If you’re thinking of developing a vertically integrated approach when investing in real estate, it can be helpful to understand how it works. Some investors opt for this strategy to gain a greater level of control over their investment. At the same time, the trade off is often that it can be challenging to scale. You might be so absorbed with one project that you aren’t able to carry out multiple projects.

Here are some points to think about if you are considering a vertically integrated approach in real estate investing.

Vertical integration in real estate means owning and managing multiple stages of the investment and development process under one umbrella. This model contrasts with a setup in which an investor or entity focuses on one aspect of the value chain, such as property acquisition or construction. A vertically integrated firm may be able to streamline operations, which could be an advantage.

Acquiring properties is often the foundation of real estate investment. For a vertically integrated approach, investors will typically look to develop in-house expertise to identify, analyze, and move forward with transactions. Some investors may bring this skill with them, and then rely on a team for other functions. If you hire someone, you’ll want to look for an individual with a deep understanding of market trends, zoning laws, and property valuation. You can also leverage technology such as data analytics tools to identify emerging opportunities that align with your business goals.

Some investors prefer to manage construction, as it can provide benefits such as quality control and cost efficiency. If you hire an experienced project manager, they can oversee everything in the construction process from permits to zoning and contractors. You might be able to buy materials directly from suppliers to reduce expenses.