Hello,
I just bought a park with 15 vacant homes. The homes need anywhere to some minor work to some medium work. As soon as they are complete I have a waiting list of people trying to get in. I would like to know what the best way to pay a crew like this would be. I originally started paying by the hour and I am about to switch to paying by the job. How should I pay these 4 guys? Is paying by each trailer reasonable once complete? Any feed back would be helpful
I would highly recommend paying by job with clear SOW. Paying by the hour is the quickest way to get taken advantage of.
Thanks for the reply. In your opinion what would be the best way to pay per job/home? Also how much should I pay per home since it is only taking them a couple weeks to complete the job
Hello. You probably should do a walkthrough on each home and get an estimate for each. If you can’t be there have your manager or whoever is helping you w the property do a walkthrough w the contractor. Fix the easiest and cheapest first and get them sold. I would also look at the exterior of the the park to improve appearances for new buyer.
For two weeks of work with four guys full time I would buy the materials and pay them 5 grand (this is basically a blended average of $15 per hour). I walk through the unit with the crew to estimate how much of what material is appropriate and then order it. We keep a deposit account (with $500 or less) with the local hardware store so that the foreman can pick up the small stuff we missed or had surprises. The receipts are emailed to me in real time. This is easier to do once you have an established crew otherwise you might need a manager to facilitate…
Labor rates may vary for your area.
I assume the guys you’ve hired are independent workers as opposed to a GC with his own crew? If the former, these guys are working hand to mouth. Why not pay them for the labor performed; ie, by the hour. Even cheap Walmart would do that. I mean, these guys could become tenants if you treat them reasonably. And if you don’t, think about the bad press you’re going to receive among the local population which could lead to longer vacancies, etc. Consider what a few months of vacancies could cost you. If you’ve employed a GC, then just pay by agreed upon milestones as in any other traditional construction contract. Just be real.
That goes both ways: if they figure out how to do acceptable work in less time, everyone wins with more accomplished and more pay. Running a meter blindly offers incentive to stretch the work out.
In re: to original post – This is by far the most difficult thing to manage in this business, and your personal facts and circumstances will be the difference between sinking or swimming.
ive done dozens of poh rehabs, i would NEVER pay per hr, get a couple of bids from different contractors , best bid wins, if it takes them a few days or weeks, you wont worry about them sitting on the clock. when its complete , pay them asap.
IRS will want 1099s on each guy if you pay by the hour or job unless they are working for a company that has its own tax ID, then you will need to have that info instead.
Pay by the job, the break it into weekly draw requests against the mutually agreed to SOW.
Brandon is correct - this is huge. This is by far the hardest part of managing a mobile home park. Collecting rent from tenant owned home leases is easy and takes only a few hours per week, but construction is expensive, complicated, and time consuming.
Somebody gave the example that even WalMart will pay by the hour, however you are not WalMart. WalMart has supervisors and managers on staff 24 hours per day tracking what employees do and that their breaks do not exceed the minutes provided per the HR policies - there is no useless loitering. Unless you or your manager are able, willing, and competent to watch over the workers, you will have huge problems paying by the hour. It would not surprise me if you paid for 40 hours of work and all that was completed was a few cases of beer were consumed. By the time you drive 700 miles to conduct a site visit, you will think all is ok, but it is not.
We have had better luck drafting a contract with a defined scope of work and milestones for payments. If and when the work is completed, the workers get paid. The contract also has a work completion deadline, so if a worker sits around for 3 weeks, we can terminate the contract and hire somebody else without having to pay anything. Workers are independent contractors, so we are required to collect W9 and issue 1099 if we pay in excess of $600 per year. We typically pay for materials separately using the company’s trade accounts at the major retailers.
Hi there.
As a rehab contractors, we consider our mission to help Park owners to have their houses in the market in the less feasible time, with the best quality possible.
We think you worry about managing rent, tenants, city relations, bookkeeping and accounting, tax filing, find new business, etc.
And we worry about material and tools procurement, and doing the house interior and exterior roofing, siding, skirting, ceiling, walls, subflooring, electrical, plumbing, underlayment, repairing/rehabbing to get the house ready to rent/sell.
All works have to be done with an agreed scope of work between MHP owner or manager and us, and over a detailed bid with itemized prices. That way you know what’s to be done and it’s cost, so you can plan ahead on your cash flow.
Best regards
Alejandro Riera
Insignia Remodeling LLC
where are you located are you willing to travel? OH AND IN
Alejandro - sorry that you get categorized with some contractors that don’t perform as they agreed. The good news is that someone like you is a great asset to the management team of a MHC. Stay in touch with them. Let them know you are competent and want to work. Overperform on the first job and you’ll have work the rest of your life.
Hi, Kurt.
Every professional activity that people do, no matter what field they are in, has good and bad professionals. Painters, mechanics, stock brokers, bakers, sales persons, house developers, lawyers, IT people, writers, etc…
We, in the rehabbing business, are not exempt of this.
That’s why we, the good ones, need to be committed to perform with high standards, not only in job quality, but in the reliability, trustworthiness and ethical components of every work.
And that is what we are doing right now in our market niche of Mobile Home Rehabbing. Our clients are happy with us and have excellent professional relations with them.
Thanks for your words, Kurt. And be sure that always trying to obtain results inside our envelope of excellency.
Respectfully,
Alejandro Riera