The Tyranny of the Lowest Bid
When trying to find a contractor for your projects, you want to avoid something I call the tyranny of the lowest bid. Doing this will ensure you have all the information possible to make the most informed decision.
It’s your property manager’s job to ensure you’re getting the best prices by getting multiple bids. Because of this, we always seek out a minimum of two contractor bids for any project.
In an ideal situation, you would be getting contractor bids from people you already know and trust. However, one reason to get multiple bids is to see whether there’s a major discrepancy in price anywhere. Using two bids as an example, if there’s a giant discrepancy between the two, obviously you’ll want your property manager to investigate and get to the bottom of why.
Don’t Always Take the Lowest Bid
For many reasons, the lowest bid isn’t always the best bid.
When acting as your property management team, we know how to find a contractor. Because of our experience working with other professionals, if we get a bid that seems too low, we’re going to discuss that with you. Sometimes, some bids seem far too low for reality. Now, there could be a reason why it’s low – and that’s why we investigate these instances – but most of the time, low bids are a result of contractors not knowing what they’re doing.
Accepting that bid might mean spending time and money trying to hold contractors accountable for their initial quote. This could lead to your workers having to spend more money out of pocket, which could end up being less than ideal for us if the project ends up going far beyond the anticipated timelines as a result.
Time is money – and you don’t want to spend any more of yours than necessary. There’s always a trade-off between the cost of a property and the time it takes to get it done.
- Remember that a higher bid might also coincide with a shorter project timeline.
- In some situations, a longer timeline might make sense. However, you’ll lose rent when a property is being rehabbed.
- Choose your contractors wisely. Try to choose contractors who have a positive reputation, who you’ve worked with successfully in the past, or who are significantly cheaper – but still have a good history of getting projects done in a reasonable timeline.
Working With Contractors For Rental Property Maintenance & Rehab
To get the best results, it’s important to work with skilled laborers for many major rehab or maintenance projects. However, working with contractors can end up being needlessly expensive if you take their quotes as-is.
A lot of the time, contractors will give you a quote for one number. In our experience, we like contractors to separate the quotes from labor and materials. Contractors sometimes inflate the price of materials, so it may be better – in some cases – to buy materials from Lowe’s or somewhere similar on the owner’s behalf instead. That way, contractors and their teams can focus only on the labor, which could save you money in the long run, especially if you get discounts for buying in volume.
Working with a property management team can provide the added benefit of helping you discover where to find good contractors and make those connections for you.
Final Thoughts
The cost of rehab and maintenance on investment properties can quickly increase if you’re not careful. While we always recommend working with skilled laborers and professional contractors to ensure jobs are done right, there’s no reason to spend more money than you need to on any project.
By making smart choices with what materials you choose, weighing the bids you receive against each other, and ensuring you have many options, you can save a substantial amount of money.
The right property management team can help guide you to making smarter decisions. Our expertise and connections can open doors to solutions you may not have considered as cost-saving measures, such as knowing what materials to source elsewhere vs. which ones to let contractors and other laborers provide.
Part of making the right decisions as an investor is surrounding yourself with other knowledgeable professionals who you like, respect, and trust to ensure your property is being handled the way you want – and without any huge time commitment on your behalf.
Too often, owners can take on too much and end up costing themselves more money in the long run instead of entrusting the responsibilities to a company that knows the ropes and will care for your property like their own. That’s what we value at ROOST, and what we offer our investors for every property, every project, every time.
