If you’re managing a number of properties, you inevitably work with a contractor on everything from basic maintenance and upkeep to catastrophic improvements. Regardless of the scope, it’s important to budget effectively for these projects. Here are a few reminders to help you avoid costly mistakes.
First, always ask your contractor about the “iceberg potential” of a prospective project.
The old expression about the tip of the iceberg is especially applicable when you’re working on property improvements and repairs. A simple job for your handyman manages to multiply into a many-thousand-dollar repair that involves a contractor’s entire team for plumbing, rewiring, and more.
Budget for the whole iceberg by asking upfront, “And what if…” Of course, there will always be times when problems cannot be foreseen, but taking the time to think about what could be discovered under the old tile in the bathroom will help you avoid sticker shock should the iceberg be larger than expected.
SKYLINE tip: collect all of your questions prior to meeting with your prospective contractors in your database. When you’re on location, use the secure web interface to pull up all of your questions and concerns to keep the conversation going.
Second, when getting estimates, always tell your contractor that you will require a certificate of occupancy.
This may seem like common sense, but Mike, a Baltimore area contractor, said he’s surprised how often his prospective clients are unwilling to pay the extra fees associated with a repair or remodel that is up to code. “These days, lots of contractors simply assume you want things done off the books,” said Mike.
Find a reputable contractor and let them know upfront that you expect a quote that covers all the costs of work done up to code.
SKYLINE tip: Maintain copies of all pertinent certificates and permits for each of your properties digitally. You’ll never lose them this way.
Third, keep an inventory of appliances.
You can never be sure when an appliance is going to fail, but – if you keep a detailed inventory of the appliances at each of your properties – you can more effectively provide essential maintenance and budget for possible failure.
James, an Oregon-based residential property manager said, “I keep track of all of my property’s major appliances in an Excel sheet. For big things like water heaters and air conditioners, I schedule routine “check ups” for older models to keep them in working order. Sometimes, I’ll get a gut feeling that something is going to fail and replace it before it breaks. Keeps my tenants happy and reduces emergency spending later!”
SKYLINE tip: Store data for all past and scheduled maintenance in your property database – even better, keep a record of you and your tenants experiences with the contractors and handymen who do the work. This will save you time and money later as you forge stronger relationships with the companies you like to work with.
Fourth, do your homework.
Collect quotes from multiple sources. Selecting three is a good start: a small operation, a medium sized business, and a larger chain.
Whenever you receive a quote, do some homework of your own. Research the prices on the fixtures – can you find it for less elsewhere? Take a look at the time allotted for the project – is it reasonable? Or will it likely take more time (and cost more money)?
Compare more than just the prices, too. Take the time to investigate their referrals and endorsements. Make a few phone calls to past clients and ask specific questions about the job that was completed – as well as whether or not they stayed on budget.
SKYLINE tip: Keep notes of your conversations with your prospective contractors and save them in your database. Compare them to each of the actual bids you receive to make sure everything matches your conversation.
You’ll never be able to expect the unexpected, but – if you’re diligent – you’ll be able to avoid major budgetary pitfalls in your property management business. What tips do you have for fellow property managers?