Quote from maintenance company - are they trying to rip me off??
Ok, so I've been skeptical for many, many years of hiring a PM. My main concerns were that a PM wouldn't care for my properties like I would, that I would pay exorbitant amounts for any kind of maintenance, and that they wouldn't fight to get me high rents (in alignment with market comps).
With that, my portfolio became too much for me to manage, and I've taken the plunge and hired a PM. My building just had a vacancy and the PM proceeded to get the maintenance company to quote out work needed prior to placing a tenant.
About the unit: this particular unit is a 450 sqft studio with 1 full bath and a small kitchenette. When I got the quote I was floored, couldn't believe it. I've omitted the name of the company to maintain confidentiality.
Parts I'm having a very hard time with... to paint the unit along with a very small wooden stairway leading to the front door, maybe 4-5 feet wide and 3 steps, they want over 2k. For unknown reasons to me they want to replace the faucet, angle stops, and supply lines. Upon inspection it seems that the only thing needed is a new faucet cap. They want $40 to plug in a C02 detector into the wall for crying out loud. For reasons unknown to me, they are wanting to apply a new "stain coat" on top of laminate. Maybe this is a thing, but I've never heard of it. Floors are generally in ok condition, some minor scratches.
The one thing that did look ok to me was the electrical work in the bathroom. If there's something wrong there I would have no problem paying someone a couple hundred dollars to get it right.
Are these guys trying to take me for a ride?
@Greg R.
What area is this? Sounds a little high. I’d get one more quote. I’m in the Dallas area and it’s expensive to get good reliable help these days. Just the way it is now with a labor shortage. I pay high, but my crew is convenient and gets it done on time.
@Greg R. Looks like many of the things they are suggesting are just cosmetic. You don’t have to accept any or all of the repairs. Just decline those items that you don’t want. The cost of the individual items do not seem excessive, but it depends where you are located.
Quote from @James Hamling:
Ok people, I am going to pull back the PM curtain in hopes to dispel some of these ridiculous assumptions and misconceptions. @Nathan Gesner has already laid down some of this but seems few are picking up on it.
First of all, all this BS saying a PM is out to get someone because "oohh, aahh, gonna get-em for a few hundred on this" is just asinine. NO! We have 0 interest in drumming up some big time-suck and distraction to drive what is truly a very small amount of added $.
Here is the reality. As a legit PM Company our #1 focus is TIME EFFICENCY. And that makes profits for EVERYONE.
Someone has a ~$4k improvement work to be done. So what happens in efforts to get 17 bid's to try and save $1k, 25% off the job. THAT TAKES TIME. Easily expect it to burn up an extra month just doing that, because in case you havn't noticed vendors are not sitting around with nothing to do, THERE BUSY, more demand then supply for vendors, so yes, that's a month burnt up on feeling out prices. And with rent's at $2k, congratulation, you just threw away $2k to save $1k, a 100% NEGATIVE ROI.
Often we Pro PM's have to educate our novice Landlords of this math paradigm, it is called Opportunity Cost. The cost of time, in exploring discount potential. We have to guesstimate the legitimacy of that exploration, how much it could save, and then cost of time to do so. Ever hear of the math that if Bill Gates saw a $100 bill on the ground when walking into work, it would cost him almost $200 to stop and pick that up? Yup.
As a Professional PM Company we are focused on efficiency and performance, FULL-STOP. It's literally in our name; PROPERTY MANAGEMENT. No, we are not focused on making $ on maintenance, if we were, we would stop doing PM and just be a Remodeling Company! More then enough work to do it.
Maintenance is a big pain in our azz, arguably the #1 pain in our azz because it is blocking our ability to get a property leased which we DO make $ on, and in maintenance we have all this brain-damage and time-suck of getting vendors out, scope of work, communicating with owner etc etc.. The 10% fee on it is to MITIGATE our time-suck. Do the math, it's $400 on a $4k project, exactly how many labor hours do you think $400 covers? And before any idiotic comments of oh $400 covers a lot for a $15hr person NO, it doesn't, because after all the lovely costs of employment a $15hr person DOES NOT COST $15hr, there $30+. Don't believe me, ask an accountant, there is like 14 tax's paid on employees or some ridiculous #, I don't count em anymore but it's a list, a loooong list.
So most often even after a 10% fee we are loosing $ on maintenance. So yeah, we want that done and out of our lives and back to the business ASAP.
Our focus on maintenance is EFFICENCY. The cheapest person is ALWAYS a hack. There going to do crap work, mess things up, take longer because we need them back out 3 times to fix what they messed up, and it ends up costing MORE. The most expensive is some retail shop, who doesn't "get" rental property, and the property owner (rightfully) will be up in arms over the price blowing up our e-mail/phone demanding answers and guess what, will quit services so we did all that for nothing because we make $ on PROPERTY MANAGEMENT.
The answer is somewhere in the middle. Again, our EFFICENCY focus. That combination of quality and price, better known as VALUE.
So yes, when we find a VALUE service vendor, we build relationships, reoccurring services. We come to a place of getting them out to a property 1st, vs 17 bids. Because again, 17 bids LOOSES $ FOR EVERYONE.
And here is the deal, from the worst novice clients I hear the #1 stupid answer of "when I did it myself it only cost ___" well DUH, of course it did, your "guy" was FREE! Nothing can compete with free. So yeah, it's gonna cost more.
And here is the thing, EVERY Pro PM Company I know, mine included, is more then happy for a Property Owner to SELF-CONTRACT the work. Please, have it, and thank you very much. Again, we are a PM Company NOT a Remodeling Company. Our maintenance service is for your CONVENIENCE, it sure as hell isn't for ours, it's our #1 loss leader. Again, the time-suck of it all.
Getting quality vendors today is hard, wicked hard. The #1 reason I loose vendors today is because they tell me they have crossed over into more retail and are just flooded with high paying retail. I applaud them, it's great for them, I don't blame them 1 bit, I would too in there shoes. It's very hard for us Pro PM's to get the quality vendors, it's constant effort at recruiting because we basically have to find rising star's over and over and over again.
Reality is our best most profitable operations is a property with LT tenant in place, things humming along on cruse control. THAT's efficient time. And end of day that is what we are selling, TIME. We have a locked in $ with a landlord which means our internal labor time is locked, to make $ we have to use less to create a profit margin, and enough to mitigate those times when it's more. And to RETAIN clients.
FYI, we have ~2,000 properties under management today in the T.C. market center, that is where I am coming from in things. A person will never get close to this mark ever without being a master of efficiency for all. Efficiency = $'s.
Our goal is to get the most $ for rents on a property, maki it as passive as humanly possible, for as long as humanly possible. And when maintenance items come up, to keep them to ROI as much as humanly possible, keep it EFFICENT as humanly possible, and get back to the primary ASAP. And RETAIN clients which requires ROI for our clients. It's just that simple.
Hey James, good to hear from you. I agree with a lot of what you said. However, there was no time efficiency in this one. I just started the relationship with this PM company immediately had a 30 day notice when we started. Tenants got out toward the end of March, it took them about 2 weeks for their maintenance company to get out and for them to get the approved quote over to me. I wanted to give them a chance to do their thing without being involved, so I just sat back and watched.
However, I typically do a walk through on the unit a couple weeks prior to the tenants leaving and then coordinate with my team to start the work literally the same day or maybe 1-2 days after the tenants are out. I usually have units ready in less than a week from when the previous tenant moved out. Further, I start my marketing several weeks prior to the current tenant leaving. I've filled units in 2-3 days before. Not easy, but it's very possible. I've done it multiple times.
My team is in there now and will be finished tomorrow. I will post a full breakdown of what I paid for everything, full transparency... we'll see how reasonable (or not) their quote was.
However, I did have a question for you James. You mention that you're not a remodeling company, and that you don't like coordinating work, it's a loss leader, etc. I find that bizarre. I totally get that hiring a single company to do all of your work might be the easiest thing for you to do. However, don't you feel that you have a responsibility to your clients to get them good pricing on maintenance? Or is your stance that it is what it is, and that you're not concerned with what the owners have to pay to get stuff done?
Quote from @John Morgan:Hey John, this one is in San Diego.
@Greg R.
What area is this? Sounds a little high. I’d get one more quote. I’m in the Dallas area and it’s expensive to get good reliable help these days. Just the way it is now with a labor shortage. I pay high, but my crew is convenient and gets it done on time.
Quote from @Dan Heuschele:That sounds very reasonable Dan. I'm all about paying someone for their work and being reasonable. I'm not looking to rip anyone off or have people work for free. However, there are a lot of predators in the handyman/ contracting arena that are looking to make a meal on everyone that they work with.
Quote from @James Hamling:I agree with a lot of what you say especially about time versus money and the associated costs (I covered this in my earlier response). I also agree labor costs are higher than hourly wage as you explained well.
However, 1) My PM, in the same town, would do that list for less than 50% of that quote. 2) My PM does not mark up the maintenance/repair costs. They charge a PM fee that includes managing their team for maintenance/repair items.
I am OK with both scenarios: 1) charge a little extra for flat PM and not charge for the various items where they could itemize the smaller costs or 2) charge less for the PM and charge for the various itemized smaller costs.
In the end the PM is likely making a similar amount of money as PMs (contrary to many owner views) are not getting wealthy just on their PM fees. As long as all parties understand what the costs will be (i.e. maintenance markup is documented) there is no wrong approach.
Note my PM has their own maintenance employees that are competent. I can make work orders that are not just maintenance. For example, last month I made a request to paint stripes for parking because vehicles were parking in positions that did not allow optimal use of the parking lot. In about a week, because it was low priority, they painted the stripes and they are perfect. 5 parking spots was less than $150. Very reasonable cost (tape and paint, remove tape).
A couple months ago I had a clogged bathtub drain in a different property. I thought it was a simple issue, so I called the first plumber I found on yelp to snake the drain. They had an advertisement $100 to clear any drain or it's free - sounded like a pretty good deal to me. They come out and say that the p-trap and about a 2-3ft section of drain pipe needs to be replaced, apparently there was an issue with it. Ok, no problem.
After talking with the "manager" to form the quote, they call me about 30 minutes later and say they can do the job for $2,500. I asked them how long it would take them to get it done. "Not long, maybe a day, but probably a half a day" - aka a few hours. I asked for the breakdown of labor vs materials, and they refused to give it to me. Obviously materials were very minimal, less than $100.
I obviously didn't accept the job and was able to get one of my guys out there a couple days later. He completed the job in about 4 hours, and out the door it cost me $450.
Quote from @Greg R.:
Quote from @Dan Heuschele:That sounds very reasonable Dan. I'm all about paying someone for their work and being reasonable. I'm not looking to rip anyone off or have people work for free. However, there are a lot of predators in the handyman/ contracting arena that are looking to make a meal on everyone that they work with.
Quote from @James Hamling:I agree with a lot of what you say especially about time versus money and the associated costs (I covered this in my earlier response). I also agree labor costs are higher than hourly wage as you explained well.
However, 1) My PM, in the same town, would do that list for less than 50% of that quote. 2) My PM does not mark up the maintenance/repair costs. They charge a PM fee that includes managing their team for maintenance/repair items.
I am OK with both scenarios: 1) charge a little extra for flat PM and not charge for the various items where they could itemize the smaller costs or 2) charge less for the PM and charge for the various itemized smaller costs.
In the end the PM is likely making a similar amount of money as PMs (contrary to many owner views) are not getting wealthy just on their PM fees. As long as all parties understand what the costs will be (i.e. maintenance markup is documented) there is no wrong approach.
Note my PM has their own maintenance employees that are competent. I can make work orders that are not just maintenance. For example, last month I made a request to paint stripes for parking because vehicles were parking in positions that did not allow optimal use of the parking lot. In about a week, because it was low priority, they painted the stripes and they are perfect. 5 parking spots was less than $150. Very reasonable cost (tape and paint, remove tape).
A couple months ago I had a clogged bathtub drain in a different property. I thought it was a simple issue, so I called the first plumber I found on yelp to snake the drain. They had an advertisement $100 to clear any drain or it's free - sounded like a pretty good deal to me. They come out and say that the p-trap and about a 2-3ft section of drain pipe needs to be replaced, apparently there was an issue with it. Ok, no problem.
After talking with the "manager" to form the quote, they call me about 30 minutes later and say they can do the job for $2,500. I asked them how long it would take them to get it done. "Not long, maybe a day, but probably a half a day" - aka a few hours. I asked for the breakdown of labor vs materials, and they refused to give it to me. Obviously materials were very minimal, less than $100.
I obviously didn't accept the job and was able to get one of my guys out there a couple days later. He completed the job in about 4 hours, and out the door it cost me $450.
Good, reasonable priced, licensed plumbers are a unicorn find in San Diego. I share your frustration.
If you find one, they can get too busy and you need to find another.
I had one that took a job but had not paid his contractor fee. So the permit had to be filled out owner builder even though it was not. I found out late (like plumber had forgotten) and was too busy to raise the stink that I should have. Basically an unlicensed plumber masquerading as a licensed plumber. I have other such stories including one desiring $500 to fill out paperwork associated with the effort after having provided a quote for the job (I did not use him and will not use him again).
If the job can be done by a handyman, it is far cheaper than licensed plumber.
Good luck
#3 Real Estate News & Current Events Contributor
- Real Estate Broker
- Twin Cities, MN
- 4,425
- Votes |
- 3,462
- Posts
#3 Real Estate News & Current Events Contributor
- Real Estate Broker
- Twin Cities, MN
Quote from @Greg R.:
Quote from @James Hamling:
Ok people, I am going to pull back the PM curtain in hopes to dispel some of these ridiculous assumptions and misconceptions. @Nathan Gesner has already laid down some of this but seems few are picking up on it.
First of all, all this BS saying a PM is out to get someone because "oohh, aahh, gonna get-em for a few hundred on this" is just asinine. NO! We have 0 interest in drumming up some big time-suck and distraction to drive what is truly a very small amount of added $.
Here is the reality. As a legit PM Company our #1 focus is TIME EFFICENCY. And that makes profits for EVERYONE.
Someone has a ~$4k improvement work to be done. So what happens in efforts to get 17 bid's to try and save $1k, 25% off the job. THAT TAKES TIME. Easily expect it to burn up an extra month just doing that, because in case you havn't noticed vendors are not sitting around with nothing to do, THERE BUSY, more demand then supply for vendors, so yes, that's a month burnt up on feeling out prices. And with rent's at $2k, congratulation, you just threw away $2k to save $1k, a 100% NEGATIVE ROI.
Often we Pro PM's have to educate our novice Landlords of this math paradigm, it is called Opportunity Cost. The cost of time, in exploring discount potential. We have to guesstimate the legitimacy of that exploration, how much it could save, and then cost of time to do so. Ever hear of the math that if Bill Gates saw a $100 bill on the ground when walking into work, it would cost him almost $200 to stop and pick that up? Yup.
As a Professional PM Company we are focused on efficiency and performance, FULL-STOP. It's literally in our name; PROPERTY MANAGEMENT. No, we are not focused on making $ on maintenance, if we were, we would stop doing PM and just be a Remodeling Company! More then enough work to do it.
Maintenance is a big pain in our azz, arguably the #1 pain in our azz because it is blocking our ability to get a property leased which we DO make $ on, and in maintenance we have all this brain-damage and time-suck of getting vendors out, scope of work, communicating with owner etc etc.. The 10% fee on it is to MITIGATE our time-suck. Do the math, it's $400 on a $4k project, exactly how many labor hours do you think $400 covers? And before any idiotic comments of oh $400 covers a lot for a $15hr person NO, it doesn't, because after all the lovely costs of employment a $15hr person DOES NOT COST $15hr, there $30+. Don't believe me, ask an accountant, there is like 14 tax's paid on employees or some ridiculous #, I don't count em anymore but it's a list, a loooong list.
So most often even after a 10% fee we are loosing $ on maintenance. So yeah, we want that done and out of our lives and back to the business ASAP.
Our focus on maintenance is EFFICENCY. The cheapest person is ALWAYS a hack. There going to do crap work, mess things up, take longer because we need them back out 3 times to fix what they messed up, and it ends up costing MORE. The most expensive is some retail shop, who doesn't "get" rental property, and the property owner (rightfully) will be up in arms over the price blowing up our e-mail/phone demanding answers and guess what, will quit services so we did all that for nothing because we make $ on PROPERTY MANAGEMENT.
The answer is somewhere in the middle. Again, our EFFICENCY focus. That combination of quality and price, better known as VALUE.
So yes, when we find a VALUE service vendor, we build relationships, reoccurring services. We come to a place of getting them out to a property 1st, vs 17 bids. Because again, 17 bids LOOSES $ FOR EVERYONE.
And here is the deal, from the worst novice clients I hear the #1 stupid answer of "when I did it myself it only cost ___" well DUH, of course it did, your "guy" was FREE! Nothing can compete with free. So yeah, it's gonna cost more.
And here is the thing, EVERY Pro PM Company I know, mine included, is more then happy for a Property Owner to SELF-CONTRACT the work. Please, have it, and thank you very much. Again, we are a PM Company NOT a Remodeling Company. Our maintenance service is for your CONVENIENCE, it sure as hell isn't for ours, it's our #1 loss leader. Again, the time-suck of it all.
Getting quality vendors today is hard, wicked hard. The #1 reason I loose vendors today is because they tell me they have crossed over into more retail and are just flooded with high paying retail. I applaud them, it's great for them, I don't blame them 1 bit, I would too in there shoes. It's very hard for us Pro PM's to get the quality vendors, it's constant effort at recruiting because we basically have to find rising star's over and over and over again.
Reality is our best most profitable operations is a property with LT tenant in place, things humming along on cruse control. THAT's efficient time. And end of day that is what we are selling, TIME. We have a locked in $ with a landlord which means our internal labor time is locked, to make $ we have to use less to create a profit margin, and enough to mitigate those times when it's more. And to RETAIN clients.
FYI, we have ~2,000 properties under management today in the T.C. market center, that is where I am coming from in things. A person will never get close to this mark ever without being a master of efficiency for all. Efficiency = $'s.
Our goal is to get the most $ for rents on a property, maki it as passive as humanly possible, for as long as humanly possible. And when maintenance items come up, to keep them to ROI as much as humanly possible, keep it EFFICENT as humanly possible, and get back to the primary ASAP. And RETAIN clients which requires ROI for our clients. It's just that simple.
Hey James, good to hear from you. I agree with a lot of what you said. However, there was no time efficiency in this one. I just started the relationship with this PM company immediately had a 30 day notice when we started. Tenants got out toward the end of March, it took them about 2 weeks for their maintenance company to get out and for them to get the approved quote over to me. I wanted to give them a chance to do their thing without being involved, so I just sat back and watched.
However, I typically do a walk through on the unit a couple weeks prior to the tenants leaving and then coordinate with my team to start the work literally the same day or maybe 1-2 days after the tenants are out. I usually have units ready in less than a week from when the previous tenant moved out. Further, I start my marketing several weeks prior to the current tenant leaving. I've filled units in 2-3 days before. Not easy, but it's very possible. I've done it multiple times.
My team is in there now and will be finished tomorrow. I will post a full breakdown of what I paid for everything, full transparency... we'll see how reasonable (or not) their quote was.
However, I did have a question for you James. You mention that you're not a remodeling company, and that you don't like coordinating work, it's a loss leader, etc. I find that bizarre. I totally get that hiring a single company to do all of your work might be the easiest thing for you to do. However, don't you feel that you have a responsibility to your clients to get them good pricing on maintenance? Or is your stance that it is what it is, and that you're not concerned with what the owners have to pay to get stuff done?
As I mentioned, a Pro-PM Co. does of course care about the cost of maintenance, but it's not with tunnel-vision of only price. There is price, quality and time to completion. All 3 things have to best align, because a really "cheap" vendor who takes 2x-3x what others would to completion is no longer "cheapest", time is $. And a vendor who shows a lowest bid $ but does horrible work, and has to go back 3 times to fix what they messed up, again that is not a "worth it" vendor.
From my seat, we don't really care if it's 1 or 4 vendors to get a project done, less is more convenient but only that, convenient. What matters is; price, time, quality of work completed.
Price wise, I most often seeing the 3 factors meeting (price, time, quality) with a vendor who's project pricing is somewhere in the middle of bidding. Not the cheapest and not the most expensive.
And here is the thing, not all PM's are PRO-PM's. Especially now, there was so many "Pandemic Agents" who now are falling flat and desperate for an income, and I am hearing the messaging of "just get into PM, it's "easy"". And yeah, there going to be all kinds of interesting right. For every PRO-PM there is probably 10 NON-pro's in any given market, that's just the reality of it. All I can do is share how it is NORMALLY done by a Professional, established PMc.
On the Remodeling side, no, no PMc can double as a Remodeling Contractor no matter how much of a convenience it is for clients, there is a reason Remodeling Contractors have a ~40% profit margin. First off, we don't have the insurances for that, and it costs $ for it, PMc's don't have the project management software, project management staff, tool's etc.. I get where your coming from, you'd like to get a remodeling contractor for free, via a few hundred PM monthly fee. It just doesn't work that way. Again, keep in mind we PMc's have to pay for labor and a few hundred bucks per month does not go far. A remodeling project can easily eat up dozens of management hours, $110 per month does not pay for dozens of labor hours.
Now looking at this relationship of revenue and labor hours available, I get it how one could think "oh, the PMc just won't care, they will just get what's easiest for them" and some foolishly do this BUT remember all this is wrapped up in the box of CLIENT RETENTION. If we don't have clients, we have $0 in revenues right? So, if a PMc "just doesn't care" they will loose that client, done, gone. That's the incentive and prod to produce results. The impact on rev/labor $ is the incentive to be EFFICENT in it all.
So in truth, the life of a PMc is threading the "perfect" tiny path where both meet. It's a lot easier said than done. Retaining clients, and operating profitably.
always get at lease 2 or 3 quotes