In the rental profession, the inevitable day to choose or lose a contractor comes. Having the right contractor on your vendor list is paramount, and the decision on who to use can make or break your profitability and tenant relations. Consider giving this 5-step approach a try when you need to hire or replace a vendor.
Review Your Current Vendor List
Every new landlord or property manager will need to create a list or review the one inherited. Vendors should be a part of your support team of trusted individuals not a source of frustration or concern. Perhaps your vendor pricing, availability, workmanship, or attitude is less than desired. If you are new to the field or are simply unhappy with your current vendor list, now is a great time to get started.
Readiness is vital in the life of property management, and putting off tasks can have dire consequences. A proactive approach to reviewing contractors is recommended. It’s important to work into your schedule a routine checkup confirming vendor license status and insurance coverage. Ask for a new W-9 tax form if any information has changed such as an address, entity type, name change, etc.
Set Clear Goals
In the dark ages when a plumber was needed immediately, you would turn to the yellow book. Today a quick internet query is all that’s needed. Often, in both cases, the first one on the list or the one with the most eye-catching ad gets the job. That is the equivalent to playing darts with your property investment and tenant relations. It might turn out ‘ok’ but you also might poke an eye out.
Shoot for accuracy by setting clear goals and executing a thorough vetting process to refine your vendor pool.
Setting goals is like crafting a mission statement. Who will these vendors serve? Take into account: the property type, your budget, skill requirements, and whether the vendor aligns with your principles and purpose. On that note, consider reviewing your mission statement so you can align what you are looking for in a contractor with your overarching company and/or landlord goals.
Unless under contract, you are not locked into a specific contractor. Additionally, most don’t typically require exclusivity so you are not limited to one player in a category. In my property management past, I would keep a vendor list three deep per category, categorized in order of preference.
Having two or three on your list per subcategory can be a life-saver when your first choice isn’t available. Don’t overlook the benefit of subcategories and/or keeping detailed notes. For instance, plumber A might be great at large leak detection and pipe repair, but expensive and sloppy with a quick toilet seal replacement. It doesn’t mean they are off the list, just prioritized for their specialty.
Conduct Vendor Screening
Ask and you shall receive! Call up your insurance carrier, local businesses, colleagues, associations, and friends to ask if they have any vendor recommendations. These referrals can save you time researching but remember to do your due diligence before hiring any contractor to care for your assets.
Vendor screening is similar to hiring an employee, you’ll want to apply careful attention to the interview process. At the minimum conduct an interview on the phone, but preferably have them walk the property with you. Discuss scenarios that typically occur and how they might handle it. On-site you can ask them what areas of concern or interest they notice–or better yet, they may offer that information without prompting.
When reading online reviews (and I recommend you do), watch for fake or over/under inflated remarks. Read between the lines! If you do find one or two reviews outside the norm, don’t be afraid to ask the vendor how they handled the incident.
Remember to ask for references, certifications, and licensing information. Verifying that information is vital. Call every reference and confirm all certifications and licensing. A little work at the beginning is the foundation in a great partnership and keeps you protected.
You could choose to give them a small task or project, allowing them to earn your trust as you evaluate their work. Or, if you are not comfortable, go with your instincts and move on to vet another. You might also ask yourself if one hundred percent certainty is necessary; perfection can sometimes hinder decision-making.
Keep in mind if a vendor fails to perform, performs sub-par work, costs more than quoted, ect., you have the power to reevaluate participation on your team. You will be in a state of readiness and can take the best course of action for your property and tenants at that time. Don’t let the hypothetical scenarios stop you from creating the optimal vendor list today.
Take confidence in your efforts. You’ve done your research, sized up their capabilities, read the reviews, estimated costs for services, and verified all information provided. It’s decision time.
If they get a coveted spot on your list, fire away and ask them to send you a current W-9 form and copies of all licenses and certifications to keep on file. Then, categorize and prioritize them on your vendor list.
Don’t risk it! Ask your insurance carrier if you need to add to your policy coverage for vendor issues and/or injury. Have contractors provide documentation of the coverage they carry.
Once established, vendors are now a part of your team so take advantage of their insider information. Their shared knowledge may prove invaluable for conducting routine maintenance or in disaster recovery planning.
Lastly, remember to promptly pay invoices and go the extra mile to show your appreciation for their contributions. The less vendor turnover the more time you’ll have for other important tasks.
Having reliable and trusted contractors on your side, you can put one more worry away knowing that your assets are in good hands.