5 Benefits of Working with a Vertically Integrated Real Estate Firm
Updated: May 24
Most real estate companies focus on addressing a single aspect of an asset class. Many firms acquire potentially lucrative investment properties and end up outsourcing to 3rd parties other aspects like construction, development, and management. For example, in the New York City area, some firms raise capital to buy properties; others are private lenders who specialize in loaning money to investors or developers seeking to rehab existing real estate properties. Still in the industry are many construction firms, property management companies, and even Brooklyn Real Estate impact investors focusing on equity and social justice.
Vertical integration is when a business owns or controls suppliers, distributors, or retail outlets locations, the entire supply chain. A vertical integration approach benefits companies as it allows them to reduce costs, control processes, and improve efficiencies. The vertical integration method of running a company is pursued for the clear benefits it brings -- namely, greater control over the company’s supply chain and the power to offer lower product prices while at the same time increasing market control and dominance.
Vertical integration in a company is when a company extends its business operations within its own value chain. Operations that were once outsourced are brought in-house. At Brownstone NYC, we have unique experience in the larger New York City area in many aspects of residential and commercial real estate. When investing in multifamily properties, a vertically integrated operation like Brownstone NYC offers investors many advantages.
Brownstone NYC is a vertically integrated real estate firm that operates five separate businesses under a single umbrella:
1) Origination/Acquisitions - Buying as Joint Venture
In business, speed and efficiency are critical for success. Being a vertically integrated firm, all our individual operations and interests have been aligned with the property acquisition team. All viable opportunities can be rapidly put in place and be ready to roll in a short span of time. Brownstone NYC handles all aspects of the buying in consultation with the property owners to facilitate time shorter time frames in a business decision, negotiating, and the contracting cycles. As a joint venture between BYNC and the client, this translates into happy landlords, winning tenants, shorter vacancy periods, and of course, better returns for all parties.
2) Development - Contractors Improving Property
Integrated workflow promotes maximized efficiency and optimized productivity. For customers, the benefits are obvious, but for developers, they are just as good. It means building more while you spend less money which means better bottom lines — plus more opportunities to sell.
A vertically integrated company like BNYC will have its own development and construction unit and operate under one corporate family. Moreover, the interests of the development unit would be directly aligned with the interests of the acquisitions team and the firm’s other divisions to generate the best possible returns for the investors.
This means that a vertically integrated real estate company like Brownstone NYC is uniquely positioned to make better and more deals work more successfully than others that are not vertically integrated.
3) Brokerage - Selling Property on the Market
Perhaps among the less-obvious benefits of vertical integration is understanding the market for a product and then creating your own version of it. This is a huge benefit that typically only large firms can enjoy. Experienced vertically integrated companies like BNYC can readily meet real estate market demands by eyeing properties that are selling well and fast, then creating their own versions quicker and for less.
Another significant advantage associated with vertical integration in property investing is that it can create economies of scale—cost advantages enjoyed by a business when it increases its output level.
4) Property Investment
When a real estate firm is vertically integrated, it controls how it raises capital and how deals are structured, the entire supply chain. In real estate, this means that the property design, engineering, and construction all fall under the purview of a single developer. This is a very efficient way of doing things because it combines ground-up technical ability and top-down financial expertise into a single funnel.
A vertically integrated company like Brownstone NYC can concentrate on a specific category of real estate—such as multifamily property—and further focus on restricting acquisitions to a particular area such as New York. With time that leads to developing a set of processes allowing it to invest more efficiently and skillfully. Ultimately, the proportionate costs of such investments fall as the firm acquires more properties and keeps learning from each of these acquisitions.
5) Property Management
A vertically integrated firm dealing in real estate generates an unparalleled level of domain know-how. The company gains a deep understanding of best practices and the real estate market in general. As part of our vertical integration, we specialize in maintaining the property for renters. And we do it professionally in collaboration with you.
Vertically integration has allowed us to provide a superior level of service to our customers. With Brownstone NYC, you will not have to contact three different people or companies to get a solution about your property or project. Working vertically integrated real estate firm like Brownstone NYC allows for a better experience where you don’t have to manage as many communications. You will also be working with a minority family-owned business.
The Bottom Line
A vertically integrated real estate company like Brownstone NYC puts together more deals, develops deeper market expertise, and the individual processes making up the components of each real estate deal. Consequently, economies of scale are established. At BNYC, the uniquely integrated suite of services we have assembled provides the individual or corporate real estate investors the opportunities to fulfill their investment goals.
Our overall vision is to be the go-to integrated minority-owned and operated real estate Company in greater New York. Our mission is to provide minority homeowners in New York City the opportunity to keep and improve the value of their properties while creating profitable investment opportunities for investors and lenders through Impact Investing. We strive to meet and exceed your expectations through our stellar service and employee retention.