Don't Be Afraid To Ask Service Provides Questions

[Stuart Udis]

Never hesitate to ask service providers to explain the rationale behind their recommended course of action. New investors are most susceptible to overspending for services due to their willingness to accept whatever service providers recommend. Its observed repeatedly in these forums but it's almost always too late to offer beneficial advice since the services have already been rendered.

Many clients hold back out of concern that questioning a service providers approach may seem disrespectful, but thoughtful inquiry is a critical component of diligence and personal education/growth. Service providers should welcome informed clients who want to understand the rationale behind each decision. Those who dismiss or take offense to your questions do not belong in your network. Far too often, investors pay for tax segregation studies without understanding the implications of depreciation recapture, purchase properties based on unverified assumptions shared by their realtor, accept the loan terms without proposing alternative loan structures that offer the lender equally safe collateral, form entities without understanding their purpose, secure the incorrect or unnecessary insurance, or spend unnecessarily on improvements and inefficient construction practices.

 Asking service providers questions such as: “Why does this benefit me?”, “How does this benefit me?”, or “Is there another way to achieve the same goal?”  often prevents the purchase of unnecessary services or leads to better, more cost-effective outcomes. These questions prompt quality service providers to reassess their approach, think creatively, or confirm their proposed strategy is truly the best option. 

My willingness to ask questions saved me $48,000 in the past 30 days. On a mixed-use project, four sprinkler contractors quoted systems including standpipes, assuming they were required due to the building height. After a city examiner unexpectedly required a 3-hour rated floor assembly between the first and second floors due to the buildings wonky design, I asked whether this changed the standpipe requirement.  The sprinkler companies all believed the standpipe was still required. I sent an email to the city examiner who confirmed an exception in the code for this exact condition. Removing the unnecessary standpipes reduced costs by $10,000 per building.  The second example involved a restaurant fit-out in a mixed-use building. The MEP plans specified a 16' hood for a gas appliance lineup. The existing ductwork couldn’t accommodate this size hood, requiring new ductwork ran to the roof.  The MEP engineer assumed a gas oven was required, but after confirming with the restaurateur that electric was acceptable, we switched to an electric setup. This allowed the hood size to be reduced to 13', compatible with the existing ductwork saving $28,00

 Don't be afraid to ask questions- it will weed out the service providers who are taking advantage, reduce costs and fuel your growth & education.