What Every Rental Property Owner Wants
Your phone rings and it’s your property manager calling.
“Oh no, this can’t be good” you think to yourself (yes, we know how you feel when we show up on your caller ID!).
As you nervously answer the phone, it’s exactly what you were worried it would be. A major repair needs to be done to your rental property and your property manager is calling to tell you about it.
It’s at this point that you will probably tell us something to the effect of “I want the work to be done well (high quality), taken care of asap (done fast), and done for as cheap as possible (low cost).
Which makes sense! In a perfect world we would all want these three characteristics to exist simultaneously and in perfect harmony with each other.
Reality Check
Sadly, we do not live in a perfect world and the truth is, those three characteristics can never exist simultaneously. A vendor that does high quality work, does it fast, and does it cheap is a unicorn. Or Superman.
In other words, they don’t exist.
So how do we think about quality, cost, and speed when it comes to third party vendors and work on residential rental property?
Introduce - the Vendor Value Triangle.
Here’s how it works - you get to pick two corners of the triangle. The section between the two triangles explains the outcome of your two choices. The outcome will result in the opposite of the characteristic that you didn’t pick.
It is impossible to pick all three characteristics at the same time! Here are the results:
- High Quality + Done Fast = High Cost
- Low Cost + Done Fast = Low Quality
High Quality + Low Cost = Done Slow
These outcomes may not be the case 100% of the time, but 99.5% of the time this rings true.
Let’s cover each of these combinations in detail and talk about when scenarios where each is the appropriate choice to make.
High Quality + Done Fast
The outcome of this equation is high cost.
These types of vendors are typically licensed professionals with a back office. Think good plumbers, general contractors, and electricians.
They do excellent work and they get it done fast. They have a back office and a secretary/accounting team that schedules work and handles the invoices. You probably don’t ever talk to the person doing the job until they are on site. You deal with their administrative support before and after the job.
These types of vendors are able to get work done fast because they have the infrastructure to support them. They have a lot of overhead so they have to charge more. But the result is a great experience for both owner and tenant as the work gets done quickly and with high quality resulting in a long lasting repair and the vendor rarely has to be sent back to fix something they missed.
A few examples of when it is appropriate to go this route:
- HVAC repairs and replacements
- Water heater repairs and replacements
- Anything structural
- Significant plumbing repairs
- Any emergency/habitability issue.
Any habitability or major inconvenience should be solved by using this option. You want to take care of your tenant by getting the work done fast so the property is returned to operating condition and you want the work done well so there aren’t any go-backs or short-lived repairs.
Low Cost + Done Fast
The outcome of this equation is low quality.
These types of vendors are typically unlicensed handymen or other small operations. They are sole proprietors or maybe have a small crew of two or three people.
There is no administrative support. When you call, you talk to the handyman. When you get the invoice, the handyman is the one who created it and sent it to you. When the tenant is contacted for scheduling purposes, the handyman is the one making the call. Their overhead is low so they can keep costs down.
However, they are a jack-of-all-trades, not a specialist. It doesn’t mean you never use handymen. There are plenty of situations where something small needs to get done fast and quality is not a huge concern. In this case, choose this option.
You also want to be careful of hiring a vendor in this category for a job that should really be high quality, high cost. For example, repairing an AC unit can be done quick and cheap, but if the work isn’t high quality, it can cause more harm than good. We have seen instances where a cheap HVAC technician doesn’t clear a drain line and the result is water damage and mold. Terrifying words for property owners.
A few examples of when it is appropriate to go this route:
- Small plumbing repairs (dripping faucet, garbage disposal, diverter valve replacements)
- Cosmetic exterior work
- Touch up paint
- Landscape work
- Minor drywall work
- Minor roof patch or vent seals
High Quality + Low Cost
The outcome of this equation is done slow.
These types of vendors are typically licensed professionals as well, but they work on their own. They may be the same types of vendors as those in the high quality + done fast category. However, they have no back office support. Their overhead is lower so their cost is lower, but they can take a long time to schedule with tenants.
This is the general contractor, plumber, or electrician, that acts like the unlicensed handyman from the low cost + done fast category. They schedule their own work, handle their own invoices, and are the ones that you talk to directly when you have a problem.
It’s great to use vendors like this for things like full rehabs that you can schedule way in advance so you aren’t delayed by the done slow part of the equation.
These types of vendors are also highly sought after because their quality is high and their cost is low. They can often get backed up for weeks at a time. They are a one-man show so if they have lots of work, they can only get to you so fast.
These vendors will very, very rarely morph into the unicorn mentioned above and be able to provide high quality work for cheap and done fast if you happen to catch them when they have a light work load. But that probably means their quality is slipping if they don’t have a back log of work!
A few examples of when it is appropriate to go this route:
- Full rehabs
- Roof replacements
- Non-emergency big jobs (AC replacement in the Winter when it isn’t hot, as one example).
These vendors are also the hardest to find! They aren’t advertising online and usually don’t have a store front. They may be retired tradesmen that decided to go out and do their own thing or they have a few clients that they work with that keep them busy so they aren’t looking for work.
Summing it Up
Rental Property Owners often get frustrated by the missing characteristic in their particular situation. The work is getting done too slow, or for too much, or for too low quality. Understanding this vendor value triangle will help make the best choice for whatever the situation is.
Don’t think you can get the unicorn! Understand how this works and work within the framework. Don’t try to work magic by finding a vendor that can do work at a high quality level, for cheap, and can do it quickly. In our experience, these vendors don’t exist so it isn’t worth wasting time trying to find them!
It also can’t be understated the importance of relationships when it comes to dealing with vendors! Even if you own several of your own properties and use the same vendors, your amount of work can’t come close to a property management company that uses the same vendors week after week and even year after year.
A good property management company will have extensive relationships with vendors that fit in any given section of this triangle and will also be able to help make the decision on which equation makes the most sense for the current situation.