Since a trades vendor can lien a property for payment, we never understood why some turn away jobs unless they get half down. If they lack the working capital to at least start the job, it can be a red flag. We have pointed out to trades vendors: "You stay with the same dentist, doctor, bookkeeper, accountant - for years, right? Because it's a PITA, the 'search cost' to go out and find a good fit?" Then point out that if they offer 'low friction' terms for a first job, everyone disklikes the 'search cost' - everyone keeps going back to the same vendor if the work quality is good, and if the vendor is not trying to fleece them on that first job. The problem for a property owner, upon hearing "50% down" - we have no idea (if it's a new vendor) what the outcome will be. The ethics in the trades varies a bit (unfortunately). Since they can lien the property, offering "terms for the first job" takes away a lot of "No's" from prospects. The key is - don't sell in the 'hood.
I've owned/operated a portfolio of rentals and other property for over 2 decades. We never hire the "we need 50% down to start" when it's a service job. That changes after they've done a few jobs for us. We've had the same roofing vendor for 8 years, since we left California for a new state. Same HVAC vendor too. Same flooring vendor for our remodels. The "easy No" for property owners when they hear "we require 50% down to start" is - the ethics (unfortunately) in the trades community varies too much. Since the vendor can lien the property for payment, we never understood "50% down to start" If the vendor doesn't have the working capital for supplies for at least the start of the job, this can be a red flag. It is a reason why, when we find a reliable vendor, we grab on to them like a first born child. The 'search cost' is too much of a PITA. I've pointed out to trades people: "You have the same dentist & doctor for years, right? And same bookkeeper/accountant? Because the search cost is regrettable?" So if the trades vendor can focus on "Terms" to get a foot in the door, BAM it's likely they'll get repeat business as long as the work quality is decent.
Since a trades vendor can lien a property for payment, we never understood why some turn away jobs unless they get half down. If they lack the working capital to at least start the job, it can be a red flag.
We have pointed out to trades vendors: "You stay with the same dentist, doctor, bookkeeper, accountant - for years, right? Because it's a PITA, the 'search cost' to go out and find a good fit?"
Then point out that if they offer 'low friction' terms for a first job, everyone disklikes the 'search cost' - everyone keeps going back to the same vendor if the work quality is good, and if the vendor is not trying to fleece them on that first job.
The problem for a property owner, upon hearing "50% down" - we have no idea (if it's a new vendor) what the outcome will be. The ethics in the trades varies a bit (unfortunately). Since they can lien the property, offering "terms for the first job" takes away a lot of "No's" from prospects.
The key is - don't sell in the 'hood.
I've owned/operated a portfolio of rentals and other property for over 2 decades. We never hire the "we need 50% down to start" when it's a service job. That changes after they've done a few jobs for us. We've had the same roofing vendor for 8 years, since we left California for a new state. Same HVAC vendor too. Same flooring vendor for our remodels.
The "easy No" for property owners when they hear "we require 50% down to start" is - the ethics (unfortunately) in the trades community varies too much. Since the vendor can lien the property for payment, we never understood "50% down to start"
If the vendor doesn't have the working capital for supplies for at least the start of the job, this can be a red flag.
It is a reason why, when we find a reliable vendor, we grab on to them like a first born child.
The 'search cost' is too much of a PITA. I've pointed out to trades people:
"You have the same dentist & doctor for years, right? And same bookkeeper/accountant? Because the search cost is regrettable?"
So if the trades vendor can focus on "Terms" to get a foot in the door, BAM it's likely they'll get repeat business as long as the work quality is decent.
This is solid and I agree 👊
🔥