Tips On How To Build Your A-Team
When it comes to property maintenance and improvement, gathering a top team of professionals around you is the key to a winning formula, writes Jeremy Gray.
31 July 2023
‘Cheap, fast or quality: pick two” is many trade professionals’ favourite saying. In project management it has the drier title of triple constraint theory. The basic idea is you can’t have everything.
When it comes to property maintenance and improvement, getting this mix right is key to growing rental returns and equity without over-capitalising. Every informed investor will have their own strategy, from just keeping on top of basic maintenance to developing properties for rental and/or capital gains.
Developing your strategy is the first critical step, the second is less clear: how to build your A-team of professionals to help you execute.
To realise your goals, work on investment properties needs to be carefully managed, especially navigating the tight margins created by our current economic climate. Reducing outgoings can balance the books in the short term, but underinvesting in maintenance can compound problems and costs in the long term.
Adapting your strategy with the times is crucial. This involves having a team of professionals that understand your strategy and will work with you to keep costs controlled. It’s arguably just as critical as meeting the needs of tenants and your balance sheet.
So how do you build an A-team of pros?
With property maintenance and repair it’s key to get a good balance of improving rental returns and equity, without over-capitalising.
“The essence of strategy is choosing what not to do” – Michael E. Porter
Your investment strategy is at the core of your property maintenance and improvement plan. Knowing what you’re not doing is key to planning what you will do.
At the simplest level, keeping on top of general repairs and maintenance is a base investment to preserving equity. It’s pretty hard to lose money on performing basic repairs; small problems generally become exponentially more expensive to repair over time and typically faster than rental returns.
At the other end, redevelopment has bigger risks and tighter margins. The team you’ve chosen to execute means the difference between your project being a commercial success or failure.
What is the overarching objective of the work? Tying your objective back to cost/return goals is important. If unsure about the scope of the work, that’s fine. Most work has a scoping and inspection component which is handled later on.
Some examples of work type and objectives:
- Roof inspection/maintenance and repaint – basic maintenance to preserve equity.
- Fix shower leak – basic maintenance to preserve equity.
- Inspect and repair/reclad south facing exterior – basic maintenance to preserve equity.
- Repaint interior – increase attractiveness to increase rental return.
- Convert second living area to bedroom – increase rental return.
- Add second dwelling on site – increase rental return and equity.
- Property makeover (repaint, flooring, garden tidy-up, cleaning) – increase value ahead of sale.
Clear Time Frame
By getting clear on the time frame we fix one part of the triple constraint, and the time frame is the easiest.
Consider these factors when getting clear on time frame:
- Increasing cost of repairs – roof and cladding issues, water leaks.
- Obligations to tenants – certain repairs must be done within a reasonable time frame.
- Opportunity cost – property is empty until work completed.
- Material availability – less of a problem at present but has been recently.
Generally tradespeople love clients who set out clear outcomes giving them the chance to present the options on how these can be achieved.
“You don’t know what you don’t know” is something that most homeowners soon discover when they scope up their own work and begin talking to tradespeople. When tradespeople hear “I just want this done” (often with a price attached), it sets off alarm bells. So how does a property owner get clear on the scope without expert knowledge?
The key is to get clear on the outcome. Generally speaking, tradespeople love clients that set clear outcomes and offer space for them to present options on how. Outcome is basically quality in the triple constraint model. Some factors that make up a clear outcome are:
- quality of finish
- materials used (high or low quality)
- size of the job
- in terms of repairs, how long you expect the repair to last
- access, timing and noise constraints that must be considered
- if you want specific people to work on specific parts (for example, your own plumber for a bathroom renovation).
Another favourite saying in the trades is: “The price is the price.” One of the mistakes often made is property owners setting a budget for repairs before they’ve thought about work type, outcomes and time frames. For a lot of trade work there are specific standards which are non-negotiable, but there is also a substantial amount of work where there are different approaches or techniques that could be used and have variable costs. Instead of looking for the lowest price, look for the best value.
When putting your work out for quoting, you’ll want to clearly communicate:
- The work type: This helps tradespeople frame your needs, and feeds into the outcome you’re looking for.
- Your time frame: Including how much variability there is in it. If a tradesperson can’t work with your time frame from the start, there is no point in getting them to quote.
- Desired outcomes: Provide all the details you have.
Depending on the size of the job and other circumstances, this may happen over the phone or on-site. Feeling heard is important. Gauge how the conversation feels for you and trust your instincts here. If you don’t feel like your outcomes are being listened to, then make a note. It’s unlikely things will improve once the job starts.
As a rule, only ask for a quote from tradespeople who you’d be happy to do the job based on the rapport you’ve established. It’s OK to say, “I’m not ready for you to quote yet.” This saves everyone time.
Ideally you’ll want at least two quotes but be mindful of the time it takes for tradespeople to quote. For simpler jobs, two is generally sufficient. For more complex jobs with multiple approaches, three is ideal.
Ask that the tradesperson details time frames, materials, payment terms and conditions in their quote. A quote is a legally binding document that forms a base contract for work under $30,000. If the total price is over $30,000 a dedicated contract is required by law.
The two main ways to charge are charge up and fixed price. A fixed price is exactly that, a fixed price to complete the scoped work (given in the quote). Charge up is an hourly rate (often given with an estimate of hours), with all other costs associated with the job added on top. Fixed price gives greater certainty over the total cost, while charge-up allows for more flexibility.
Ideally, you’ll have two to three quotes from tradespeople, any of whom you’d be happy to work with.
If the prices you’ve received are similar, look at quote details and terms to see who you feel will work best for you. Consider your interactions through to this point. Were they prompt? Did you feel understood? Did they have high attention to detail? These are all positive signs.
If the prices you’ve received vary greatly, work with the high and low offers to understand how they’re priced:
- A low price can be due to innovative problem solving and careful diligence. It can also be due to corner cutting and a poor understanding of the desired outcomes. It’s critical you identify which scenario you’re dealing with before making a decision.
- A high price can also be due to not understanding the desired outcomes. Maybe they thought your time frames were less flexible than they are, or that you wanted a higher quality finish than you do.
It’s good management to understand what’s made up the price and why, and this helps inform which truly is the best value, over simply the lowest price.
Once work begins give your tradesperson space but keep your phone handy in case they need to consult you.
Once you’ve agreed to move forward with a quote, keep in touch.
- For smaller jobs in the near future drop a message the day before checking that everything is on track.
- For larger jobs, it might be appropriate to have one or more site visits and catch-ups before the job moves ahead.
Once work is underway it’s important to give your chosen professional space to work but keep your phone close in case they need to consult you. Let them know it’s not a problem to reach out for anything. As a general rule, daily check-ins are common for mid-sized jobs; more for complex or difficult to scope jobs; and less for larger or simpler jobs.
Pay On Time
Nothing says thanks like an invoice paid early. If you’re impressed with the work done, let them know. The key to building your A-team is building trust. If they’ve nailed the brief, be sure to share that.
Likewise, if something hasn’t met your expectations, open a conversation about it. In most cases an unforeseen constraint will have needed to be worked around. Ideally this would have been discussed at the time, but if not it’s important to raise. Discuss what could have been done differently or better next time and ask for the same feedback from them.
To build your A-team you want to develop trust and understanding with a core group of trade professionals. You know they give you great value, but more importantly, you know they understand your strategy, and the outcomes you need to achieve it.