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Updated almost 6 years ago,
Vertical integration - good or bad idea?
Hi All, I’ll be getting started soon syndicating commercial real estate deals. The way my mind works, it makes the most sense to me to operate as a vertically integrated/full service real estate company that offers brokerage, property management and construction to create additional value for the investors (and myself) and also serve as sources for deals. I have some brokerage and property management experience but I’d bring folks in to head up each division. I do have experience starting a company from scratch and am working on a second right now.
The flip side of the coin is that you’re now competing with most of your sources for off-market deals (not that you’d really need them with the innate deal funneling of the much larger client pool). But, of course, the magnitude of starting and overseeing such an organization (even if it’s a boutique shop) can’t be overlooked. So just focusing on putting the deals together and outsourcing everything would be the way to go.
What are everyone’s thoughts on pros and cons of these two scenarios? I’m just asking about the scenarios themselves in a vacuum of sorts since there’s no way for you to understand my abilities or resources (or lack thereof).
This isn’t the sort of thing I’d usually put out their for public opinion but I thought I’d give it a try. Any insight is greatly appreciated. Thank you!