1. If you’re able, include renovation or repair services in your property management offerings. You’ll want to have control over as much as possible—accounting, renovations, and such—because they’re potential revenue streams for you. This is always true unless you get a percentage of payment from repairs. For example, some companies charge vendors 10 or 15 percent, but if you do it yourself, the margins are higher.
2. Always include a contingency factor. Add to each project (when you’re starting out) 20 percent more than you had budgeted. This “fudge factor” covers you if you get in over your head.
3. Get everything in writing—everything. You want to have a detailed scope of work, your payment schedule, and all terms in writing. Get signatures, too! That way, in the worst case scenario, if you have recourse, you have grounds to do so.
4. Guarantee your work. If you want to have a successful business—peer reviews are vital in today’s marketplace—so making your clients happy by going above and beyond is important. If your client is not happy, it’s going to impact your business long term.
Side note about guarantees: You are going to mess up some percentage of projects, so you need to have a 5 to 10 percent “screw-up factor” so that you can guarantee projects. This is once you have learned your margin better. At this point you don’t have to put in your budget a 20 percent contingency factor (see above). At Serene we don’t leave our clients hanging. So, for example, if a client’s floor starts bowing after a few months, we come in there and swap it out at no cost. (For a rule of thumb on length of time for guarantee, Serene Communities guarantees projects for 12 months.)
This guarantee goes a long way when we’re renovating homes and selling them, too. That way if the a property owner has a limited budget, they know they can pass the buck to us—because we guarantee the repairs.
Story: An example of when we followed through with a guarantee
During one home renovation project, we hired a few guys to install new drywall. We didn’t realize, however, that there was mold behind the existing wall. To our chagrin, the guys we hired had put new drywall over it! The problem was that we didn’t know this. When we did the inspection the studs were no longer exposed, making it impossible to see the mold.
Then, after we completed the project, we got slammed with the bad news. We had sold the home and signed the contract with the owner. At that point, though, the owner noticed that the drywall was bowing. Then, he gave us the call. Since we had guaranteed the home, we were liable for it.
In the end, we were out $2,500 to fix it. We learned the hard way to be diligent checking and assessing the jobs we’re doing. I advise the same to you, so you don’t have to pay the same cost I did to learn that lesson.
Was it worth the guarantee even though we had to pay? Yes, because we stand behind our work. We continue to get new business because we right our wrongs—and everybody makes mistakes.