized independently, but there are three advantages for the real estate investor who opts to use these services in combination.
Many real estate investment firms acquire attractive investment properties and outsource to third parties other facets such as rehab, construction, and management, for example. How, when, and if those separate operations come together to create a viable deal at a specific time for an individual investor becomes an issue. With a vertically integrated approach, all the individual operations’ interests are aligned with the acquisition team, and fully viable opportunities can be put in place and ready to go.
Of course, no investment is risk-free, but reducing the level of risk as much as possible should be an important consideration for the real estate investor. Projects fully prepared before being designated as open for investment typically carry less risk than other projects that may face delays or changing circumstances between acquisition and viability. A vertically integrated firm is far better positioned to offer those ready-to-invest opportunities.
Higher potential returns
As a vertically integrated company puts together more and more deals, it develops a deeper expertise of the market and the individual processes that are the components of each deal. Thus, economies of scale, a proportionate cost advantage enjoyed by an increased level of output, are established. When one company can control a project from conception to completion, uncertainty is reduced, efficiency is increased and the relative cost savings can be passed along to the investor in the form of higher potential returns.
At Primior, our uniquely integrated suite of services is designed to provide you, the individual real estate investor, opportunities to fulfill your personal investment goals. Contact us today to learn more.