Choose 2: Quality, Efficiency, Price

It's a common saying that when hiring a contractor, you can choose two of the above three attributes. We've found that to be very true, with one small caveat -- if you're lucky, you'll stumble into a quality contractor who just started his business. We call these unicorns. And yes, unicorns can deliver a quality product for a good price and on time. 

HOWEVER . . . This doesn't ever last. 

If he stays cheap, he'll quickly become overworked and his quality/efficiency will suffer. If he keeps his focus on quality and efficiency he will very quickly have to raise prices to keep up with the inevitably high demand. We run a business, so we're looking for repeatable success. It does us no good to find a contractor who's good for one job. The time that it takes to find a new contractor for the next job and the risk of constantly using someone unproven outweighs the benefits of a unicorn on any one job. Not to mention that you will run into 999 horses with glued-on horns for every one unicorn you find. If you want to take the risk, just don't bet the farm.

So, what do we do? Well, we brought the construction piece in-house. We manage our own jobs now, but still deal with this same issue on a microlevel with the subcontractors for each trade. We've just come to terms with the fact that we can only choose two from the list of quality, efficiency and price.

Which two did we choose? Quality and Efficiency!

We now happily pay a premium to work with the best contractors that we can find. We consciously sacrifice money to put a focus on speed and quality. However, we've found that BOTH of these save us money. A quality product will cost less in maintenance over the lifetime of ownership (a lot less). A quality product will sell for higher numbers (yes, buyers noticed a difference). A project with a predictable timeline performs closer to a pro forma than one that doesn't (and saves money on interest, taxes & insurance). An efficient timeline allows us to do more volume -- a higher volume of modest deals is a better strategy than swinging for home runs during each at bat.

Just accept it. Stop looking for the unicorn. Pay the expensive contractor who sticks to timelines and delivers a quality product. We'll never go back.

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Debt Service Coverage Ratio (DSCR): 101