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The High Cost of Cheap Labor: A Gate Story

Welcome Back Real Estate Investors!

One of the most valuable services that we provide to our clients as the nation’s largest property management company is the recommendation of professionals for maintenance and repair work.  We have an extensive network of handymen, plumbers, contractors, electricians and pretty much anything else you need.  We know they are good because we have worked with them before and they have done good work and are always on time and courteous.  If we received complaints about work then we no longer use the company.

high-cost-of-cheap-laborOf course as we all know you get what you pay for, and so quality workmanship is always going to cost more than bargain basement fly-by-night companies.  But if you have not been a real estate investor for long you may not have learned this incredibly valuable lesson.  The truth is that in almost every case if you go with a cheap company you end up spending more in the long run and having huge headaches and stress.   So lets forget the damaging effects that stress has on your health because that would push costs into the tens of thousands to unlimited depending on your heart condition.  Lets just consider the basic costs as we recount a story about a fencing company that one of our clients made the unfortunate decision to hire against our recommendation.

Once upon a time…
in a home in West Miami-Dade a front gate was rusting and badly in need of repair to ensure the security of the property.  The owners had great tenants (provided by their property management company by the name of Real Property Management Miami) and they wanted to keep them happy by getting them a nice new front gate.  The owners notified RPM Miami who proceeded to secure them 3 different quotes from reputable companies.  Each of the quotes came in around $2200 but the owner was dismayed.  He had spoken to a friend who knew a friend that had a guy that could do the work for $1200.  Sound familiar?

bad-adviceThe experienced managers…
at RPM Miami pleaded with the owner not to go with just some guy who was not licensed or insured because he would certainly run into problems.  But the owner was adamant about saving money and decided to go with the friend of a friend guy.

All went well at first…
the owner gave the guy a 60% deposit and the guy said he would return in two weeks to install the gate once it had been completed.  Two weeks later the guy said it the gate was done but that it still needed to be painted and that he would install it a week later.  A week later the gate was painted but still needed to be finished in the over.  A week later was Father’s Day week and the guy couldn’t be reached.  Now the owner was getting a bit frustrated so he started calling the guy every couple of days.

Finally…
the guy showed up to install the gate to the tenants delight.  The guy removed the old gate and began installing the new gate.  But then…

Uh Oh!
the gate was not measured correctly and could only be partially installed, leaving a gap where not only could outside intruders enter, but the tenant’s dog could no longer be let out in the back yard.  The guy apologized and promised to return two days later with a new correctly sized gate.  The tenants were furious because their dog was let outside constantly as they had a new baby and didn’t have time to walk the dog.  The owner assured them the work would be completed in two days.

Three weeks later…
The guy was not answering his phone and had basically disappeared.  The tenants were completely furious and threatening to leave the property and sue for their security deposit because the house they rented was supposed to have a secure backyard.  So the owner swallowed his pride and emptied his wallet to hire one of the original companies suggested by RPM Miami.  The work was completed within a week and the tenants were happy but the damage had been done.

The owner lost $700 and countless amounts of time in addition ruining his relationship with the friend who knew the friend who knew the guy.  The guy never appeared again and the owner gave up on pursing a small claims lawsuit at the advice of his attorney.

Here is a shot of the finished gate…

finished-gate
This is just one example of countless stories we have encountered in our decades in property management that prove time and time again that cheap labor comes at a high price.

Happy investing and we will see you next week!

We are pledged to the letter and spirit of U.S. policy for the achievement of equal housing opportunity throughout the Nation. See Equal Housing Opportunity Statement for more information.