Nobody enjoys overpaying for repairs. But determining what "too much" means can be tricky since value is subjective. One key concept to understand is the Value Triangle, which consists of Price, Quality, and Speed—you can only choose two. I made a brief video discussing this, which you can view here.
In a recent survey, a few clients mentioned that they feel the vendors' prices have become somewhat too high.
When we looked into it, we found that some plumbing bids were just too high. We stopped using that plumber and brought in a few with better prices. In other cases, the bids were fair for the market, but clients still thought they were too high. When this happens, it's usually because of one of three reasons:
Our Vendors Charge Too Much: It's possible that some vendors are overpriced. We strive to reduce prices where we can by always trying to use affordable vendors when this happens.
Rising Costs: Prices across the board have increased, affecting repair costs.
Poor Value Communication: There's a saying, “Value is not received until value is recognized.” We need to communicate the value of our services more effectively.
Unrealistic Expectations: While DIY or cheaper handymen might seem like cost-saving options, they often lack reliability, quality, and proper licensing.
To understand these factors better, I delved into the plumbing industry, one of the most common trades in rental management 👇
General Trends
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Labor Costs: Attracting skilled workers requires better pay. Apprentice plumbers start at $22 an hour, and journeymen earn $28-$35 an hour. Meanwhile, fast-food workers in California make at least $20 an hour. It's clear why many prefer safer, easier jobs over hazardous trades for similar pay.
- Material Costs: Prices of essential materials like copper have soared—from $1/foot to $5/foot. Construction iron and steel prices have increased by 83%, and water heater prices have doubled since 2018, with annual increases of 8-18%.
The Home Depot Query
Clients often ask, "Home Depot charges $X for a water heater, why does your plumber charge more?" Here’s why:
- Quality of Material: Water heaters from plumbing supply warehouses use higher quality metal components versus Home Depot's plastic parts, offering longer lifespans and better value.
- Customer Support: Plumbing stores provide parts faster, often by the next business day, unlike Home Depot's weeks-long wait.
- Availability: Supply houses are open 24/7 for emergencies.
Why Not Hire a Handyman?
While handymen might be cheaper, the risks are significant. Professional plumbers, who are licensed, insured, and bonded, ensure high-quality work and safety for your property.
Other Cost Drivers
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Regulatory Changes: The strict environmental regulations in California, including those on ultra-low NOx emissions, have escalated the costs of compliant products and services.
- Insurance Costs: California’s insurance crisis and litigious environment have led to higher premiums.
- Fuel: Often a service call involves driving to the property to assess the situation and parts needed, then a stop to the supply house, then back to the property. According to the EIA, gas has gone up 29% since May 2021 to May 2024.
In Summary
Maintenance costs are going up because of rising material prices, labor costs, and new regulations. These changes affect the balance between cost, quality, and speed. We always look for the best vendors who provide top-notch work without breaking the bank. By sharing this information with our clients, we hope to build understanding and keep delivering high-quality service.
If you have questions about specific trades or repairs, please let me know. Your feedback helps us create valuable content and provide the best service possible.
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Steve Welty
CEO @ Good Life Property Management
DRE #01744610
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