Whether you own or manage a self-storage facility, there are times when you need to hire outside service contractors. How do you get the best bang for your buck and avoid being swindled in the process?
You can always do an online search and check the review ratings for various vendors, ask for referrals or check paid-listing sites for consumer reviews. But how do you ultimately make the decision to hire someone you don’t know? Here are some things to consider the next time you negotiate a service contract.
Contractor Type
First, it’s important to know which type of contractor you need to hire. Let’s say you need to repair a storage unit that has a leaking roof, some drywall damage and a shorted electrical outlet. Do you want the sheetrock guy doing your electrical and roofing repairs? Probably not. In this case, you’d want to hire a general contractor to take responsibility for all the repairs and handle the necessary subcontractors.
Getting Bids
Never go with the first offer you receive, no matter how great it may appear. I always get a minimum of three bids and compare the providers’ bid style, how detail-oriented they are, how quickly I receive their proposals and what they cover. By doing this simple exercise, you may be shocked by what’s missing from that first “perfect” bid.
You’ll also get a gut feel for a contractor’s work performance through the proposal process. Did the company take pride in presenting a professionally prepared bid, or did you get a sloppy “fix XYZ problem at $2,000” proposal with few details? If you find yourself having to call a company several times to get a quote or missing information, cross that candidate off your list.
Contract Details
When negotiating a contract with an outside vendor, the items to consider can run the gamut. Here are a few simple ones that are applicable to any situation.
- Call your local or state licensing board to ensure the contractor has a valid license and bond to do the specific work.
- Ask for and check references from others who’ve used the company in the past.
- Read the contract carefully and completely. If you don’t understand something, ask for clarification. If need be, have your attorney review it.
- Never sign off in a hurry on any contract. If your office is busy and the person is pushing for a signature immediately, send him packing.
- Be clear that what you sign off on includes every aspect of the job in which you’re hiring.
- Obtain an insurance declaration from the vendor before work commences. Make sure the company has the necessary coverage for workers’ compensation, liability, etc., to perform the job.
Unit Security
Consider how you’ll protect tenant property during repairs. If you’ll be accessing occupied units at any time, your customers’ goods and concerns should be a top priority. Whenever a contractor is working inside an unsecured, rented unit, a trusted storage employee should be watching over the contents. Better yet, use a video camera on a tripod to film while the unit is open. This way, you can ward off any doubt about items that go missing or get damaged.
For example, if the contractor breaks that heirloom Ming Dynasty vase that just happened to be sitting in the front corner of the unit, the customer can pursue his company, not yours. Being the intelligent operator you are, you’ll have video proof of you telling the contractor to avoid the vase. This is one of many reasons you want to be sure a contractor has full insurance coverage before authorizing him to work on your property.
Contract Violations
Now let’s presume you did your due diligence and hired a contractor. You paid a deposit, work began, and then he vanished. What do you do now? Try a phone call or two; contractors are human, too. I once had a contractor disappear and learned a few days later that his young daughter was critically ill. Thankfully, she recovered and work was completed to my satisfaction.
So, if you’re contractor doesn’t show up as scheduled, try calling a few times. If you get no response, type a demand letter (check with your attorney) stating your conditions and the status of deposits paid. Make sure you cover all the bases.
One line that usually elicits an immediate response from anyone with any modicum of a work ethic is, “Your response is required within 10 days of the date of this notice.” If mail takes five days to get to the contractor, then the company has five more days to respond and address the situation. You may want to send the letter with tracking, certification and maybe even a signature-required delivery. Maintain a file for all attempted communication in case you need to pursue legal action down the road.
Tenants as Contractors
Let’s say a vendor walks into your store one day needing storage space. You just happen to need the services this person provides. You begin an impromptu discussion, and before you know it, you’re trading rental space for a job, be it a one-time project or ongoing services like lawn care or snow removal. Put the brakes on immediately and think! Have you gone through the steps above? What recourse do you have if the tenant doesn’t honor the agreed-upon verbal contract?
The answer is none. You have no recourse. Unfortunately, the days of a handshake deal are pretty much over, so put everything in writing before you proceed. You might also want to consult your legal counsel.
Write up your rental contract per the status quo, and tell the tenant to give you a service proposal in writing. If you accept the terms, follow up with a short agreement, something along the lines of: “Joe’s Landscaping will mow the lawn weekly, fertilize monthly and advise management of any conditions that need to be addressed in exchange for consideration of x dollars off the monthly rent of unit 123. This agreement may be terminated by either party without cause with a 10-day written notice.” Both parties need to sign and date the agreement. Keep the original in your file and give the contractor a copy.
Also request a monthly billing invoice for the services performed. This way you have a record of the ongoing transaction. When you get the invoice, you can write off the rent and reference the same invoice in your accounting. This procedure will provide you with a solid paper trail.
The last piece of advice I will offer is this: Never pay the final installment on any job or service performed until you’ve had time to inspect each aspect of the project. Confirm each item was addressed per spec and you’re satisfied with the finished work. If you’re really pleased with the result, do the vendor a favor and give him an honest, not overly hyped, online review.
Note: This article is not intended to constitute legal advice.
Gina Six Kudo is general manager of Cochrane Road Self Storage in Morgan Hill, Calif. She has more than 16 years of self-storage experience, and a strong customer-service and sales background. She’s also a moderator on Self-Storage Talk, the industry's largest online community. For more information, visit www.cochranestorage.com.
