Vendors on flat monthly fees - yay or nay?

Vendors on flat monthly fees - yay or nay?

Investor · Seattle, WA · Member since 2015 · 39 posts · 41 votes

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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  • Cameron TopePro Member
    Property Manager · Katy, TX · Member since 2015 · 1k+ posts · 1k+ votes
    6y

    @Ryan Murphy I can see both sides. It's helpful to setup an auto-pay of $550/mo and forget it! But you also could lose his motivation to show up and do the work. 

    Are you out of state? Did this vendor come recommended?

    I honestly would do what's easier for you and your partner. If the guy ends up not holding up his side of the bargain then find someone else. It's pretty easy to see if that landscaper is doing his job or not. 

    Get a tenant to report on when the guy(s) take care of the grounds. Once you trust him then you'll only have to do periodic checks to ensure quality. 

    Best of luck!

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