In a blog for Multifamily Insiders, Ashcroft Capital CEO Frank Roessler outlines the benefits of vertical integration but cautions that it must be undertaken for the right reasons.
“Over the years, I’ve seen too many apartment owners create their own property management and construction divisions for the wrong reasons. Maybe they simply want to be able to tout their vertical integration to help them raise big money. Or perhaps they’re just focused on maximizing the revenue streams these entities may create,” he writes. “If you’re an owner with these motivations, I’d strongly recommend against launching an in-house property management and/or construction company. The chances are, things will go wrong before they go right.”
However, Roessler adds, “if your focus is on building in-house divisions with the proper expertise and experience in place to optimize the performance of your own portfolio, then you and your investors can reap significant benefits from vertical integration.”
To read the full blog, visit Multifamily Insiders.