Costs associated with landscaping, painting, plumbing repairs, floor replacement and general maintenance can significantly add up for a property of any size.
Costs associated with landscaping, painting, plumbing repairs, floor replacement and general maintenance can significantly add up for a property of any size. While some owners and managers perform their own maintenance or have a staff that handles repairs, others may have to hire contractors to tackle their larger jobs.
With experience, owners realize they must outgrow the folk advice: “If it should move, but doesn’t, use WD-40, and if it shouldn’t move, but does, use duct tape.” Following are some ideas to help find skilled contractors who provide high-quality work at a good price.
Finding a Contractor
Word of mouth is a great way to start when seeking a qualified contractor.
Asking property owners for referrals can provide solid leads. Ask the contractor for portfolio examples (with pictures) that describe jobs they have completed. Have they handled similar projects of your scale? While some contractors have built sky scrapers and manage a large crew, others may work alone and have experience limited to smaller remodeling projects.
Years ago we learned the importance of these sometimes subtle distinctions when we called a friend who is a plumbing contractor to come to a rental unit where the toilets and drains were clogged. After unsuccessfully working on them for a few hours he explained to us that he was not a service plumber and that his specialty was in new construction. He referred us to a service plumber who had special equipment, including a video camera system that went hundreds of feet into the pipes and found that tree roots were the source of the clog.
Make sure the contractor is state-licensed before they are hired. Some states require licenses for any contractor performing home improvement work valued at $500, including parts and labor. Professionals doing jobs worth less than $500 usually are classified as handymen and don’t need licenses. Owners are required to submit IRS form 1099-MISC if paying more than $600 for a job.
An exception is when property owners do their own work or hire maintenance workers as their own employees. In many states, hiring someone who is licensed also ensures they have years of experience in the industry and in their specialization.
Obtaining Bids
Once contractors are chosen, the next step is to meet with them in person to solicit bids. It is highly advisable to obtain multiple bids, but keep in mind that some bids only estimate the cost of the work while others may convey a guaranteed price for a job. Keep in mind that bids are negotiable for the price as well as what work is necessary.
Get repair bids in writing and make sure these bids are comprehensive and itemize all work that will be completed. Itemize parts and labor separately for bids and within the final invoice. This can result in a more reasonable price compared to bids that only include the cost to complete the job. When getting a comprehensive bid that is not itemiz-ed, the owner potentially could pay
hundreds of dollars per hour for labor.
The lowest price does not always represent the best value. The lowest bidder does not always provide the best work quality. Be sure not to sign anything until the contract is understood and the terms are agreed upon. Consider asking an attorney to read and offer advice about the contracts before signing them.
When You Hire a Contractor
Reference checks are another important step when choosing a contractor. The downside to references is that contractors generally only give out reference phone numbers for people who they are confident will give a positive and glowing report. Seldom will references say anything negative.
Obtain a copy of an official document with a tax ID number for any contractor under consideration, as well as a signed consent to run credit and criminal background checks. These reports will indicate if there are judgments against the contractor and ensure that owners aren’t assuming liability for giving a convicted rapist or thief access to residences. Always alert residents that contractors will visit and never give a key to an occupied apartment to a contractor without the resident’s permission.
Make sure the contractors and everyone working for them have both liability insurance and workers compensation insurance, and get a copy of their certificate of insurance that names you and your company as additionally insured. This is essential because it means that they assume liability for accidents that occur during the job. Without this, owners may be held liable for accidents and injuries that occur.
Before having the contractors start the project, have them read and sign the community’s fair housing policy. Owners are liable for contractors who make discriminatory remarks to residents or prospective residents.
Owners who self-manage and want to keep costs low might consider working alongside the contractor, assisting them and doing the cleanup rather than paying an hourly rate for the professional to do it.
Meeting Deadlines
Having work completed on deadline can be a challenge when working with independent contractors on smaller jobs, because they sometimes can be dividing their efforts on multiple jobs simultaneously. Never pay in full until the job is completed. Paying for a job before it is completed leaves little leverage to ensure that all the details are completed on time or to your satisfaction. Some owners suggest never paying more than 10 percent of the job or $1,000, whichever is less, as a down payment.
Check on the completed work before paying the final bill. For minor jobs or those where the owner is unable to visit the property promptly, contact the resident to see that the work was completed to their satisfaction.
Consider offering extra cash for jobs that need immediate attention or rewards if the work is completed by a specific date. Owners typically pay premiums for contractors to work a holiday, weekend or late at night, so apply the same incentive to them for giving your job priority. Paying extra to help turn a vacant housing unit can pay off if there are prospective residents ready and willing to move in. Paying a cash bonus also will likely inspire that contractor the next time they are hired to work at the property.
Be Aware of Mechanic’s Liens
The law protects contractors when they are not paid what they are owed by allowing them to place a lien on your property. This is called a mechanic’s lien. But if a contractor fails to pay his subcontractors or suppliers, they also may be able to file a lien on the property in some cases.
Mechanic’s liens are easy to file by contractors at county recorders offices and can easily be abused. Owners should have contractors sign a Waiver and Release before payment is made and provide those forms onsite. This will protect owners having a lien filed against them in the event that the contractor who is overseeing the job does not pay a
subcontractor or supplier.
An Alternative to Contractors
Consider working with a property management company that has an
in-house maintenance staff or one that manages multiple properties because, by buying in bulk, they can purchase materials and appliances at reduced prices.
Ryan Schindler is Vice President of Marketing for Fast Forward Property Management, in Petaluma, Calif. He can be reached at 707/766-8100, ryan@fastforwardpm.com, or www.fastforwardpm.com.