The 10% That Changes Everything

[Pete Labath]

A 10% spread on a roof replacement is not a one-time event. It is money you will leave on the table, project after project.

Just this week, I received bids for concrete leveling work at a single-family rental in Illinois. The range was from $5,000 to $6,430. Same scope. Same materials. Same outcome.

Early this Spring, I got bids on a roof replacement in Wentzville, MO that ranged from $17,000 to $24,000. Same roof. Same materials. Same warranty. One contractor charged 40% more for the exact same work.

These are not outliers. They are the market, and most owners never see the spread because they never ask.

The Cost of Not Asking

That $7,000 spread on the roof was not a one-time event. It was money you would have left on the table. And if that happens on one roof, it is happening on every project where you do not check the market.

Let's do the math.

A roof replacement averages $20,000. A 10-15% spread means you are overpaying by $2,000 to $3,000 on that one project. Across a portfolio of 10 properties, that is $20,000 to $30,000. Across 50 properties, it is $100,000 to $150,000.

That is not a one-time loss. It's a recurring leak; and it compounds with every project.

A Concrete Example

On that concrete leveling project, one contractor came in at $5,000. Another, for the exact same scope, came in at $6,430. Nearly 30% more.

The higher bid was not offering better materials. They were not offering a faster timeline. They were not offering a better warranty. They were simply charging more—because they assumed no one would check.

Often, the higher price is driven by advertising and name recognition. The company that spends millions on billboards, radio spots, and Google ads has to pay for that marketing somehow. That cost gets baked into every bid they submit. You are not paying for a better roof. You are paying for their marketing budget.

The smaller, local contractor with less overhead and no national advertising campaign can often deliver the same quality work at a significantly lower price. But you'll never know unless you ask.

The higher bid was not offering better materials. They weren't offering a faster timeline or a better warranty. They were simply charging more, because they assumed no one would check.

The owner who takes the $5,000 bid saves $1,430 on that single project. That's not just a one-time savings. It's a recurring opportunity to reinvest and buffer against surprises. Every time the property needs work, the owner who checks the market saves money. The owner who calls "my guy" loses it.

The Pattern

This pattern plays out on every property and every project. HVAC replacements. Parking lot resurfacing. Deck and siding replacements. The same scope. The same materials. The same outcome. The spread is consistently 10-15%.

Most owners never see the spread because they never ask. They call "their guy," get a price, and move on. It feels efficient. But loyalty that only goes one way comes with a price tag.

The Solution

You don't need to become a procurement expert, you just need a system.

A documented, competitive bidding process does not have to be complicated. It just has to be repeatable. Define the scope. Ask three contractors to bid on it. Compare the bids side by side. Choose the best value.

That $1,430 saved on a single concrete leveling project is not an expense line item. It is real money. And over the life of your portfolio, it adds up to tens of thousands of dollars.

The Choice

You can keep calling "my guy" and hoping for the best. Or you can build a system that protects your bottom line.

When was the last time you tested the market?

If you were to benchmark your contractor costs against the market right now, would you be confident in the result?

[Richard F.]

That all sounds great...if you are in a market with an unlimited supply of vendors. Or an oversupply of quality vendors looking for jobs.

Reality is, for many markets, there are 3 or 4 tiers of vendors, from the "custom home" guys, to the one man show from a nearby town. There is NO guarantee of equal job quality. NO guarantee of product quality. And, without prior experience with a particular vendor, you have no idea how they will treat your tenant, your property, your timeline, or how legally, safely, and efficiently they will perform the job and, importantly, how well they stand behind their work! In other words, their most certainly is value in "my guy(s)" that does need to be considered, whether for you as the investor, or as the PM.

The "one man shows" come and go, but the Value Vendor keeps performing, and over YEARS, stands behind his work, and in fact the work proves out to be very proper and durable as expected. 

Certainly, having just one guy per trade is not a good strategy, but having 2 or 3, and using the one that can meet your current timeline without requiring written estimates for every job is not, overall, causing you to leave money on the table. Verbal estimates, from the site to approve actual work and avoid a surprise is perfectly fine, and I have never had a vendor refuse to agree to that. You need to build Trust...both ways with your vendors.

It also matters how many units/how many jobs you have. If you call your guy once every 5 months, you are retail to him. If you are using them weekly, you are higher priority. And if you pay them promptly and without haggling at every opportunity, you will get better pricing over the long term, AND the occasional freebie/response above and beyond. They can indeed, Make or Break you, but they are in it for profits just like you and I are, and there is nothing wrong with that. To keep them honest, for the occasional large job, I will call in other vendors for a comparative estimate. But the more estimates you get without giving the job, the sooner you will find it difficult to get either an estimate or someone willing to do any job.