The Importance of Vendor Screening For Your Rental Properties
If you are not screening the vendors and contractors servicing your rental properties, you become vulnerable to risk. Below, learn why screening vendors is so important and how background checks can become part of your standard operating procedures as a real estate owner.
Why Perform Contractor Screening?
It’s not smart policy to solicit bids and accept the lowest vendor bid. Vendors that submit low bids may be skimping on craftsmanship, materials or quality. Or they may be trying to rebuild their client base after a performance issue. Contractor screening protects your investment property, your renters and your reputation.
Any vendor or contractor you let into your rental property has full access to apartment common areas and amenities and /or tenants’ properties. All it takes is one incidence of theft to damage the reputation of your rental property and cause tension with tenants.
It only takes a few minutes to do a background check. Vendors that do not pass the screening should not be used. Those vendors that do can be used going forward with peace of mind, knowing that the plumber, handyman or contractor is a trustworthy individual. Increase the odds of finding reliable contractors by asking other landlords and property managers you know for recommendations of service providers.
The best time to screen vendors and contractors is before you need them. Longtime property managers know that it’s always more difficult to find a serviceperson when you have an emergency. Since good vendors are often booked in advance, a company that can come immediately may not be a reputable service provider. Take the time when things are stable to identify a service provider for every need, then keep the numbers in your property management software and personal devices so you know exactly what vendor to call when something goes wrong.
How to Conduct Vendor Screening
All it takes is a few minutes to complete a simple online background check for vendors. Scan the vendor website to see how long the company has been in business. Find out what licenses and insurance it carries. If a contractor lacks the appropriate insurance and damages something, you’ll need to pay to repair it. Check the Better Business Bureau for complaints against the vendor. If the complaints haven’t been successfully resolved, this is a red flag. Also, look at consumer databases, such as Angie’s List or Yelp.
If the company has a few bad reviews, but mostly good ones, it is probably fine. You can always ask for references to check the quality of its work. Any company with predominantly negative reviews should be avoided.
After a repair, follow up by checking out the quality of the work. If the repair was in a unit, ask the tenants whether they were happy with the work performed and the person who handled the repair. A company may look great on paper and pass your contractor screening, yet do subpar work. Following up with renters demonstrates that you care, and fosters a positive relationship with your tenants.
The American Apartment Owners Association offers helpful information for property owners and managers looking for contractors to remodel or repair apartments. Contact us for help with vendor screening services or to learn more about selecting trustworthy contractors.
Disclaimer: The information provided herein is for advisory purposes only and AAOA takes no responsibility for its accuracy. AAOA recommends you consult with an attorney familiar with current federal, state and cal laws.
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