Mobile Home Park Mastery: Episode 236

Ability, Liability And Reliability

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Choosing contractors for any task in your mobile home park requires a thorough comparison of certain traits that can typically lead to success or failure. In this Mobile Home Park Mastery podcast we’re going to break down the algorhythm between selecting the cheap contractor vs. the more expensive options and how to make smart decisions using these criteria.

Episode 236: Ability, Liability And Reliability Transcript

Around the 1300s in England came the origins of the word ability and it meant skill. And today, the word ability is again the root of many of the decisions you need to make smart decisions in selecting the contractor for your mobile home park. This is Frank Rolfe of The Mobile Home Park Mastery Podcast, we're gonna talk about how to figure out the correct contractor choice for whatever it may need to be done in your park. Using three qualifications; ability, liability, and reliability. Always come from the same root word, ability. Let's start of with the word ability. Well, ability means skilled versus unskilled, that goes back to it's early roots. And often what I have written about in books and articles, the concept of the pro versus the shmoo. The person knows what they're doing versus the person who has absolutely no idea. So in making this first selection of a contractual, it's important to know first what licenses or skills are truly required to get the task done? Are you required to use a certified plumber or can you use just anyone? Does it need to be a actual licensed electrician or can it be again, anyone who thinks they have a mastery of power. So, licensing requirements are very, very important to know and you've got to match your job to that requirement.

Number two is the basic knowledge. It's a lot more complicated obviously, to pick up leaves than it is to remove a tree, so is your choice of a contract or do they have the knowledge to actually get the job done. May be educational, may be just street smarts, may be past experience, but do they actually know how to do it? Finally, do they have the ability to hit your budget, because all of us, we're all at the mercy of trying to hit our own financial statements with every mobile home park in America, at least all the ones that are professionally owned. We've got banks to make happy with us, investors, ourselves, and we have to make sure that we stay in line with what we budget our expenses to be. So, will your contractor choice have that ability, there's no point in hiring someone you simply can't afford, at the same time, it's stupid to hire someone who's so cheap when you've budgeted more for that task. Next, we look at liability. This means basically the concept of risk versus low risk. Now, there are two types of risk in any mobile home park, you've got insured risk, and by insured risk, I mean that it is covered under your insurance in a worst case scenario.

What would be an example of an insured risk? Well, let's say you hire someone to cut the tree, and if they have insurance and the tree limb falls and it hits a car that would be covered under insurance. But you also have non-insured risk, this could be an action that is not covered under your insurance policy, for example, accidental pollution is not typically covered in most mobile home park insurance policies. I don't know how the contractor could do that, but we all know in The Simpsons, it starts off at the very intro to the cartoon, Homer Simpson dropping a nuclear... A radiated isotope into a gutter. Well, that would certainly foster, non-insured risk, but it can also be non-insured risk, if it's something in which you are supposed to use a licensed contractor and you fail to do so. So, if it is insured risk, you need to make sure the contractor has the correct insurance or that they are properly covered under your insurance certificate, if it's not insured risk, well, you need to make sure that just doesn't happen because neither you nor the party who you hired can do that kind of risk.

So, just be very, very careful about how risky that customer, that contractor will be, because you need to be extremely risk-averse. Then you have reliability. Now, reliability revolves around the ideas of people that you can trust versus those that you don't trust. So, how do you trust a contractor, what do you trust them to do? Well, first, you trust them to simply show up. Over the last 25 years, we've had many, many contractors who fail in this very, very simple concept, that the whole point of the exercise of hiring them is that they're supposed to be there on a certain day or at a certain time. We've even had contractors who walked off the job, unexplicably, never to be seen from again. I once had a large fence build on a property, contractor got almost completely done and then they just never finished it, nor did they ever show up again or ask to be paid for all the work that they had done, that was a complete fail. So unreliability, will they be there?

Number two, will they perform as expected? Now, everyone on every task has in their mind an idea of what a successful job would look like. If you're gonna go in and put in a three-rail white vinyl fence, you assume it to be straight, you assume it'll be in the right position on your property, but have I seen fails on that, frequently. That contractor did not perform as expected, so that was a reliability fail, you trusted them, but they weren't worthy of your trust. Finally, can they meet the pricing guidelines, you have a budget, you tell the contractor the budget, they agree to it, hopefully in writing, and yet at the end of the job, they come to you and they say, "Oh, I'm sorry, I mis-estimated the actual price is far higher." Pavers are notorious for this, so are tree companies. They'll come to you at the end and they'll bring you a price much, much higher than what you originally had agreed to. And then they'll simply want you to pay the difference, they'll say, "Well, it ended up taking more time." Or, "It ended up taking more asphalt." Once again, they've let you down, you trusted them, but they weren't worthy of the trust.

Now, in the mobile home park business, we say there's no perfect park, because all of your great locations with mobile home parks are the older parks, and the older parks have worse infrastructure 'cause it's older and worst density. However, they sometimes have spectacular locations and the newer parks that have new infrastructure and better density, sadly don't enjoy such great locations. But when it comes to contractors, you can have the perfect contractor. The perfect contractor would be an ideal match of skill versus unskilled, they meet all the requirements of the city as far as licensing, they have total knowledge of what they're doing, they're able to completely hit your budget. On the liability side, they have their own insurance or they fall under your insurance, and they don't create non-insured risk through bad behavior, and they're very reliable. They show up, they perform as expected, and they meet all your pricing guidelines. You want to trust them and they totally earn your trust, so you need to watch out for that type of contractor.

And when you can find that type of contract or someone who scores in all three areas, you need to hold on to them as long as you humanly can, because one thing you'll learn over the years with contractors is that there's not a whole lot of good ones out there. Often all park owners are having to give on some issue, either on the skill, or the risk, or the trust, and when you find that rare individual that doesn't let you down, the person who actually is worthy and you feel good about writing them that check when they've completed the job, then you've really got a keeper. Now, there were two things told to me when I got in the business, one was when you evict someone, you always wanna first walk a mile in their shoes, that way when you get the eviction, they're mile away and you have their shoes. But the other one was, it's easier to change people than to change people. And what that means is, as a mobile home park owner, where we typically don't have the luxury of lots of staffing or an HR department rather than try and resolve behavioral or training and difficulties with contractors, it's better just to let them go and go to the next one, we just don't have the luxury of what a big company has where they can go in or retrain someone.

We have to move fast. We have to be nimble. So as a result, when you're looking at candidates and you're weighing them on ability, and liability and reliability, it needs to be a very fluid grading process, the contractor that does well on the front end may let you down over time, and at that point, you may just have to reassess it and say, Well, that person was really great for a while, but they no longer are, and it's time for me to move on to find somebody new. It's really that simple when trying to find somebody to get your job done, look at their skill, look at risk, look at trust, make the best decision that you can. You won't always be right. Sometimes you'll win, sometimes you'll lose. When you lose, it's okay. Move on and try and find that perfect work man. This is Frank Rolfe from Mobile Home Park Master Podcast. I hope you enjoyed this, talk to you again soon.