Repair quotes by property manager seem extremely high

43 Replies

Originally posted by @Kenny Dahill :

@Roi C. I don't think anybody has truly answered this:  $45/hr.  That's a general handyman unlicensed for whatever scope you desire in Phoenix.  

$45/hr is ballpark.

I don't think $45/hr is bad for "on demand" use-it-when-I-need-it for a few hours handyman.   I have about 30 maintenance guys on staff that do 99% of what I need (all but high level electrical/plumbing).  They're paid between $15-$22/hr.  But they're full time employees. 

I have seen material and labor costs rising in Arizona. It's just simple supply and demand, and with all of the construction going on here prices are being driven up. 

Be careful using a handyman for rental property. There is a handyman exemption that allows non-ROC licensed work up to $1,000 including labor and materials per home if the work is "casual or minor in nature" (small projects not involving health or safety). Anything over $1,000 requires a ROC licensed contractor. Contracting without a license in violation of A.R.S. § 32-1151 is a class 1 misdemeanor (A.R.S. § 32-1164).

Another reason to be cautious is that handymen usually have no insurance. If they damage your property or have an injury who will be liable? There have been many cases where uninsured workmen suffer severe injuries and successfully sued the property owner.

As always, seek professional legal advice.

Even with a long time trusted PM, you have to have some checks and balances...multiple quotes from very similar companies.......not licensed compared to not etc.

Even with long term trusted people, its easy for the PM to get lazy and start to ignore the fact that this is an investment...... expenses matter......the reality of life is that with trust it becomes easy for the PM and contractor to fall into the "they do whatever I ask them and never question the cost" and the cost creeps up and up until you finally say "WTF?" and start asking questions. Sometimes its on purpose....other times it subconsciously happens

Get multiple quotes from comparable sources......a good PM should have relationships with multiple contractors.....don't accept one bid

@Cody L. We are looking to bring on a full time handyman to do repairs at our properties. Here in New Jersey, the large company from which we bought a shopping center recently pays their handymen about $20/hr. I am wondering where do you recruit? Craigslist seems more suited to this than an Indeed.com but we have met lots of shady people from Craigslist. Also, do you pay any benefits? If you require them to travel from one of your properties to another on a regular basis, are you supplying a company car or requiring them to use their own car and reimbursing travel time/gas?

Thank you in advance for any tips you can provide.

So many good answers, I appreciate everyone's input.

As others have mentioned, being a remote investor does not allow me to inspect the property to a level where I can tell exactly if every line item on the PM's invoice is necessary, so I give them the benefit of the doubt due to our long relationship that was pretty good over the years. I do feel though that our PMs are taking my accounts for granted and don't necessarily feel like they need to work hard to earn my business anymore. They don't always act in my best interest because it would create more work for them.

We just recently finished a pretty large renovation in one of our other properties there, I managed the entire project by myself remotely and was able to get it done with higher grade materials and appliances at 70% of the cost that our PMs initially quoted, and I did all of that over the phone without physically being there at all, I would've probably get it down to 50% if I was actually there. I don't know if they add a markup to the invoices, because the invoices from the contractors are typically forwarded directly to us by the PM and we are billed for them back to back. Maybe the contractors and the PM have a side agreement where they get some type of commission, but there is no way for me to prove that...

We are going to get this project done, and after that we will have a serious conversation about how to handle future projects and maintenance calls.  I am trying to think of a system that can work good for both sides, maybe something like a system where the PM will do a walk-through and get a detailed description including pictures of the items that need to be repaired, and then post a bid online so we can get multiple contractors involved in a bidding war, and I will be able to see the price without any markup or hidden commissions. Or alternatively try to come up with a system that compensates the PM better if the profit from the property is higher, I'll need to run some mathematical models to see if that even make sense. If any of y'all have any suggestions or ideas I would love to hear them.

Thank you so much!

There are pro's paid to look over projects. i.e. supervisors, superintendents, project managers, consultants, etc. If you want more control then you need to think like a person in control, not like a regular joe trying to get work done.

I've had very little luck hiring off craigslist, but I have seen lots of people get it done that way. Its all about your style, but more importantly what are you WILLING TO DO. I put that in all caps because people are willing to say they are willing to do things far more often than they are actually willing to do them.

If you want good people, you will have to go through a lot of not so good people; and some Gawd awful ones.

It cost money to hire pro's to inspect your deals, to put together a non-biased/fact based/line item/complete bid for your project that includes timelines, budgets, scope, materials, and permitting/material order information. It cost money to pay someone to review bids/paperwork to insure the trades you hire are qualified and you are protected if they mess up. It cost money to have someone oversee your project to insure quality, code, property material use/install, collect warranty paperwork, meet inspectors, trades, and insure the safety/security of your project; with your projects best interest in your project. (i.e. not what you demand done even though you are wrong thus allowing you to screw up the project.) It cost money to hire a qualified realtor who will not only know all about your project, have the passion to properly convey it to others, willingness to miss their kids Sat. soccer game, but actually spend their reputation, time, energy, imagination, information, to get your property sold for the highest margins in the shortest time possible. 

But, if you knew that all in the beginning and (like a good investor does) buy your deals w/out sacrificing yourself to the "eh, I'll just do that myself to make it a deal" mentality, then you can pay someone to do it all for you. It sounds expensive, and it does cost you some of "your" ROI. BUT...you lose far less often on deals that go south, turn out like crap, sit idle on the market, and so on. You pay for what you get, and if you don't pay anything...well..

Anyway; my advice. Pay a pro until you feel you are one. If you think you can fake it until you make it, well good luck and bless your heart.

*I hire pro's still. Learning all you need to know to be a pro in all the area's means less room in my head and time in my day for things I enjoy that I call "Life".

@Matthew Paul 's just telling it like it is. As a contractor, you grow your satisfied homeowner network as much as you can, you stick with your GC network for your steady work, while you take crap-paying jobs from your investor network when nothing else is being offered. The more skilled you are as a contractor with even the most basic people skills, the larger your satisfied homeowner network is going to get with time. Excellent plumbers, electricians, and HVAC guys also have another top-paying network that appreciates good, fast emergency work with actual money, the reasonably competent, reasonably intelligent self-managing self-fixing small landlord network. Contractors that rely on investors for most of their work either have zero people skills or hands that grow out their butts or both.

As a small-ball investor calling around for contractors and trying to impress them with how incredibly serious you are with turning your handful of properties into a rental empire and thereby trying to drive their prices down...in most parts of this great country of free enterprise you are literally NEVER going to get a high-quality job done quickly in your properties. Every single time I see some poor schmo here in the forums trying to pull off their first, often long-distance flip without an onsite, local, experienced renovation GC, I cringe.

Originally posted by @Jim K. :

@Matthew Paul 's just telling it like it is. As a contractor, you grow your satisfied homeowner network as much as you can, you stick with your GC network for your steady work, while you take crap-paying jobs from your investor network when nothing else is being offered. The more skilled you are as a contractor with even the most basic people skills, the larger your satisfied homeowner network is going to get with time. Excellent plumbers, electricians, and HVAC guys also have another top-paying network that appreciates good, fast emergency work with actual money, the reasonably competent, reasonably intelligent self-managing self-fixing small landlord network. Contractors that rely on investors for most of their work either have zero people skills or hands that grow out their butts or both.

As a small-ball investor calling around for contractors and trying to impress them with how incredibly serious you are with turning your handful of properties into a rental empire and thereby trying to drive their prices down...in most parts of this great country of free enterprise you are literally NEVER going to get a high-quality job done quickly in your properties. Every single time I see some poor schmo here in the forums trying to pull off their first, often long-distance flip without an onsite, local, experienced renovation GC, I cringe.

 😂😂😂 Great points. Well said.

As the owner of a General Contacting Company, Real Estate Brokerage & Property Management Business with annual volumes over $50M+ I've seen & dealt with all types of investors. Newbies to Big dawgs & everyone in between.

Folks here is a Pro tip; 

When you are starting out with your new empire and you are calling PMs, Contractors & Realtors don't tell us how many properties you plan to buy & or rehab over the next few years. In other words if you are about to make your 1st purchase or perhaps you are 2 to 3 in but plan on buying 50 houses this year just go ahead & keep that info tight to the vest.

Those of us who've been in the game know that the schmo who starts the relationship off doing this crap is a total fool who's business isn't out of the infancy stages and he's got no idea what he doesn't know. 

Anytime someone says something like that to me or my staff (usually fishing or outright asking for discounts or special treatment) I immediately write that investor off as a time waster. Trust me, if you are a serious investor, we'll know. Don't puff your chest, never gets you anywhere other than the back of the line.

To answer the original question that was asked, $40-$60/hour would be fair rates, at least in Ohio unless specific circumstances.

and to respond to someones comment of $250/ceiling fan. You don't need to hire an electrician to hang a ceiling fan, handyman services are not in the same category as construction contractors. Yes drive time is a factor but $100/hour is ridiculous in my opinion.

Look at it this way. When you go out to dinner at a restaurant, do you think the food is 4X - 10X better than it is at your house? Clearly it is not - you are paying for the service of others preparing your food. If you go to a fast food place, you still get food prepared by others. It is generally not high quality and the cost is lower than other restaurants. If you go to a white table cloth restaurant, the food and service is higher quality and the cost is higher than most restaurants. Contracting work is the same thing. You can get work done for cheap, but it is generally lower quality. If you are willing to pay for the skill and experience, you can get higher quality work done. There is nothing wrong with either of these scenarios. Each one has it's place. The problem becomes when you go to McDonald's and think you should get filet mignon, or you work at McDonald's and think you should get paid like you work at Ruth Chris.

As far as investing in out of town markets and having no way to verify, find people you trust to look out for your interests or invest in your hometown. It's hard to believe that someone didn't know they would need help running their property when they live on the West Coast but purchase investment property in Florida for example. I get that it's hard, but if you don't have people you can trust, don't do the deal.

Real estate investors, agents, property management companies, contractors, attorneys, and the majority of parties in the real estate world are for profit entities. It is funny to me when the same people trying to maximize their returns don't want others to maximize their own returns. Profit is not a dirty word - we are all allowed to make it. I also encourage people not to compare construction costs between markets. The permitting, labor, and utility costs vary widely from market to market. It is no different than comparing real estate prices in disparate markets. For example, Cleveland is a different market than San Francisco - comparing the two is not useful.

It sounds as though you feel like your PM is getting too comfortable with your money.   That is the bottom line here.  At this point it makes sense to sit down with your PM and let them know what you are seeing and be honest with them from your perspective.  Give them some examples and ask why they thought these were competitive costs.  They should be able to explain their rationale or thought process.  It doesn't make sense for you to look at every completed project that comes in and try to justify if that is a true cost.  That is why you are paying someone.  If you don't trust them, its time to discuss or find a new PM.  

Interesting thread. We have the two extremes of our restaurant with white table cloths and eating at home. Many good answers

@Cody L.   with staff you are essentially the GC and your costs are more like eating at home. Nothing wrong with that you know what you are getting but hardly a way to compare costs for most. It seems you have a successful formula that I am sure was not developed overnight.

@Roi C. I would say  from the information given you are being overcharged. I would ask for at least three bids from your PM on major repairs. I would require licenced contractors with POI of at least 1 million. I would have estimated time and  material and straight bids from the same contractor. I would think your range should be 45-65 per hour

Originally posted by @Michelle R. :

@Cody L. We are looking to bring on a full time handyman to do repairs at our properties. Here in New Jersey, the large company from which we bought a shopping center recently pays their handymen about $20/hr. I am wondering where do you recruit? Craigslist seems more suited to this than an Indeed.com but we have met lots of shady people from Craigslist. Also, do you pay any benefits? If you require them to travel from one of your properties to another on a regular basis, are you supplying a company car or requiring them to use their own car and reimbursing travel time/gas?

Thank you in advance for any tips you can provide.

I'm old skool. To me, 'Benefits" are just part of the comp offered. If you pay $18/hr but also offer dental that costs you about $2/hr. And have time off/vacation pay that adds about $3/hr to your internal pay, then just offer $23/hr.

I'd rather do that and let them employee decide what they'd like to buy.   Because when you offer a benefit, it's really just at the trade off of offering that person more comp. 

So I offer a fair hourly and they get that when they work, and that's the end of the story.  For my workers that have been there a long time and do good work I'll also pay for their vacation, give them extra bonuses, etc. 

All my guys have come from Craigslist or referred (i.e., one of my guys knows a guy, etc.).   As someone else pointed out, on CL you deal with a LOT  (LOT!!!) of junk to find a good person, which is why when I find someone good I hold onto them like grim death. 

I want to respond to this, but seems like everything has been said ! If you find a good contractor, stick with them. Bust their chops once in awhile so it looks like your paying attention, but all in all...its hard enough to find a contractor that has your best interests in mind, when you do, stick with them. 

1-3 days work: $45-$55 per hour for a good handyman in Phoenix and valley, inspection required.

Licensed contractors

I would trust reef builders or Arizona contracting to do the job - They help many investors in Arizona valley. I am not sure if you would have enough work for them to take your job. 

As a Property Manager in the Pheonix, AZ market I have a variety of vendors. Some are fully licensed and some are not, job dependent we make decisions that make sense for the owners.

The cheap person isn't always the least expensive and the most expensive isn't always the best. 

A good handyman can handle small tasks very effectively day after day. 

I have a 4-Plex cut open at the moment due to a water leak resulting in mold that is an insurance claim and all the contractors are licensed. At the same time, I have work orders out for Handman stuff on a nearly daily basis that most licensed contractors don't even want to do. Handyman are great for punch lists at turnover versus sending in 6 different licensed trades. The Handyman we use will speak up if it's not something he should do. Electrical is a grey area for most, a handyman can hang a ceiling fan or replace a cracked switch but he won't wire or do much inside the panel.

I don't mark up invoices to owners, that's why you pay us to manage the property!

I would avoid time and materials when ever possible, to much room for abuse. Flat fee gives contractor incentive to finish faster and helps investor budget correctly.

If you can come up with fair price and agree who cares if contractor can do it in half the time you thought it'd take, at the end of the day price is fair. With that said I'd probably not use that contractor again.

On the flip side if I honest contractor doesn't ask for change order when job takes longer (depending on reason) they might not want to do future work depending on how payment turns out....