Mobile Home Park Mastery: Episode 306

Paving The Way To Ruin

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There are few vendors as tough to handle as paving contractors. They have some basic methods to take advantage of park owners that you won’t learn until after it’s too late. In this Mobile Home Park Mastery podcast, we will explore the typical scams pavers have developed over the years and how to protect yourself from these unscrupulous methods.

Episode 306: Paving The Way To Ruin Transcript

Why are roads so important to mobile home parks? Mainly because the definition of a mobile home park is two or more mobile homes on one platted piece of property. And one of the first things you notice when you enter any mobile home park is, in fact, the roads. This is Frank Rolfe, Mobile Home Park, Mastery Podcast. We're going to talk about not only roads, but the various problems and pitfalls that come with using contractors to fix or replace your roads. Now, there are several kinds of pavers out there. There's one that does really large projects, typically for the highway department. They have huge equipment and are very professional, and you won't have any problem with these groups at all because they're used to the bidding process that city and federal governments require and they're used to working in a civilized society and they understand the importance of reputation.

But then there's a second group of companies out there that pave roads and mobile home parks, and these are not quite so good. They don't have the big equipment. They don't have often a whole lot of expertise. They may not have really a lot of goodwill and recommendations from prior customers. And unfortunately, this is the group that most park owners have to work with because our projects are not in the millions of dollars traditionally, but only in the 1000s. In the world of paving, there's a huge, huge difference. Just to pave a mile of county road is a million-dollar-plus project. But to fix the potholes in your mobile home park may only be $5000 or $10,000, and even an overlay of your roads may only be maybe $50,000 or $100,000.

So as a result, you're working with a group that traditionally is not that attuned to professionalism. And as a result, over the years, they have developed a lot of interesting ways to try and get extra money out of the customer, kind of their extra additional markup, which they don't quite tell you on the front end. So I thought we would go over what some of these tricks are that some of these pavers use. Not all. I mean, there's a lot of great pavers out there. Don't get me wrong. But the problem is, if you make a mistake, that the damage to you and your business and your profitability is going to be massive. So you really have to watch out for these few scams. So the first scam is the classic quoting of the job, not by a final price, but by the truckload.

What they'll do is they'll tell you, I'll go ahead and fix your roads, and it's going to cost whatever the number is, $500 per truckload of asphalt. And what the problem is going to be is you'll ask them, how many truckloads do you think we're talking? And they'll say, oh, I think we're only talking about 10. And then when your bill comes, it turned out to be 20 or 30. And the problem is you don't have anything in writing other than them saying they're going to charge you X dollars per truckload. So as a result, you don't really have a paper trail to dispute what they're saying. And when you won't pay them, they're going to threaten to sue you or slap a lien on the property. So how do you get around that kind of a pitfall?

Well, you've got to get a price that's turnkey. It has to be the price of all the truckloads of whatever materials plus labor comes to a final price. Don't let them tell you they can't do that. Of course they can do that. Any city or governmental group that's going to go in and get paving done, and I'm talking even the larger, more sophisticated customers that might use the same kind of a paver, maybe the Walmart parking lot or the McDonald's parking lot for annual pothole repair. They're not going to accept any bid that is not turnkey. So when they tell you they can't do a turnkey, that's not true. Obviously they can. They can guess how many truckloads of material they need. And if they're wrong, well, tough. And if they're right, well, that's great.

But they can't put you in the position as the customer of not knowing the final. They have to know the final amount. So never sign an agreement that has anything other than a final total turnkey price, without exception. Now another trick they like to do is change orders. So what happens is you get the contract. It tells you the total price. So you've jumped over that pitfall. And then here comes the final, final bill. And it's not the price that you had agreed to. It's now twice that amount. You then say, how is this possible? I have an agreement with you for this price. And they say, oh, well, it's all those additions that you agreed to. You say, I never talked to you about any additions. What are you talking about?

And they say, no, we talked to your manager. While the guys were there paving, they asked the manager, hey, what do you think of some speed bumps? The manager said, yeah, that sounds great. And then we said, hey, manager, how about making a circle at the end of that dead end street so the cars can turn around without backing up? The manager said, terrific idea. And lo and behold, your manager did authorize all these additions without your permission. The problem is technically that manager is your agent. So since they agreed to these additions, there's not a whole lot you can do to undo what has been done.

So how do you solve that? Put in the contract that no one, absolutely no one can agree to any additions to this paving agreement other than you, only you. And additionally, any agreement, any add-on has to be in writing, signed by you. That will eliminate the entire issue of the manager going and authorizing all these additional cost bumps. Bear in mind that the manager doesn't know any better. And the manager is kind of thrilled to be a decision maker. And the manager often lives in the park and wants to see these various improvements. So you're flirting with disaster if you let the manager authorize additions.

Next problem is when everything you thought was included in the bid turns out to not be included. We've had pavers who've gone in and then tried to come back later and say, oh, well, but we didn't include the speed bumps or, oh, well, we didn't include putting those curbs in. And the problem is, yes, that was what was discussed. And once again, it's all going to tie back to your paper trail. Make sure that your written agreement with the paver includes everything. Do not leave anything untouched. Make sure that everything is stipulated in that agreement from one end of the property to the other. Don't let them gloss over and say, oh, yeah, well, you know, we're just kind of kind of out there, go out there and kind of fix the roads like we talked about.

They love to work in an area of nebulousness. Do not allow them to do that. Make sure that everything is pinned down to the letter, every bit of work that they do. Finally, the problem is when they don't finish the work correctly to begin with. So you ask them to fix the potholes and put a skim coat of asphalt over the roads. And lo and behold, at the end, they did a crummy job. The asphalt that they put down is not straight, it's not correct. Maybe one side of the street is a different height than the other. You've got to fight back on that. Don't pay them until it is completely and properly done. One big issue I have with pavers is that they'll always try and tell you, well, I really need that money for payroll on Friday. I really need the money to go down and buy the last of the materials. Could you go ahead and pay me now? Could you go ahead and advance me the money to finish the project?

The answer must be no. You can't advance them until it is completely finished. The problem is if you get in the habit of paying any contractor, not just a paver, but anyone doing work on your park and homes or anything, if you pay them in advance, they may not show up and finish it. You have nothing built in to save the day when things go amiss. So what in the world are you going to do? Well, you're probably just going to take it on the chin, right? Don't do that to yourself. When a paver wants you to pay them before the end of the job, you must be firm and resolute and say, I can't do that. I'm not going to pay you until it's done and it's done correctly. Because otherwise, what's going to happen is, I can almost guarantee you, it's never going to be done to your satisfaction, and in some cases, they may not show up at all. Or you may be calling and chasing them forever trying to get the job done.

Now, this is not to say, with everything I just discussed, that there aren't many pavers out there who will give you a firm written bid, parts and labor, in comes the bill and it's completely accurate. But the problem is, if you let just one unscrupulous vendor sneak through and get you with any scam I just discussed, the impact to your business will be enormous and it's completely unnecessary. As long as you are always resolute in the fact that you are not going to be taken advantage of, make sure you have a perfect paper trail, make sure that everything in this agreement is stipulated as far as what work will be done and what it will cost, and make sure you do not pay them until it's all finished and correct, then you shouldn't have any problems. This is Frank Rolfe with Mobile Home Park Mastery, Podcast. Hope you enjoyed this. Talk to you again soon.