February 29, 2024
By: Travis Watts, Director of Investor Development
Inside Ashcroft Capital’s Procurement Process – Streamlining Operations for Unmatched Efficiency
Typically, a real estate syndicator identifies, structures and acquires assets on behalf of investors. However, a firm seeking greater self-reliance may opt to internalize additional aspects of the process, such as directly overseeing asset management and ensuring the full implementation of the business plan from inception to completion. This strategy is commonly referred to as vertical integration. At Ashcroft Capital, we aim to set a Gold Standard.
Our property management company, Birchstone Residential, and its in-house construction team, Birchstone Construction, have one of the best streamlined in-house procurement processes around. Ashcroft Capital handles all steps of the investment life cycle, yielding the strongest possible returns for investors by streamlining operations in true vertical integration fashion.
Beyond our property management and construction arms, Ashcroft Capital’s procurement process is a one-of-a-kind cornerstone that truly sets us apart from the competition. This process has decreased our unit renovations timeline to sub-30 days, which is among the fastest turnaround in the industry.
Four Step Procurement Process
- We source materials directly from manufacturers.
- We ship the materials to our Birchstone warehouse in Dallas, TX.
- We organize the materials into individual unit renovation kits.
- We disseminate the renovation kits to our communities.
20-30% Savings
We source most renovation materials directly from the manufacturer. This allows for the best possible pricing with the additional benefit of our hardware always being in stock.
The savings we tend to see are 20 to 30% less than what we see when buying the same amount in bulk from U.S. retailers. We re-run these comparisons on a bi-annual basis to make sure our costs are well below market. This approach creates tremendous efficiencies and locks in pricing to help offset future inflation. In addition, we mitigate supply chain delays by having bulk inventory on-hand for our properties, which is stored in our own warehouse in Dallas, TX. Typically, we place material orders of $5 million or more and forecast the need for about 9 months’ worth of inventory in our orders.
30% Custom Designed
About 30% of our renovation materials are custom designed at no additional cost because of our large volume orders. Custom designed items include pendant lights, faucets, vanity lights, and cabinet hardware. Most groups cut items to save money, while we operate more efficiently with higher quality products. Our focus is on providing high quality renovation finishes while saving money through bulk orders comprised of the best materials.
Small Details Lead to Big Savings
Some Examples:
Light Fixtures – In a standard apartment community, you might see brushed nickel dome lights in the hallways or entrances. We renovate our properties so that they not only have an updated modern look, but also for efficiency. For example, standard dome lights require two light bulbs, resulting in more maintenance. Instead, we use flush mount lights that have a modern sleek look and only require one light bulb. In addition, these custom-made lights are $4 less than the standard dome lights. On a final note, as it pertains to light fixtures, we replace the glass, not the product. Pendent lights are beautiful, they make the space pop for the resident, but sometimes the maintenance team makes a mistake and breaks the glass when installing them. We have a process that accounts for that by having extra glass on hand so that we don’t have to replace the entire unit.
While these small savings may not seem significant, as we apply this process to thousands of units, a real cost savings benefit adds up for our investors.
Bar Pulls – The pulls we have on our cabinets are zinc die cast. Working directly with the manufacturers, we can dictate the finishes. Not only does this mean we don’t have to pay a premium for the current trend, but we can also manufacture in a more durable way. For items like cabinet and door pulls, we dictate a zinc die cast finish, which is more durable to wear and tear and from surface rust. Our bar pulls cost about 20 cents less than what most of our competitors pay, and about 30 pulls are needed for each apartment unit we renovate. That’s a $6 savings per unit, but more importantly, a six-figure savings across the portfolio.
Ashcroft Capital’s Procurement Process is Customized to Benefit Investors.
We mitigate risk by:
- Decreasing turnaround time for renovations
- Avoiding supply chain delays via bulk ordering
- Offsetting inflation costs via bulk ordering
- Utilizing In-house construction teams vs third-parties
- Using less packaging to reduce our environmental impact
We increase potential profits by:
- 30% cost savings in materials by buying in bulk
- Custom-made high-quality materials for our residents leading to higher tenant retention and decreases turnover
Adding Value
The collaboration of Ashcroft’s fully integrated platform enables us to execute each property’s business plan immediately upon acquisition. Through renovating and revitalizing our apartment communities with our industry-leading value-add business plan, we enhance the quality of our properties, making them more attractive, safer, and appealing for our residents. Simultaneously, we improve value for our investors by boosting net operating income, addressing inefficiencies, and ultimately enhancing property valuation upon sale.
Ashcroft Capital has you covered from start to finish. From locating properties, to structuring deals, to overseeing property management. Our investment model is tailored to investors who want to enjoy all the benefits of owning multifamily real estate without the headaches of being a landlord. We negotiate the purchasing and financing of institutional-quality properties on behalf of investors and are best known for our best-in-class value-add strategy that creates forced appreciation.
Ashcroft Capital’s Track Record
Since inception, we have delivered 25%+ annualized cash-on-cash returns to investors on the first 26 deals we have taken full cycle through the business plan. We have over $2.8 billion dollars in assets under management (AUM) and more than 21,000 units. Our track record is a direct result of a commitment to excellence in property management and a focus on capital preservation for our investors.
Next Steps
Whether you are a new investor or seasoned professional, we welcome you to meet our team. Accredited investors can schedule a call with one of our team members to learn more about our current offerings and opportunities. No investment is without risk. Make sure to consult your investment advisor or speak to an Ashcroft Capital team member before making any financial decisions.
