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Updated almost 5 years ago,

User Stats

39
Posts
41
Votes
Ryan Murphy
  • Investor
  • Seattle, WA
41
Votes |
39
Posts

Vendors on flat monthly fees - yay or nay?

Ryan Murphy
  • Investor
  • Seattle, WA
Posted

My partners and I own a 66-unit multi-family complex.  Landscaping / cleaning costs quoted by a vendor at $275 per visit.  The average would be 2 visits per month, but it would end up being 1 visit per month during the winter months and 3 visits per month during the summer months.  One partner wants to set this up as a monthly $550 charge, saying it is "standard practice."  My hesitation is that because this is winter and this is a new vendor, we would be paying the vendor an extra $275 per month for however many months left in winter, and the new vendor would then "owe" us the additional service calls.  What if he turns out to be a bad vendor, or quits, or something else happens?  My experience of human nature is that if he already has the money, he's less likely to be concerned about his performance and if we're happy with him or not, etc.

Another option is to wait until the summer months where the service calls are 3x/month, and then let the vendor opt to take the $550 average per month - that way we have the leverage if he decides to quit early or if we're not happy with the work - if anything, we would owe him money instead of him owing us service.

So one factor is who has the leverage.

The other factor is if there's a benefit to having the monthly costs consistent every month - does this matter to you as an owner / property manager?

Any feedback is much appreciated!

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