Vendor & Contractor Management in Multifamily in a New Marketplace
“This aint workin“ said Tony the contractor. “I can’t make any money doing this work for what you are paying!” After his grandiose statement, he proceeded to leave four apartments partially finished and stiff us about $4000. The worst part is that two months prior, he was referred to me from my third-party property manager. He was “starting out “a new renovation business, and I was one of the ones that actually gave him a chance.
I took a risk on him and invested my time and money to help get him started, and he left me hanging, none the less. I even bought him and his guys lunches once a week, secured ALL the materials, and at one point, even strapped on a tool belt to help finish an apartment to get it rented so he could work on “other things” Ugh!! I felt beat up.
I’m sure some of you reading this have felt the same way.
And I would do it over again in a heartbeat.
My name is Jason Valchine, and I’m General partner of a 54 unit apartment complex in Jackson MI (this story and blog is in reference to this property) . I dabbled in single family home flips while I was a was a technical salesman selling capital equipment for about 20 years, until I got serious about real-estate as a means of leaving the W2 job. I starting BRRRR’ing SFHs, (completed a few) and when I realized that was too slow, I learned how to syndicate apartments, and found and purchased this 54 unit complex we are currently doing a two million dollar renovation on. That’s where my story starts, but that is not where it is going to end. Not me.
So WHY would I do it over again you ask? Because, that is the right way. Its Christ’s way, (that’s a whole other blog) and it’s the ONLY way in today’s market to secure and retain GOOD and even GREAT workers that provide a high value. Tony the contractor didn’t provide that value and didn’t appreciate mine… but that is okay. Because the right contractor will. And they did. Now I have 4 crews renovating those apartments, and I am not paying them any more than Tony. And they are doing a better job. They are my friends, I know their family, and I am invested in them. And they are invested in me.
In today’s world d of inflation and supply chain problems and lack of loyalty, contractors and workers are getting paid more to do less, and they are still busier than ever. I often ask myself “Where have all the good workers gone?“, and the answer is not clear. There are fewer than ever, so sometimes, they have to be attracted and developed, the ONLY way to attract and retain contractors, as well as employees in today’s climate.
RELATIONSHIPS.
I know what you’re thinking, “I know this. This is obvious.” Of course, I have a good relationship with my employee or contractor. Do you know what a good relationship looks like? Maybe you did … but the past couple years, like many other things, have changed the game on the way contractors and employees (good ones) expect to be treated.
I’ve outlined four corners of a solid relationship foundation for your contractors and employees.
I’ll break it into 4 main points that I have learned the hard way, that has changed the game for our renovations, and even for my life.
#1 Find them
First, do the obvious thing and ask around in your existing relationship circles to find the person you’re looking for, whether contractor or employee, whether carpenter or maintenance guy. But pay attention around you. One of the best contractors I have I found, I found standing in line at Lowes. God will place people in your path, but he is subtle so you have to pay attention, and take action, and be open.
#2 Learn about them
Then, take an interest in them. Their families, where they live, what they like to do. Find some common ground or connection. And remember it. Take genuine interest. Don’t fake it. Regardless of what you believe, you will find something interesting about every person that walks this planet if you ask enough questions. We are all people, trying to do the same things. Make the best life for ourselves and our family’s, and if you take a GENUINE interest in people, you WILL form a bond.
#3 Invest in them.
Be generous. Pay them more than their worth. Show them grace if they make a mistake. Most people have been hurt or wronged by someone just like you, so be patient if you don’t see immediate results. My strongest contractor that I have hates people and won’t work with anyone. It took six months to get him to realize I was only there to solve problems, not blame. He finally realized I was a partner and now he is like a brother to me. I love him like family. I am even funding his first flip ,and helping him buy his first house. It’s amazing.
#4 Don’t give up on them.
Finally, make sure that when things get tough, (and they will ) and they make mistakes (everyone does) you don’t bail. Spend extra time talking with them and helping them become better contractors, employees, or workers. Lead, and inspire them to see the value in doing things right versus easy. Have the hard conversations, but do it gently. And remind them they are valued and you want them there for the long haul. Show them the potential you see in them. Help them see the vision you see where they are elevated to higher levels they ever thought possible. Fuel it.
4.1 Be ready to get burned.
At some point, you will get burned. No matter what you do, someone will quit, or steal, or destroy something …. Expect it. People are flawed, and we live in a fallen, broken world. It doesn’t mean we shouldn’t get upset or should allow people to walk on us. But sometimes it happens. And when it does, just remember WHY you are doing what you are doing. And remember they are people, just like you. Personally, I feel bad for them . I pity those that fell they need to steal or hurt others to gain or protect themselves. I refuse to share in that mindset. I try to help them the best I can but eventually we have to move on if someone won’t let us help them help themselves.
Bringing this around, if you follow all of these tips, or even some of them you, will start to see BULLETPROOF loyalty, and rich relationships, that not only protect your buildings and tenants but also your pocketbook. When people know you care, they are less likely to steal and cheat. When they feel like they are a part of something, they will feel more obligated to protect you and your buildings like you were family. It’s just human nature. Its ownership! Being from Detroit, I’ll use a car reference about people. We are all built the same. Just different motors and paint jobs. The heartbeat and the blood you have is from the same creator they have. Keep that mindset and remember what matters. Relationships are what matter most.
If all you see is a way to get something done, or get something you want or need when you see people, you’re missing so much out of this life.
It is much more fulfilling and rewarding to genuinely take an interest and invest in someone’s life… to partner with them and celebrate their victory’s because they are your victory’s as well.
It’s not just about money.
It’s about a quality of life that is unmatched. It’s about doing something for someone that most of this world won’t take the time or effort to do. Be different. I always say “spend a little more, get a lot more”
This applies to your time and your heart. Give them a little more of it. You’ll get a lot more in return than you ever expected.
And if you don’t. …
Do it all over again.
Jason M. Valchine | Three Nails Capital LLC | Founder
P.O. Box 282, Chelsea MI 48118 | Mobile: 734.548.4091 |
Email: jvalchine@3nailscapital.com