Investors need to work with tradespeople effectively to ensure good repair or renovation work on their properties, so Miriam Bell looks at how they should go about doing that and what the resulting costs might be.
1 August 2020
It’s part of the property investor’s dream to add some value to a property through a smart renovation job. At the same time, it is a critical part of an investor’s job, as a landlord, to provide a good quality, safe and healthy rental property for their tenants.
And that means effectively engaging with tradespeople – on renovations and/or repairs and maintenance - to achieve those aims and to meet their responsibilities.
Yet a frequent topic of conversation for investors, both online and in person, revolves around tradies: what constitutes reasonable costs, how to tell if a quote is a fair one, how to find a good tradie, and so on. Often the views expressed are disgruntled ones.
One reason for this is that, traditionally, Kiwis are DIYers. As a nation, we like to think we can do these things for ourselves. But, in reality, that is not often the case. Most people are not the handymen they think – and shouldn’t be trying to do work which has specialised, professional standards.
That means most investors do need to work with tradies in order to get the necessary work done on their properties to the correct standard.
So we thought it was timely to have a go at compiling some information on what the estimated reasonable costs of some standard tradie jobs are. We worked with Builderscrack.co.nz to do this and you can see our list in the sidebar which accompanies this article.
But we’ve also expanded our thinking around this. In this article we take a look at the critical factors that investors need to consider when selecting tradies, how to assess and understand quotes, and discuss what to be aware of when working with a tradie.
For investors, there are two levels on which they need to engage with tradies. One is where they are renovating to add value to a property. The other is where they are carrying out essential repairs and maintenance.
IFindProperty’s Nick Gentle says that when it comes to a renovation, investors need to think about what they are looking to achieve with their rental property. “It depends on who you are renting to and what rent you expect and what your tenants expect for the rent they will pay. So there’s different standards for a home that you’re renting to a family as opposed to a student rental, for example.”
If you are doing a trade you start at your sale price and work backwards in terms of costs, but if you are doing work on a buy-and-hold rental any work is tied to tenant appeal and yield and how you can improve it, he says.
‘If you’re planning to rent out your property and a $20k renovation spend will amount to $500 a week, while a $50k spend will get you $520 … Go for the cheaper option’ NICK GENTLE
“There are the minimum standards that people expect in a rental. Then, there is a bit beyond that where what you can spend varies widely but it may not make much difference in terms of the rent you get. It all depends on the property, the tenant type that you want and the related standard.”
Therefore, before hiring a tradie, investors have to decide whether they simply want to bring a property up to an acceptable standard or whether they want to add value.
Gentle says that decision should determine the type of work an investor commissions as well as the quality they are looking for and the costs.
“Whatever the case it’s important that you don’t over-capitalise. So, for example, if you’re planning to rent out your property and a $20k renovation spend will amount to $500 a week, while a $50k spend will get you $520 … Go for the cheaper option.”
When it comes to repairs and maintenance, it’s a different story. Gentle says investors should set the rent and maintain the property to the level that the rent requires. That means that if you have a problem you have to fix it promptly, before it escalates.
“But, if you have sitting tenants, only do a big job, or a major overhaul, if the situation is dire or something big has happened (like a leak or the discovery of black mould) and it needs to be addressed immediately. However, remember that when you do one job – be it a repair or a reno – it often highlights what you haven’t touched. So bear that in mind: It can show up other deficiencies.”
Once an investor has established that work is necessary and that a tradie should do it, they have to select a tradie. In New Zealand, word of mouth tends to play a big role here, but there are a number of things an investor can do when choosing the tradie best suited to their job. Jeremy Gray is the spokesperson for Builderscrack.co.nz, which is an online jobs board and marketplace for building work. He recommends getting three quotes, as that is a reasonable amount to make a judgment from.
“From that point, our advice is don’t necessarily just go for the cheapest Rather you need to considerqualities like creativity, professionalism, integrity and, perhaps most importantly, their communication.
“Do they have great listening skills and ask good questions about the job, are they transparent with details, and do they create a clear understanding of what’s required? It’s important that you feel the tradie understands the requirements of the job and believe that the tradie will meet them based on the communication you have had.”
Alongside that, you can look to other sources. Gray says online reviews may be relevant sometimes, but there are better ways to get information. “Don’t be afraid to ask the tradie about previous jobs and if you could talk to the people on those jobs, ask for photos, if you can look at the sites, etc. A tradie should be happy to do that if required.
“This is a good thing to do - especially if you are looking to build a relationship. It’s important to understand what experience they have and what experiences people who have worked with them have had.”
A common complaint about tradies’ quotes are that they are too expensive. But Gray says someone might want something really cheap, but they have to realise that there are basic costs and standards a tradie has to meet.
“It also comes down to the level of finish they want. So investors need to think about what they want to achieve: is it a quick flip or a long-term rental, for example. Because that will make a difference to the job. So if a property is going to be demolished at some point in the future, then – yes – getting a cheaper job is the way to go. But if they are wanting to maintain a property for the long term, any work should be of a higher quality.”
Further, there are a number of points investors need to be aware of when assessing a quote. One is that there is a difference between an estimate and a quote: an estimate is not legally binding, while a quote typically forms a basic contract around price and timeframe. Grey says that, typically, a quote will include charges like materials, travel, and labour.
“But there may be elements of the quote that are just estimates. So it is important to query what is what, as well as establishing an understanding of timeframes. “This is critical as investors often have tight timeframes - especially if they have tenants and there are access issues. They should make sure that the tradie understands what the situation is. Discuss conditions and variances and how they could impact. It’s also important to be sure the choice (and quality of) of materials match the type/age of property.“
Be aware that a contract is legally required for work over $30,000, he continues. “But it’s a good idea to have a contract for any job, even if it’s just a quote detailing the various costs and timeframe for delivery, along with any other details agreed – like deposits (which shouldn’t be too large) or milestone payments to ensure the risk is shared between both parties.”
Investors also need to realise that prices will vary depending on the timeframe and the quality of finish. They are also affected by location and the qualifications necessary to undertake the work required.
Even if price is all that’s important, Gray says investors should question low quotes before proceeding with them. “In many cases compromises may be made on quality of materials and work - and it may end up costing more in the long run.”
What To Watch Out For
Finally, investors should be careful and discerning as there are things to watch out for with tradies. Gray points to poor or delayed communication, a reluctance to talk through job requirements and bad reviews as warning signs.
But he also says investors themselves must have realistic expectations about the work they want and are willing to pay for. For example, if someone wants to repair a dry rot hole in a wall, they could either replace the wall which will be an excellent finish but at a higher cost, or they could just plaster and patch which won’t look as good but will be cheaper.
“If someone goes for the cheaper option and is then disappointed with the result because they think it is too rough, the problem is the perception issue not the intent or work of the tradie. Remember you can’t get gold standards for peanuts.”
The best way to avoid problems is good communication. Gray says it’s about creating an understanding for the client of what they can expect the job to look like at the end. “It’s also about the responsibility of the client to manage their own expectations and enquire as to what the finished standard of the job will be. And if they are looking for a particular finish then they have to tell the tradie and make sure the tradie has priced it accordingly.”
So set some clear guidelines or ground rules from the beginning so both parties know where they stand, and how they can both best operate, he says. “We find that disputes usually come when both parties have failed to engage at the start. It sounds logical. But it’s the Kiwi culture to be laidback and accepting: asking all sorts of questions and setting conditions can feel weird and full-on. But it’s not and it’s necessary. Communication is the key to success.”
The Cost Of Keeping Rentals Up To Scratch
With the help of Builderscrack.co.nz, we’ve put together a list of the standard repair and renovation jobs which most commonly crop up in the upkeep and improvement of rental properties. They’re divided into the following categories - maintenance, Healthy Home standards, and renovation – and they are broken down by trade.
Alongside each job, we’ve put an estimated cost range of what the job should reasonably cost. But it’s important to note that costs are also dependent on a wide range of factors. They can be affected by variables like location, weekday or weekend call-out, qualifications, unknown extent of job entailment, and the quality of finish.
– General maintenance
– Healthy Homes standard
A handyman can carry out the following tasks: (note that larger jobs will require a specialist which is given in brackets).
– Attend to (battery operated) smoke alarms (electrician) ($100 - $200)
– Clean paths, decks and surfaces ($150 - $400)
– Remove item from insinkerator (electrician/plumber) ($150 - $250)
– Unblock sinks or toilets (plumber) ($100 - $400)
– Replace patch of carpet (carpet-layer) ($100 - $300)
– Tidy up garden (gardener/landscaper) ($100 - $300)
– Repair tiling (tiler) ($200 - $500)
– Replace carpet or lino (carpet-layer/ floorer) ($1,000 - $3,000)
– Plaster and paint walls and ceilings (plasterer/decorator/painter) ($1,000 - $4,000)
– Install new curtains or blinds ($200 - $300)
– Refresh landscaping (gardener/ landscaper) ($3,000 - $6,000) Builder.
Builders can do all handyman tasks, but are typically better suited for:
– Detect and stop draughts ($100 - $1000)
– Install ceiling and underfloor insulation ($1,500 - $4000)
– Repair cracks and holes in roof or external cladding ($250 - $1,000)
– Upgrade wall, ceiling and floor linings ($1,000 to $5,000)
– Install handrails and balustrades ($500 - $1,500)
– Renovate kitchen ($5,000 - $20,000+)
– Renovate bathroom ($5,000 - $20,000+)
– Convert garage ($10,000 - $30,000)
– Unblock pipes or drains ($300 - $1,000)
– Replace hot water cylinder ($3,000 - $5,000)
– Fix leaking taps ($100 - $500)
– Clear spouting and storm/wastewater drainage ($300 - $1,500)
– Repair stove elements ($150 - $400)
– Fix broken light ($100 - $300)
– Clean and service air conditioners, heat pumps and fireplaces ($150 - $300)
– Attend to (mains power) smoke alarms ($200 - $400)
– Install bathroom, kitchen or range hood ventilation to outside ($500 - $3,000)
– Install visibly safe power outlets and light switches ($500 - $2,000)
– Install safe, fixed and effective heating ($1,000 - $3,000)
– Install underfloor heating ($1,000 - $3,000)
– New lighting ($1,500 - $5,000)
– Fix broken windows ($150 - $1000) + Retrofit double glazed windows ($5,000
– $20,000 depending on solution)
– Change locks on doors and windows ($150 - $300)
Typically an inspector would look at a variety of aspects of the building not limited to:
– Assess for mould
– Ensure building is structurally sound
– Assess moisture and drainage
– Check plumbing and electrical age and condition
– Test built in appliances
– Report on condition of various building components An inspection will typically cost between $300 - $1000 depending on detail.