Rental Property Investor · Nowata Oklahoma · Member since 2019 · 61 posts · 37 votes
My brother and I run a small handyman repair business in the Tulsa area and were relatively new to small business. Up to this point we've been strictly commercial. We have a meeting with a local investor that has a large portfolio of singe families. For those of you that manage your own properties and use a local handyman for repairs. How do you prefer to pay for repairs? Would you rather get a invoice for the hours worked plus materials or receive a quote per job or any other way that I'm unaware of? We take pride in our work and strive to build long-term relations with our customers. Ive never hired out any repairs on my personal properties since I handle them myself. This would by far be our largest client and would heavily influence the growth of our business. In simple Okie terms "I don't want to screw this up" since I have very little experience in business management and client acquisition. Any advice will be greatly appreciated and thank you in advance.
Rental Property Investor · Concord, GA · Member since 2015 · 3k+ posts · 3k+ votes
6y
Whether something is by the job or by the hour would depend on the nature of the repair. For hanging a closet rod or shelf I'd say by the job. For some type of clean up and repair of broken plumbing or similar when it is somewhat unknown what the scope of repair is, then by the hour.
As far as invoicing, an accurate description of the repair and a separation of materials and labor costs would probably meet most people's expectations.
Rental Property Investor · Concord, GA · Member since 2015 · 3k+ posts · 3k+ votes
6y
Whether something is by the job or by the hour would depend on the nature of the repair. For hanging a closet rod or shelf I'd say by the job. For some type of clean up and repair of broken plumbing or similar when it is somewhat unknown what the scope of repair is, then by the hour.
As far as invoicing, an accurate description of the repair and a separation of materials and labor costs would probably meet most people's expectations.
Contractor · Atlanta, GA · Member since 2008 · 978 posts · 985 votes
6y
Consider the following... How will this growth affect YOUR business?
Getting a single large client can be great - but that person will quickly realize that they have you by the proverbial short hairs and can really jerk you around if they want to.
Also, if you grow quickly and suddenly need to add people, getting paid after work is done can really create a cash crunch if you need to meet a weekly pay roll, or if you're suddenly consuming 500% more gas, consumables, materials, etc... Think about your cash flow situation and how a sudden increase in work may create a cash flow crunch for you.
Also, if you've never had employees before look into the insurance requirements in your state - worker's comp and general liability can be very expensive. In Georgia, the need for worker's comp kicks in after you hire your third employee... and let me tell you, the rates are a real gut check.
Personally, I'm not a fan of getting paid after work is done. The ability for a client to simply not pay you is enormous, and (at least in Georgia), it's unbelievably hard for a contractor to get money out of a non-paying customer.
Consider the attorney approach - have the client pay for a certain number of man-hours up front and then bill for materials as they are consumed (Hopefully on 30 day accounts. If you don't have them, GET THEM.)
In other words, pay me now for XX hours of work, and we'll send you weekly audits showing how many hours were used and for what purpose. When we reach the end of our hour bucket, we will bill you for another XX hours... and so on, and so forth. At the end of each week, we'll give you invoices for materials and you reimburse us for them.
(Alternatively, bill in advance for $X,XXX dollars to be spent on materials, and then provide receipt tracking for materials bought against that bill, billing additional as needed)
The problem I've seen over and over again is that investors will turn contractors into unwilling lenders with none of the protection (Deeds) or benefits (Interest) afforded to a real lender. A simple analogy is this - would you extent this investor a loan for $XX,XXX with no real assurance that he will actually pay you back? Because when you work and then bill later, that's exactly what you're doing.
Or, to use the old J. Wellington Wimpy cartoon line, "I will gladly pay you Tuesday for a Hamburger Today"
If the scope of work is larger, I think that by the job makes more sense in most cases. A client doesn't want to hire you to remodel a bathroom thinking it will cost $3k and when you bill the hours and materials it turns out to be $5k. When quoting a bid for a larger project I would quote X amount plus fixtures and finishes to be bought (or at least chosen) by the client.
So, a small bathroom remodel might be $2k plus fixtures (tub, surround, vanity, faucets, toilet, fan/light, tile, etc). You can give them an idea of what those might cost for a basic remodel as well.
For repairs, maintenance, service calls I would think charging a flat fee for the call plus an hourly rate and materials. So, something like $40 for a service call lasting up to 1 hour, that might cover unclogging a sink. To replace a bad water heater might be $40 for the 1st hour plus $25 for each additional hour labor plus materials.
Investor · NJ · Member since 2018 · 869 posts · 921 votes
6y
As a plumber I've had the most success with flat rate or contract prices. Although I'm perfectly fine billing time and material if the customer prefers.
My suggestion is to get good with excel or Google spreadsheets. Start tracking your expenses and categorize time spent, job type, material costs, date etc. Learn which jobs end up having good profit margins etc. Data is alot more valuable to a trade than how you charge a customer.
Rental Property Investor · Tulsa, OK · Member since 2018 · 27 posts · 8 votes
6y
@Nathan
@Nathan Hughes I think that a collection of these post is what you need to look at. Different practices work for different areas. I would say a quote for the larger items and time & materials for the others. I am looking for a good handyman for my rentals here in Tulsa as well as small flips if you are interested. It is not massive, but it is around 10 properties that I need things from time to time. Also, some flips on different properties as well that I GC.
Rental Property Investor · Nowata Oklahoma · Member since 2019 · 61 posts · 37 votes
6y
@Joshua Glesener Thank you and that's the same idea I had in mind from the start. I had a small dirt work and trenching business that didn't last long due to my lack of experience and greatly underestimating all the other moving parts of a successful business. From my personal experience in my last business venture I preferred the hourly rate over a bid per job for the simple fact that I didn't have the experience needed to accurately quote a job. Thankfully I don't see that as being a problem in this line of work. We both have had side hustles in the repair and maintenance field for years.
Rental Property Investor · Nowata Oklahoma · Member since 2019 · 61 posts · 37 votes
6y
@Aaron McGinnis I hope that being taken advantage of won't be something that we would have to face but it is always a possibility. Growing too fast is something that has crossed my mind. I think that would be a welcomed hurtle we could overcome if it were to happen. I haven't priced workers comp yet but I do know that in Oklahoma as long as it's a family business with less than five employees it isn't required. I actually love the idea of paying for the hours up front. Do you find that new clients are willing to choose that option or is that a system built from trust and repeat business? In my trenching business I definitely had a few customers that took way too long to pay and had one that ended up leaving us high and dry. Thank you for your time.
Rental Property Investor · Nowata Oklahoma · Member since 2019 · 61 posts · 37 votes
6y
@Kevin Sobilo I agree and Ive had to eat my cost up in the past when I had my trenching business. It was completely due to my lack of experience in the trade. This is something I should be able to avoid in this field of work. Thank you
Rental Property Investor · Nowata Oklahoma · Member since 2019 · 61 posts · 37 votes
6y
@George W. That was the first thing we had agreed on and we've been tracking for a few weeks. We are looking into some software that I think we could benefit from. I have a hard time with organizing and records so that was the first thing on my to do list. Thank you for your time.
Investor · Newtown Square, PA · Member since 2015 · 132 posts · 149 votes
6y
@Nathan Hughes
Nathan, I currently use a handyman and he bills me an hourly rate plus materials. Each invoice he sends shows it. For me there has to be some trust involved since he does not do remodels but just small work. I send him a punch list of items for a particular address (we have lots of section 8 rentals) and he goes out. There is really no way for him to give me an estimate first since all jobs are different. Honestly I don’t want that anyway. I don’t want him going back a 2nd time after waiting for approval for a $150.00 job. I want him to go once, fix it, and bill me.
At the end of the week he sends me all of his invoices and he gets paid the following week. It’s that simple.
However, I’ve started to use him more on odd items in my renovation projects. If he needs money up front for materials I would certainly do it, however he hasn’t asked yet. If he can’t afford to purchase 500 or $1,000.00 in materials on a credit card up front he’s running his business way to tight.
I frequently get bills from him ranging from 50.00 for a minor fix to $1500 for more major items. Our relationship is important to me and over the year or so he’s been working for us we kind of know what things should cost.
Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes
6y
@Nathan Hughes I like paying based on time and material when working with someone I trust. I think that protects the handyman from unexpected surprises that add time to a project. It also protects the investor from every project having a "what if" markup put on the job. If the job is bigger, like over $1000, then I would want multiple quotes. Just make sure you are accurate with what you bill and describe what you did.