We've touched on the concept of 'vertical integration' in a few of our articles. However, we thought we would dedicate an entire article to this crucial concept—and how it benefits our investors.
Essentially, at its core, vertical integration is the art of tying together multiple facets of the real estate investment experience under one flagship company. This allows us to:
- Execute the process of property exchanges within the UPREIT structure
- Purchase wholesale investment property opportunities below market value
- Construct build-for-rent communities from the ground up
- Manage renovations, repairs, and maintenance without markups
- Offer excellent property management services without external contracts
- Provide returns to our investors that outperform other equity REITs.
Each of our incorporated units plays a role in building a better REIT investing experience through the Peak Housing REIT. Today, we want to explore a few of the more crucial components within The Peak Group structure that allow us to boost our returns by completely removing the need to outsource labor.
Prime Properties Realty and Lending
Prime Properties Realty and Prime Properties Lending have been fundamental to the early days of The Peak Group, allowing us to first connect investors to renovated turnkey opportunities before becoming critical elements of our own acquisitions structure for the Peak Housing REIT.
There are obvious benefits from having a direct pipeline to lending opportunities and licensed Realtors on staff when acquiring properties wholesale or purchasing infill lots in bulk to further pad our (and your) portfolio. These two components play a critical role in acquiring opportunities before they hit the market—below market cost. It's one more way we build a better REIT investing experience from the ground up.
Peak Property Management
Originally, this branch of The Peak Group was formed to provide on-site, in-house management services to property owners who purchased turnkey property solutions from The Peak Group through Prime Properties Realty and Prime Properties Lending. From there, it has grown to successfully manage and maintain over 400 rental properties.
Peak Property Management is also a crucial component of our renter-facing care for our build-for-rent communities and works in tandem with both The Peak Construction Group and its subsidiary Peak Property Maintenance. Not having to outsource rental property care to an external company:
- Keeps our costs low
- Helps us provide better returns to investors
- Allows us to offer seamless care to the renters we serve.
This level of symbiosis is hard for other private equity REITs to offer, and is another benefit of our approach to REIT investing via vertical integration.
The Peak Construction Group
Our in-house construction component allows us to renovate the wholesale properties we acquire below market cost with updates that appeal to renters. Our upgrades bring these properties up to speed, but lower-than-market-rate renovations aren't the only benefits of keeping our build costs within the company.
We also take advantage of in-house construction opportunities to purchase valuable infill lots across the DFW area to tap into better profit margins than wholesale acquisitions alone can provide. These unique new-build opportunities later paved the way for a shift in focus from renovation-dominated acquisitions to entirely new builds with better returns.
The Peak Construction Group is able to create entirely new build-for-rent communities of up to 75 units at a time. We haven't touched much yet on the benefits of build-for-rent as a value add for how we build the Peak Housing REIT portfolio, but it's a crucial component of our strategy, and we'll be discussing that next week.
Regardless, we've already completed three successful communities (townhomes and single-family homes) as part of our build-for-rent offerings included in the Peak Housing REIT—and that's just the beginning. These desirable builds target the growing demand for workforce housing in the DFW area and cater to a burgeoning population of renters looking for a little more legroom and a place that feels more like 'home' than an apartment complex.
Peak Property Maintenance
An offshoot of the Peak Construction Group, this subset is a critical element of maintaining a profitable UPREIT portfolio in the DFW area. The number one issue that contributes to renter turnover time and time again is poor maintenance responsiveness and outright neglect.
By ensuring that our response team is a part of The Peak Group umbrella of company holdings, we can confirm that each and every rental property under our care within the portfolio will not only receive quick turns on maintenance requests, but that they have access to the build and renovation history of the unit in question, creating efficiencies across every system from purchase to active care.
Investing in Vertical Integration Is an Investment in Better Returns
Our focus on vertical integration for the successful operation of the Peak Housing REIT is paying off in the form of higher dividend yields for our investors, but it also creates a better passive real estate investing experience at every level of operation.
You can learn more about how we've structured the Peak Housing REIT with vertical integration from the very foundations of The Peak Group by exploring Our Story, or discover more of the fine details on our FAQ page.
As always, if you have more questions about the benefits of vertical integration with respect to the returns you can expect to see from our portfolio, just reach out to us.
Posted by The Peak Group on December 3, 2020