Recently, while working to bring my new rental duplex online, I have been experimenting with sourcing my own tradespeople for a number of jobs. While I have, in the past, relied exclusively on property management to arrange for repairs and rehabs, I felt strongly that I could spend less if I was negotiating directly with the people performing the work.
A good investor friend of mine who owns property in some of the same markets that I do mentioned his success with Thumbtack, a tech startup backed by Google Ventures. I looked into it, used it for a number of small and large jobs over the past few months, and now I’m absolutely convinced that Thumbtack is an excellent tool for long-distance landlords. As an aside, I have no professional relationship whatsoever with Thumbtack– I just think that it’s allowed me to save a bunch of money as a landlord and hope that it will help you to do the same.
It works like this: You log into Thumbtack and describe everything you know about the job you want quoted, as well as the ZIP code of where the property is located. Thumbtack sends the request for quote out to all of the contractors who perform the type of work you want working in that area. If a contractor wants to bid on your job, they can use one of their bid credits (which cost a few dollars) to submit one. The customer gets a notification for each bid, and can pick and choose between them. The advantage to the customer here is that all of the contractors have an incentive to provide the best price. The bidding contractors know that they are competing against one another, and they don’t want to waste money submitting bids if they will be ignored.
Once bids come in for a project, you have what is essentially a messaging interface to communicate with each bidder. You can read the bidder’s reviews, ask and answer questions, provide pictures to help with the bid, and negotiate the price.
In some cases, I have managed to find savings of 50% or more over the bids submitted by my Property Manager’s preferred contractors.
Here are some examples of work that I (or my good friend) have arranged for via Thumbtack, and some prices paid:
- Replacement of 45,000 BTU Furnace ($1,500): This was actually for my own residence. After getting multiple quotes for a furnace tear out and replacement at around $3,500, I found a journeyman HVAC installer with 30 years of experience willing to do the job for $1,500. The installer was licensed and insured, but worked only for himself. He arrived with the furnace in the back of his SUV and did all the work himself. I had to babysit him a bit to make sure some of the ductwork was cleanly installed, but the job was done adequately, and for so much less than my nearest quote that it was well worth the extra vigilance. The initial bid price was $1,200, but when inspecting the furnace it became clear that a fixture would need to be fabricated to fit the new furnace to my old air conditioning coil. We agreed on $1,500 as a fair price.
- Biweekly Lawn Mowing ($20): My previous property manager charged $33 every two weeks for my duplex property landscaping. My new property manager wanted $35 every two weeks.
- 2 x GFCI Outlet Replacement, 3 x Light Fixture Replacement ($250): Electrician replaced two broken light fixtures (one exterior, one interior), added a new one where bare hot wires emerged from the building, and replaced two GFCI outlets. Cost of light fixtures and bulbs was included in overall price.
- Rodent Extermination ($200): Exterminator agreed to a price of $100 up front for then unlimited treatments until there was no further sign of pests, followed by a payment of $100 more. Upon removal of the traps and bait, the exterminator sealed all small holes in the siding. Property Manager’s contractor had quoted $250 for this service.
- Junk Removal ($320): Tenants vacated property and left the entire inside and outside looking like a junkyard. Junk service 20 cubic yards of debris throughout the property, including hazardous materials such as tires and chemicals. Property Manager’s contractor had quoted $400.
The best part about all of these services is that almost everyone we have dealt with has been extremely hungry for business and open to negotiation. I think it’s important to treat tradespeople fairly, because you want to build a lasting relationship and trust that someone’s work will be top notch every time. At the same time, it is to your advantage as a landlord for your tradespeople to need your business more than you need them.
Of course, nothing is perfect. My friend and I have seen a number of items that raised red flags for us. These are the things we’re keeping on the lookout for, and usually cause us to ignore a bid.
- You don’t always get a bid: For some very small jobs, it’s not worth the bidder’s money to bid on a job that might only earn them $50. I tried to find someone to re-screen some windows and adjust some kitchen cabinets, and didn’t get any responses back. Rewriting and resubmitting your project description seems to work most of the time to drum up bids, but it’s possible that in small markets there might just not be enough bidders to find someone for every job.
- Onus is on the customer to ensure license and insurance status: For some tasks, you may not care too much about licenses and insurance. For others, though, you’d better believe that you want a licensed and insured plumber, electrician, or contractor. If a bidder isn’t willing to provide you with current license and insurance information where you think they should, think long and hard about whether to hire them. I will admit, however, that for things like junk removal and lawn mowing, I don’t see much point in worrying about it.
- There is always a risk that the price may rise once the contractor is on site: My friend had someone out to tear the carpet and pads out of a room. The contractor arrived, tore the carpet out, then called him and told him that there had been more carpet than he had originally expected, demanding another $100 to haul it all away. My friend had the carpet guy leave the carpet on the front porch, and arranged a separate junk service to haul it away.
- Some people are just terrible communicators: Not really an indictment of the Thumbtack system itself, but some bidders submit their bids with a price and a one or two word message. Even after being prompted for more info, they still barely respond with a sentence. This is a big turn-off for me and I usually decline the bid.
- Safety and Security: This is somewhat related to hiring bidders with current insurance and licenses. If a property is vacant, and if you have a lockbox, it may be tempting to send the contractors in with the lockbox code. Of course, this means that you are far away in the event of a dispute and someone who is upset with you has access to your property. It doesn’t take much imagination to come up with scenarios where this could go very, very bad. My suggestion is to send contractors directly only if the property is occupied, or you can arrange for your property manager to control their access to the property when vacant.
- It’s less useful for emergency service: Of course, Thumbtack is really only useful when you have the luxury of time. When a pipe bursts at 3 AM, you will still need someone you can call, no questions asked. All the same, Thumbtack has helped me to find a few handymen who may work well for emergency service in the future.
- Some trades are annoyingly unwilling to name a price: I experienced this with my furnace replacement. The first two times I submitted my request, even though I quoted the exact specs for what needed to be done from an in-person quote I got, none of the bidders were willing to commit to a price without coming to visit the house. Because I didn’t want to meet with numerous different bidders in person and give up so much time just to get pricing, I submitted my last request with a statement that I would ignore any bid that didn’t have an approximate dollar amount. I still got one bid without a price, but I also got the low bid from the vendor I ended up choosing.
By and large (and obviously, since I’m writing this article), Thumbtack has worked really well. It has also been an invaluable tool in developing an “offline” contractor list. When someone does a great job, gives a great price, or goes the extra mile, they get added to a spreadsheet I maintain for future use. That way, even if Thumbtack were to disappear, I would have access to a list of people who I could rely upon in the future.
If you’re an out of state landlord, how do you source bids and find contractors? Any thoughts about the Thumbtack model, for better or for worse? Let me know in the comments!