Hurricane Harvey. Hurricane Irma. Wildfires consuming thousands of acres in Oregon, Montana and Idaho.
The U.S. is experiencing a horrible end to Summer 2017 in terms of natural disasters and, yes, it will impact your rental operations and profitability even if you don’t have rental properties in the affected areas.
It’s the tsunami wave that will impact the marketplace after the flood water have receded and the last fire ember has been extinguished–the rebuilding efforts.
The U.S. construction markets and supply chains were already overtaxed due to record housing sales and new home construction and overall improvement in GDP growth this year. Supply of skilled labor was already critically short–everyone from framers to electricians to hvac installers, carpet installers to drywall crews,painters to even low-level punch-out guys and cleaning crews.
If you heeded the age-old wisdom of Harvey Mackay which recommends “dig your well before you’re thirsty“, you can survive this intact. Maybe a bit bruised financially and frustrated, but you’ll survive.
But….If you are a landlord or property manager who didn’t break out their shovel last year or the year before to dig your well, aka developing solid relationships with trusted contractors, it’s gonna get exponentially worse for you. You might be dead in the water soon.
Check out this article from the Wall Street Journal about this exact issue:
So, what should you do if you dug your well in anticipation of needing to draw water from it? If you are the smart landlord or property manager:
- Protect that resource. Pay your contractors promptly and don’t haggle too hard on pricing. Prices ARE GOING UP….and there’s not a damn thing you can do about it in these turbulent times. All things have a season….now is not the time to pinch pennies and lose dollars.
- Ask your contractor if they want you to refer more work. Yes, I know it sounds contradictory to the point above–Why would you want to ‘share’ your best contractors? Here’s the rationale: Trust is critical to the success in long term rental operations. If your contractor knows you are looking out for his or her best interest by volunteering to refer your investor friends to him or her or to assign even more of your own work that comes up, you’ve just made a deposit into that trust account. Trust me–the contractor will remember your graciousness when times get back to normal or when you need a special favor in the future.
- Search for contractors and start relationships with contractors you don’t even need…..yet. Look through your list of vendors and try to identify the gaps. Gaps in a category where you don’t have multiple trusted contractors lined up yet but don’t need a secondary contractor….yet. For example, let’s say you have a rock solid relationship with an hvac contractor. They always service your homes on time, pricing is good, and life is all roses there. Go find a second hvac contractor. Not with the intent of replacing the current fella, but with the intent of protecting your cash flows and process interruption in case something happens to the first contractor.
- Search for contractors and start relationships with contractors you don’t even need…..in categories you’ve never even considered. This means looking through your list of vendors and identify the gaps where you don’t currently have anyone in those types of businesses. For example, let’s say you don’t have any current needs for asbestos abatement. Heck, you don’t even own properties with asbestos in them. Guess what you’re next research project is this weekend? You’re going to start learning about asbestos abatement companies and identifying the good ones. Schedule meetings with their sales reps. Sounds silly to invest your time meeting people whom you don’t have any needs for the immediate future, right? Let me answer your mental question with a question: Do you think they might know of other contractors who are killing it in their respective categories in which you DO NEED services? Yup. It’s the old concept of 6-Degrees of Separation, folks. Make Kevin Bacon proud–expand your network….dig your well now.
My continued prayers and support go out to those affecting in the Gulf Coast and West Coast areas.
All my best in your pursuit of Financial Freedom,