Self Storage University Podcast: Episode 99

The Fundamentals Of Working With Contractors

Whether you’re building a storage facility or just getting routine maintenance completed, you can’t really be in the storage business without working with contractors. But there is a certain etiquette to this relationship that is essential to protect your interests. In this Self-Storage University podcast we’re going to discuss how to properly structure your relationship with contractors and avoid their typical pitfalls.

Episode 99: The Fundamentals Of Working With Contractors Transcript

I don't care if you're building a self storage facility from scratch or you're merely replacing a roll-up door. You've gotta understand the correct and the incorrect way to work with contractors. This is Frank Rolfe, the Self Storage University podcast.

We're gonna be talking about the fundamentals of working with those dreaded contractors who all the time are looking for opportunities to raise the price, to do shoddy work, to get paid on work that's not completed, and how you can fight back as a self storage owner to not fall into that trap.

Now, let's say on the onset that there are many good contractors out there. We have used many of them. We have people that we've used now for over a decade. But at the same time, there's another kind of contractor that lurks around the earth and they aren't out to do a good job and provide good value for your dollar. They're out to basically screw you. That's their goal. And if it's not their implicit goal, it's kind of how it all ends up turning out.

So the tips I'm gonna give you are not for all contractors. Yes, you need to apply them. I'm not saying that all contractors are bad, but these are the tips that will insulate you from those bad contractors. And if you use them fairly on all contractors, then you won't have to worry about anything. You'll never really get in trouble.

So the first thing you have to know about working with contractors is you must never trust anybody. Never have a discussion with a contractor and say, oh, well that seems like a person with a strong moral compass. Don't do that to yourself. Don't second guess the contractor. I've learned over the last 40 years that the people with the best verbal skills are often the best manipulators. They talk a big game, they never deliver, and their whole technique is to make you think, oh, they're so good, they're so honest, I don't have to worry about them.

Because that's all part of the grifting exercise that they wanna start up. So don't trust anyone. As long as you use that rule, not having any trust in anyone, then you won't get burned. Number two, you've gotta always maintain a really good paper trail, because if you ever go to court, you'll find that all that prevails in court is what is in writing. Verbal things mean nothing. Everyone in America thinks that, oh, there's so many verbal contracts. No, basically it all comes down in court to what's in writing. And even though you hope never to go to court with a bad contractor, you might. So you have to make sure you have the complete agreement that you've read it, that you understand it, that you only sign things that you have fully read and that you fully understand.

And you need to make sure you keep all these written records in your file folder, knowing it may be possible at the end of the movie that in fact, you do have to have the paper trail. So make sure that you do get one and keep that maintained. This next one is vital. You must never let your manager interact with the contractor, nor have the ability of amending the contract unless you have done so. This is a common ploy used by paving companies.

What they'll do is they'll go out to, you know, do an overlay on your parking lot. And then what they'll do is they'll go to the manager and they'll say, "You know what, manager, don't you think we should do X, Y, Z? It would look so much nicer." And the manager says, "Oh yeah, yeah, sure. Let, let's do that. Yeah, why not?" So what then happens? Well, they send you a bill for $20,000 more than what you'd agreed to.

And then when you call them and say, "Wait, what is this thing about the $20,000 upcharge?" And they say, "Oh, your manager approved it." And if you would look at your state law, if your manager approved it, then you're bound because that's your employee. So instead tell the manager, "Don't you dare talk to that contractor on anything regarding this job. And if they come to you, you immediately call me. " And you put in your agreement with the contractor that agreement cannot be amended in any possible way without you signing it. Strip the ability of the manager to cause these kinds of problems, because they can be terrible, terrible problem.

I don't know what the world record is for a manager screwing something up, but I'm sure it's huge. We've had five digit ones. I'm sure there are six digit ones out there. I'm sure somewhere out there there's a tree company that came out to trim a tree and ended up cutting down 17 of them at $5,000 each or something. So do not let the contractor interact with your manager without you having to bless whatever the new agreement is in writing.

Also, never let the mistakes of the contractor ever go unnoticed. If the contractor said, "I'm gonna go out and I'm gonna stripe your parking lot." And you said, "Okay, and be sure you stripe it all in yellow." And they come back and they strapped it in purple, don't accept that. Say, "Wait a minute here, you were supposed to do it in yellow and purple doesn't really work for me, so you need to do it in yellow." And they say, "Well, purple's, it is just as good."

"No, it's not. I want the yellow." And if they say, "Well, but oh gosh, I can't really, I can't really do the yellow right now." Then say, "Okay, well then I want half off." Or whatever you think is reasonable for them, missing the mark.

Don't let them get away with murder. Don't accept stuff. Don't let them push you and say, "Oh, well, but gosh darn it, you know, I made a little bit of an error in my measurement, or I picked up the wrong material of the thing. I'm sorry. Your one roll up door is blue and the whole rest of the facility is orange."

No, don't do that. Tell them, "No, this isn't what I wanted and I want the right thing." Maybe you'll accept a lower price on it and still be happy. I don't know. But don't let them push you around like that.

Also, never let any contractor on your property until you have a complete written estimate and including their insurance. And I would also check out their references just to make sure that they are fully legitimate. And never pay them as they go, never pay them for partial work, unless that was your agreement. Get the work done before you pay them. If they say, "Well, I kind of need to get paid today because it's Friday, I gotta pay my men. I'm only two hours away from done."

Say, "Well then go ahead and stay two more hours and get it done. 'cause I can't pay you till you're done." Oh, they're gonna be mad. Oh, they're gonna say they don't like you anymore. It doesn't matter. It's a common ploy among contractors, though. The minute you pay them, you never see them again. Your job that was two hours away from being done is never gonna be done. 'cause the minute you pay them, they're never coming back when they already have the money in their hand.

And then finally, when working with contractors, never forget this adage; it's easier to change people than to change people. What it means is all of us, we're not big enough to redeem people. We can't go in there and retrain people and change their mental issues. That's not going to work. A big company like IBM can do that. They can say, "Oh I'm so sorry. This contractor's having substance abuse issues. We'll put them in the counseling and then we will let them finish up the job in their own time."

No. That's the realm of only big companies. The small real estate investor, the small business owner cannot afford to change the habits of people who have bad ones. So instead just get rid of them. Just fire them and move on to a different contractor. If they're not getting the job done or not doing it well, it's not gonna get any better over time.

Stanley Marcus or Neiman Marcus once said, take your markdowns on people and merchandise as quickly as possible. So just fire them and get it over with. The bottom line is that again, there's many good contractors out there. There's also contractors who can do a good job if they're properly managed.

But the important part for any self-storage owner is that you've gotta make sure you play by the rules and the etiquette to make sure that your interests are always protected. This is Frank Rolfe, the Self Storage University podcast. Hope you enjoyed this. Talk to you again soon.