Hello BP multi family members,
I am exploring the idea of of a new contracting business focused on the multi family market and want to gauge interest from the people like myself who own multi family property. I have been a contractor working with house flippers and home renovations but am needing to change directions since my last major job has completed. Please comment and provide ideas as I think this could solve a lot of issues for apartment owners. Scale and commitment from owners is key for this model to work.
The idea is pretty simple, build a contracting business that specializes in turning apartment units and performing small capital improvement projects. Prices would be fixed for various activities and would be available on a sort of "menu." You would have one contractor to go to for all your renovation needs and you would eliminate the hassle of surprise labor charges, delays because your preferred vendor is building a house and has you at the bottom of their priorities, and eliminate the process of getting quotes for work to be completed.
An idea of how this work would be an owner/manager could go online to order new flooring, painting, a window replaced, new toilet, or a light fixture exchange. They would indicate the desired range of dates for the work to be completed and provide the unit number and building for work to be completed along with an estimate for the floor square footage for the proposed work area(how most of the work is calculated off the "menu." You would even select the paint color, type of flooring, and other material from our list of standard options.
After providing confirmation for the scheduled work date we simply show up, you let us in, we perform the work, take photos to go along with our electronic report, and bill back the material and labor charge per the guidelines of the "menu" you ordered from.
In my experience of owning and managing my 23 and soon to be 31 units, I need work completed in 3 ways.
1. Scheduled work: this is for capital improvement type projects. I am planning 2 weeks to 36 months in advance for flooring replacements, patio doors, water heaters, kitchen/bath renovations, painting, or light fixture changes. Some things come to my attention from tenants that need to be replaced on the shorter timeline but are not emergencies so I tell them typically 2 weeks for that type of work. But most things I can plan months in advance and can stay within my planned budgets for maintenance/capX.
2. Apartment turns: Sometimes I know in advance, but generally only have a 30 to 60 day notice of this type of work. When the apartment comes available I try to get in and get out within days or a week so my next tenant can move in and I dont experience much loss of lease. This work is typically based on my expectations of the condition/damage performed by a tenant. I always try to get into a unit in advance of their move out so I can better estimate the amount of work that needs to be completed. Paint, sometimes flooring, and a good cleaning are usually the items needed during these events.
3. Emergency work: this is where we have a furnace or water heater or other problem that needs to be handled within 8 to 24 hours. This is 98% of the time specialized labor, but there are a number of options available and I have reliable contractors for this work.
The contracting business would focus on providing services for #1 and #2. We wont be doing designer kitchens, individuals residential bathroom remodel or building new construction. We will focus only on providing services for the multi family rental market.
We will contact apartment owners/managers to see if they are interested and if so walk them through the "menu" to be sure they understand our pricing, and provide a sample pack including material cuts and photos of our standard material offerings to see if they have any objections requiring special circumstances.
By eliminating the process of quoting each job and standardizing material we can cut costs in a number of different ways that will allow us to win on price while still paying employees a very competitive wage to keep good labor working for you. There are other unique ways we will be working with labor and the business model to provide an efficient set of systems but thats not necessary to talk about right now.
Please let me know your thoughts, objections, or recommendations. I will be focusing this in my market of Northwest Indiana to South Bend. However, I believe that if set up with the right systems processes, and pricing this could be a business easily scaled to other markets.
Thank you in advance!
I like the concept a lot. Seems like it would benefit my business a lot after we buy the 36 unit.
I really like this concept. Too bad your are a good 2 1/2 hours away from me. It would really help budgeting if you have set prices on your menu, especially for items that you know are cap-x or regular "turn" items that occur somewhat regularly, but can be scheduled out. Good luck with it.
@Brad McDaniel Thanks for the feedback. The idea is that sometimes a job will be a bit harder, and sometimes it will be easier. Rather then quote every job on a case by case basis or bill you after resulting in an unpleasant surprise, I will take a hit when its a bit tougher but profit more when things go smoothly. This way we can keep it simple for the property owner allowing for easier budgeting and less hassle.
This is definitely a good idea, especially if the menu prices are fair to start with.
I like the idea for sure. Definitely would be interested. When you say you want to work with only multi family owners/managers are you meaning duplex and triplexes in addition to larger apartment buildings?
Joel, this is exactly the business that I have built. I would be happy to discuss further with you.
@Darius Lipsey yes, duplex and triplexes would be something we would serve as well. I could imagine that we would entertain certain portfolios of single family homes. One of the issues though is things start to get unique for each house when you get into single family homes so there would need to be some understanding of what to expect. as you get into properties of larger size things get much more uniform regardless of the complex you are at. But certainly not opposed to the idea.
@Joel Florek , have you come across anything similar out there in any market? Its just a great idea, I'm wondering if someone else is doing it somewhere. I really like the idea. I'm thinking of ways that this could be a franchise opportunity, but I think dialing in the menu costs and options would be the most difficult thing to do. Also possibly have 2 or 3 quality tiers as far as finishes and grades of materials. Perhaps a clearly defined spec menu of faucets, sinks, paint brands, carpets, etc. Keep the menu simple, but with varying options depending on the quality of the properties your are working with. I'm very interested in seeing how this progresses.
@Brad McDaniel I have only heard of complexes working out deals with individual contractors for pricing on the specific trade they do. An example being the painting contractor negotiated they would paint all the walls and trim of a 2 unit townhouse style in Bloomington IN for $650. So far I havent found someone doing what I envision.
With respect to the franchise idea I did think of that and like where your head is at! If done correctly I think this could have the opportunity to scale especially with the help of contracts with large multifamily operators with thousands of doors in cities across the country. I also agree with you multi level quality scale. Do you want the $20 American Standard faucet or a $60 delta vanity faucet? as an example.
An area where efficiencies are made is especially the case on flooring. By choosing your desired flooring during the booking/ordering process, a trailer with a full roll of that flooring shows up and the installer does the rough cut on site depending on the exact dimensions of the room. This avoids a trip to measure, a trip to order and pick up the flooring, and a trip back to cut it in and install. The roll simply gets loaded on the truck in the morning and the shop has all the menu material in stock ready to go. When at scale this material can be purchased likely direct from the manufacturer helping to make this service even more attractive for the customer.
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