In-House vs. Outside Vendors: The Hidden Cost of Rental Repairs

Hey there, my name's Mendell Gosnell with Centurion Real Estate Management. And I'd just like to talk a little bit about something that's on a lot of people's minds lately, and that's repair costs, specifically with rentals, whether it's a capital improvement or deferred maintenance or a turn or just general maintenance in general. You know, first off, we get it. I'm a property owner myself. We see the maintenance charge and it can certainly feel high. And sometimes it is, a significant number. But here's the thing, value really is relative. A couple things that I want to hit on is first, I'd like to compare in-house maintenance. Um, Centurion has an in-house maintenance department, and we also use outside third-party vendors as well. But we do try to do, um, as much as we can in-house where we have the, the knowledge and the talent and the ability to do it. We believe that that is the most efficient and most cost-effective for our clients. And so with in-house maintenance, you get, I think, a number of benefits. One, you get faster response times. You get techs that know landlord-tenant laws. They know the property, they know the tenants. You know, having a team that knows the property saves a lot of issues down the road. We don't have a markup for the middleman. You get accountability, you get guys going out right away. And again,, we're able to oversee them directly, what they're doing, and we manage the quality from start to finish. Now compare that to outside vendors, uh, which again we use, but there is a trade-off. We believe that in general, uh, the cost is gonna be higher, but we do traditionally see longer delays. You're calling them and they gotta fit you into their schedule. And, um, again, the hourly rates are higher or the the, the service charge if it's by job and not hourly. They usually have a less, less sense of urgency that you're one client, um, one of, one of their many clients. And they might be unfamiliar with the property depending on how new they are with our company and the specific property that they're going to. So you— there's little to no quality control. We do try to police those and follow up, but You know, it's not our techs that are going out and doing the job. So yes, even if the number looks big, the actual value I think is much higher. Our maintenance techs aren't just handymen, they're professionals dedicated to getting it right the first time, and they're part of our team. That means no profit sharing with subcontractors, no passing the buck, no inflated fees. You're getting a really good deal for what you're paying for. Another thing, repair costs have been on the rise for a number of years. I think that I've seen a number of different reports and we know what it is for, for ours. And basically for the, in the last 5 to 6 years, we've really seen invoice ticket costs, that's repair and material, almost double in some instances, which is incredible. That's really across the board for businesses, for property owners, just Costs across the board have really gone up, not just labor and material, but everything to operate a business and a, a rental business. Insurance costs have gone up, uh, and that just drives the overall costs up. So for everyone, and we see it, we feel it, and yes, even our margins have actually gone down. So, uh, even though the cost for clients has gone up, profit margin has gone down. It's just the cost of doing business is getting increasingly harder. But we're not here to pass the blame. We're just here to educate and share and be as transparent as possible. And really ultimately to deliver the best possible solution. And that means keeping as much maintenance in-house as we can. Of course, if we have a client that has specific vendors they want us to use, we can accommodate that as well. Prioritizing quality and speed. And again, you know, there's a lot of factors that go into our thought process on how to handle maintenance. You know, we want to balance the best vendor, whether it's our vendors, our in-house vendors, or outside vendors, or anybody else, with how quick they can get there, how professionally they're going to be, how good of a job they're going to do, because time is really— is a— is of the essence. And one of the number one reasons that tenants complain and ultimately move out, which is really bad for your bottom line, is they don't feel cared for, they don't feel like they're getting good customer service. And really that ties back to how quick you're responding to their maintenance requests. So keeping costs as manageable as possible without cutting corners, super important, but ultimately speed to the lead, speed to the response, is super important. We believe, like, we have a really good tax— been in the business for a long time. We put a lot of emphasis into not only hiring good individuals but training them and working really hard to keep them for a long time. Not perfect, but we believe we have a really good process in place that puts our clients first. Sometimes every one solution might not be the, the cheapest dollar amount, although we try to be as competitive as we can. And generally, I say, I think that we're going to be the best cost solution hands down almost always. That's not always the case, but when you calculate again in all those other factors that are less tangible that really tie back to driving performance on the property and ultimate ROI for the property, taking care of the tenants, an in-house maintenance department does make a lot of sense. You know, hopefully this was educational and informative for you, and we do just thank you for trusting us with your rental property. And please Go easy on the staff. They definitely are in your corner every day, and we just appreciate your business. We appreciate you taking the time to check out this video. And if you have more questions or you'd like to do business with, with us, we'd love to earn your business. Give us a call today. Thanks.