IMT Residential is a leading, nationwide, multi-family residential investment and property management firm headquartered in Sherman Oaks, California. They have been founded in 1992 and recognized as a leader in the property management business operator with a portfolio that extends throughout Arizona, California, Colorado, Florida, Georgia, Tennessee, and Texas. The company currently manages over 18,000 residential units and 50+ communities in seven U.S. states.

“Putting you first” strategy makes IMT win the Best Places to Work in Multifamily reward for three years in a row. Concentrating on employees and leading-edge technology help IMT to excel and be a leader in their field. By using advanced technology, IMT capitalizes on the skills and abilities of their staff to provide excellent service to their residents, investors, and vendors.

IMT Residential is a vertically integrated investor and operator of multifamily assets in major US markets. It started as a very small company by joining three childhood friends together. In February 1992, two partners, who grew up directly across the street from each other as kids, founded IMT Residential in Los Angeles with the goal that they could create a company to serve the Los Angeles apartment community. Together, the company’s vision grew more ambitious, and they set out to acquire large-scale apartment communities outside of California. And in 1997, with its first apartment community acquisition in Houston, Texas, IMT Residential successfully began its nationwide expansion and presence. Over the years, IMT Residential continued to opportunistically enter new markets and grow into a portfolio that now extends throughout Arizona, California, Colorado, Florida, Georgia, Tennessee, and Texas. In the first year of its operation, IMT owned only four apartment buildings totaling 62 apartment units and only one employee; however, today it has a portfolio that includes over 60 apartment communities exceeding 20,000 apartment homes with over 600 associates (About Us, 2017).

The vertical chain at IMT Residential is illustrated in Figure 1. As shown in Figure 1, we can see that IMT Residential is highly vertically integrated company. More than half of its processes are handled in-house. IMT Residential has its construction team, internal design, assemblers, pricing department and property management services. There are three reasons for a firm to decide to produce its products and services in-house. Number one reason is the coordination of production flows through the vertical chain; the second reason is to protect company’s private information, and the final reason is to avoid higher transaction costs.

In this paper, I’m going to concentrate on the service side of IMT especially the IT department. About five years ago, IMT Residential decided to handle all their online and onsite residential services by their IT department. They have hired two Software Programmers who oversee these developments. For almost 17 years, they used to outsource these services to a consulting firm. However, they noticed that it costs lot more money to contract a programming project to an outside source. Every project and service requires a new contract and not all the contracts are complete. For every new project, they had to write a new contract and had to be very careful to cover all the requirements and legal points of the contract and not to miss any critical and life-changing points in the contract. For every revision or update required in the project, they had to bargain with the third-party company on the price change or time of the completion of the service. It is almost impossible to foresee all possible contingencies before starting the project.

IMT had difficulties in measuring the accuracy of the amount of time the third-party was putting toward the production. Most of the time, IMT would end up paying more than the agreed price because of revisions or updates required by each project. The cost of contracting with third-party was three times higher than hiring onsite programmers. Developing products onsite has decreased the fixed annual costs for IMT. IMT at this time does not have to pay extra for its in-house programmers if it wants to modify or update a project to flow with the company’s wants/needs, as well timing fit is another critical aspect for IMT. All the tasks provided by IT are very time sensitive. The tasks need to be fixed and taken care of quickly as possible when IMT faces a problem. The amount of the time that IMT had to spend with the third-party on conference calls to explain the difficulties was massive. Third-party companies can take advantage of the customer when their customers are tight on time and need something as soon as possible. However, by having onsite programmers, IMT has advantages on switching its programmers smoothly from one project to another project based on company’s needs and deadlines.

Making your product or services will decrease the danger of holdups problems associated with increasing human asset specificity. Having two programmers onsite makes IMT free of holdup problem. In case if one of the programmers decides to leave, the company will not face a significant challenge. The other programmer can take care of the issues and do all the necessary tasks since she/he has enough knowledge and ability to handle the duties. However, canceling a contract with third-party will not be as simple as it is with leaving one of the programmers. In that case, IMT will face a significant problem. It will be time-consuming to find another trusted company who can handle the project for IMT in a short period of time.

IMT Residential outsources its design and enhancements to third-party. The main reason that IMT does the outsourcing is the economies of scale. It is not as always that IMT buys land and builds a property from scratch. Sometimes it buys the built properties which are ready to use. Therefore, not always there is a need of hiring Architects for IMT. IMT works with vendors and contractors that they are specialized in these tasks and have the knowledge and experience to accomplish the task with the lower average cost. IMT doesn’t always have enough projects that require the need of an architect. For IMT it doesn’t make sense to involve in the manufacturing industry. They are Real Estate Company and are specialized in it. They can keep the transaction cost low by contracting with third parties who are manufacturing the doors, windows, cabinets and other intermediate goods. Since IMT has been in the industry for 25 years and has a good reputation, a lot of vendors would like work with it. Vendors know that how working with IMT can be beneficial for them; therefore, they give good prices to IMT to keep their customer in hand.