Whether you’re an independent real estate investor or a property manager overseeing the day to day operations of another apartment owner’s property, there are going to be situations where you need to hire a vendor to help you.  It starts with where to market your vacancies and continues on through the tenant screening process to leasing to property maintenance to evictions and apartment turns, back to marketing – and many things in between.

You’re only as good as the people who work for you, and quite often those people are not your employees, but the vendors you outsource to.  Therefore, it’s critical that you hire the right companies to assist you in your business.

Identify Your Needs

The first step in selecting the right service providers to work with your real estate investing or property management business, is simply knowing what sorts of products and services your business needs.  While it’s important to keep an open mind and an eye out for new and emerging products and services that might be beneficial, start by making a list of the basic necessities.  

Whether you’re in the business of renting apartments or you’re an investor engaged in flipping homes, you’re going to need a plumber, an electrician, and contractors for painting, roofing, siding, painting, flooring, windows & doors and general maintenance etc.  Banking, accounting and legal services are commonly needed in any real estate related business as well.  Additionally, if you’re managing a property, you will need a tenant screening company, a source for leasing forms, vendors for marketing your vacancies, property management training and a source for eviction services.  Real estate investors will also need vendors for mortgages and funding, a great real estate broker, and at times a good property management company.

Source Potential Suppliers

Once you’ve made your list, the next step is to set about finding vendors.  Real estate investing and property management industry related trade journals, websites and trade associations are the best places to start identifying potential providers.  As an investor or property manager, your needs are different than a homeowner.  This is your business and you make buying decisions based on that mindset, rather than your own personal tastes and emotions.  It’s important that the companies you work with understand this and present solutions that make sense for your business.  Companies that advertise in industry specific media and participate in trade associations typically understand those needs.

Another great way to source potential vendors is to talk to your colleagues and competitors.  For instance, if you’re a property manager and need a new tenant screening provider, getting a referral from another property manager is a great idea.

Most people don’t love to receive sales calls, direct mail or email solicitations, but if a service provider is spending time and money to target you, there is probably a reason.  While often interruptive and distracting, taking a few minutes now and then to talk to vendors and hear their messages is good for your business.  Quite often, your best vendors find you.

There are a myriad of other sources for information (search engines, newspapers, radio, tv, phone book, etc), but industry specific sources are always better.

Vetting

Once you’ve got a list of potential service providers, vet them.  Ask for references and invest some time to check  them.   Google the company and check them out with the Better Business Bureau and on online reputation sites like Yelp. 

If they provide a product or service that requires licensing, insurance or bonding, take the time to verify that the company is currently meeting such requirements.  There are companies that provide these services and more for a fee.  While this can be an excellent service if you’re busy, such services can be very expensive and limiting.   In addition to the fees they charge you, often they are also charging vendors for inclusion and selling advertising.  If the vendors choose not to pay these fess, they are often not included in your list managed service providers and you won’t be able to use them.  If at all possible, I suggest vetting your providers on your own.

Make sure your vendors understand laws and statutes that apply to them while they are working for you.  For instance, if a team of painting contractors are working at your apartment community, they are subject to adhere to the provisions of the Fair Housing Act and other laws.   If a complaint is generated by the behavior of a 3^rd party worker, you could still be on the hook.  Make sure any provider you work with understands the laws and their responsibilities.  Ask them about how they train their workers on this very important subject.

During the vetting process, it’s always important to discuss guarantees and payment terms.  Mistakes happen.  You will rarely have a business relationship where one or both parties don’t mess up at some point in time.   The important thing is what the “offending” party does to make good on the issue.  Find out that guarantees they put on their work, and, when you’re checking references, find out how they put those guarantees into real world practice.

Always negotiate the best terms possible with your service providers.  Some vendors require payment up front or at time of service. Other will offer payment terms of 10, 30, 60, 90 days, etc.  Try to get the best and longest terms possible, even if you plan to pay right away.  Advantageous terms allow flexibility and can help mitigate changes in cash flow.

Cultivate The Relationship

Finding, vetting and selecting vendors is a time consuming process.  It’s also very important, because they are an extension of your business.  It’s a relationship that must be cultivated.

Once you begin working with a service provider make sure that you’re being a “good” client.  Yes, you are the customer, but try to be the sort of customer that a vendor wants to work with, not one who they will serve begrudgingly.

Make sure to treat your vendors with kindness and respect.  You want them to do a good job and make your life easier, right?  Remember they are people, so thank them for their service and treat them well.

It’s great to have expectations and standards, but make sure you treat occasional mistakes professionally and with understanding.  Know that mistakes happen and allow your vendors to make things right without jumping down your contact’s throat.

Make sure that you pay your vendors on time.  You know what it’s like to have cash flow troubles from time to time, so don’t cause those issues for your vendors.  If you negotiated 60 day terms, make sure they are receiving their payments no later than 60 days.

Most relationships with vendors change and many come to an end at some point, and for many different reasons, but make sure that you’re doing your part to cultivate and make the relationship mutually beneficial.

From: http://rentalhousingjournal.com