Contractors - per job or full-time options

Started by JulieH4 • 15 replies • 174 views

💬 Join us to post & get advice from 50,000 HOA & Condo leaders.

⚡ Takes 30 seconds

Already a member? Log in

JulieH4
Posts: 75

Posted:

Hello everyone,

I am the property manager for a 140-townhouse complex in Texas. Our community was built in 1975, and over the years, we have relied on individual contractors for various jobs, paying them per project. However, with rising costs, I’ve been considering whether it might be more efficient and cost-effective to hire an insured contractor on a monthly basis, rather than continue with the per-job model.

The idea would be to hire a contractor to handle all maintenance tasks around the complex for a fixed monthly fee. Since we are responsible for everything outside the homes walls, we would purchase the necessary materials (such as siding, wood, etc.), while the contractor would take care of the work. Currently, we also have separate companies for landscaping, plumbing, electrical, and extermination services.

I’m curious if anyone here has experience with this model or has considered it for their community. If you’ve tried it, what worked well (or not so well)? Additionally, any insights or challenges you faced would be incredibly helpful as I prepare to present this idea to the Board. If this approach didn’t work out for someone, hearing about those challenges could help in making a well-informed decision.

Thanks in advance for any feedback or advice!

CathyA3 (Ohio)
Posts: 6,299

Posted:

Random thoughts:

* Does your community have enough work to keep the contractor busy, or would the person sit idle part of the time?

* Consider the contractor's other work. What incentive would he have to set aside an entire month for your community and to turn down other jobs? Would his other customers go find someone else and maybe not solicit bids from him in the future? How would this impact what he will charge you?

* Does the association have the expertise to handle purchasing the materials? What about pricing? Would a professional contractor who buys a lot of materials get better pricing than an association that is only buying for itself?

* Who will manage the contractor's work?

in short, I suspect that this model would not work out well for a professional contractor, and he would price his services accordingly. I also suspect that the association does not have the skills or time to tackle their parts of this - eg. purchasing and project management.

Older communities are more likely to experience unexpected maintenance needs, while this proposed model requires some level of predictability. It may work out better in a very large condo association that actually employs full time maintenance crews to handle the work.

The fact that a large percentage of community associations do use a per-job model makes me suspect that there are good reasons for it.

But I'll be interested to hear what others say.

TimB4 (Tennessee)
Posts: 21,061

Posted:

Quote:

Posted By JulieH4 on 01/16/2025 9:55 AM

The idea would be to hire a contractor to handle all maintenance tasks around the complex for a fixed monthly fee. Since we are responsible for everything outside the homes walls, we would purchase the necessary materials (such as siding, wood, etc.), while the contractor would take care of the work. Currently, we also have separate companies for landscaping, plumbing, electrical, and extermination services.

Careful that you don't inadvertently end up hiring an employee vs. an independent contractor.

See: Independent contractor (self-employed) or employee? from the IRS website

20 Questions for Determining Independent Contractor versus Employee Status: How do you determine if a contractor should be paid on a W-2 or a 1099?

JulieH4
Posts: 75

Posted:

Quote:

Posted By CathyA3 on 01/16/2025 11:04 AM
Random thoughts:

* Does your community have enough work to keep the contractor busy, or would the person sit idle part of the time?

* Consider the contractor's other work. What incentive would he have to set aside an entire month for your community and to turn down other jobs? Would his other customers go find someone else and maybe not solicit bids from him in the future? How would this impact what he will charge you?

* Does the association have the expertise to handle purchasing the materials? What about pricing? Would a professional contractor who buys a lot of materials get better pricing than an association that is only buying for itself?

* Who will manage the contractor's work?

in short, I suspect that this model would not work out well for a professional contractor, and he would price his services accordingly. I also suspect that the association does not have the skills or time to tackle their parts of this - eg. purchasing and project management.

Older communities are more likely to experience unexpected maintenance needs, while this proposed model requires some level of predictability. It may work out better in a very large condo association that actually employs full time maintenance crews to handle the work.

The fact that a large percentage of community associations do use a per-job model makes me suspect that there are good reasons for it.

But I'll be interested to hear what others say.

VERY good questions Cathy! Those are some very good things to think about.

I do know we would have them Mon-Fri from 9am-3pm daily. I get calls daily from owners about something they are in need of. I have a growing list of patios that have rotten wood that need to be replaced. I know where to buy the materials but will have to look into that part about pricing.

I appreciate the thoughts and also look forward to what others may say.

Thank you!!!

Quote:

Posted By TimB4 on 01/16/2025 11:32 AM

Careful that you don't inadvertently end up hiring an employee vs. an independent contractor.

Thanks for that Tim! I read both of those and if the Board decided to do it, the person would have to sign a contractor offer (like I did) stating that they are a contractor and not an employee.

ElleN (Idaho)
Posts: 1,338

Posted:

Quote:

Posted By JulieH4 on 01/16/2025 12:58 PM

Thanks for that Tim! I read both of those and if the Board decided to do it, the person would have to sign a contractor offer (like I did) stating that they are a contractor and not an employee.

If the hours are regular, then the IRS says no to this seeming work-around to the payer (of the wages) paying its share of FICA taxes.

MichaelS56 (Minnesota)
Posts: 859

Posted:

What is the position of the Board for whom you work for?

LetA (Nevada)
Posts: 2,679

Posted:

Our PM contracts with a "maintenance" provider, but even then you need a "skilled" contractor to come in to handle
projects. Recently we had an electrical problem that was not resolved and I had to insist that an actual electrician address
the issue. The PM pushed back at first and I told him I could tell right off the bat that a licensed electrician did not fix
the issue the first time.

CathyA3 (Ohio)
Posts: 6,299

Posted:

Quote:

Posted By JulieH4 on 01/16/2025 12:58 PM
snip ...

I do know we would have them Mon-Fri from 9am-3pm daily. I get calls daily from owners about something they are in need of. I have a growing list of patios that have rotten wood that need to be replaced. I know where to buy the materials but will have to look into that part about pricing.

... snip ...

The part in bold caught my eye.

Are we talking about repairs to common elements or to things that are owned by residents? Townhouses can go either way with portions of the exteriors.

I assume we're talking about common elements.

If we're talking about individual's personal property that is insured by the individual and not the association, then you'd be taking on significant liability risk if the association handled this work *even if the owner requested it*. In situations like this, we may negotiate a deal with a local contractor. Then the contractor sends information to the owners who can sign up if they're interested. The owner has the business relationship with the contractor is this case, and the association is out of it if there is a dispute.

For example, in the past my community has arranged deals with businesses that clean dryer vents. These vents are defined as part of the unit - thus homeowner responsibility - but we want to encourage people to clean them periodically to prevent fires. If the association just handled the cleaning, it would be violating our CC&Rs and would be liable for any damage. And heaven help us if there were a fire after a vent had allegedly been cleaned.

SheliaH (Indiana)
Posts: 6,964

Posted:

When I was on our board, we had a similar arrangement with a handyman, and saving time and money was a big reason we did it. Our president would walk around the community once or twice a week and take note of stuff that needed done in the common areas, and add that to maintenance requests our property manager received. When we had enough work to keep him busy for at least a day (usually two), he'd go out and take care of them. He'd also buy the supplies and turn in receipts to be reimbursed. We also had him get his own liability insurance, although the jobs were the type that didn't require specialized equipment or skills.

If it is not right do not do it; if it is not true do not say it. Marcus Aurelius

JulieH4
Posts: 75

Posted:

Quote:

Posted By MichaelS56 on 01/16/2025 2:31 PM
What is the position of the Board for whom you work for?

I am the property manager of a self managed HOA

JulieH4
Posts: 75

Posted:

Quote:

Posted By CathyA3 on 01/17/2025 4:57 AM

Posted By JulieH4 on 01/16/2025 12:58 PM

Are we talking about repairs to common elements or to things that are owned by residents? Townhouses can go either way with portions of the exteriors.

I assume we're talking about common elements.

If we're talking about individual's personal property that is insured by the individual and not the association, then you'd be taking on significant liability risk if the association handled this work *even if the owner requested it*. In situations like this, we may negotiate a deal with a local contractor. Then the contractor sends information to the owners who can sign up if they're interested. The owner has the business relationship with the contractor is this case, and the association is out of it if there is a dispute.

For example, in the past my community has arranged deals with businesses that clean dryer vents. These vents are defined as part of the unit - thus homeowner responsibility - but we want to encourage people to clean them periodically to prevent fires. If the association just handled the cleaning, it would be violating our CC&Rs and would be liable for any damage. And heaven help us if there were a fire after a vent had allegedly been cleaned.

We would only hire him to do what is owned by the HOA. If an owner wants to hire them outside their normal business hours, they can approach him. That's the idea anyway.

JulieH4
Posts: 75

Posted:

Quote:

Posted By SheliaH on 01/17/2025 5:28 AM
When I was on our board, we had a similar arrangement with a handyman, and saving time and money was a big reason we did it. Our president would walk around the community once or twice a week and take note of stuff that needed done in the common areas, and add that to maintenance requests our property manager received. When we had enough work to keep him busy for at least a day (usually two), he'd go out and take care of them. He'd also buy the supplies and turn in receipts to be reimbursed. We also had him get his own liability insurance, although the jobs were the type that didn't require specialized equipment or skills.

Thank you Sheila! They would have to be insured and that's a good idea of just reimbursing him, that way he may get a better deal.

SheliaH (Indiana)
Posts: 6,964

Posted:

Just be sure he or she is specific in what's needed (colors, size, quantity, etc) and that the invoice or receipt are itemized, listing the same. You don't want association money to pay for the handyman's personal project.

If it is not right do not do it; if it is not true do not say it. Marcus Aurelius

TristaJ (Texas)
Posts: 96

Posted:

I'm in Texas. We had two employees for a number of years and it sort of worked. One was a very hard worker, the other one, not so much. You almost need two people for the heavier repairs. I think a part-time basis for us would have been more suitable, but I wasn't here then.

DeanJ
Posts: 1,786

Posted:

Quote:

Posted By JulieH4 on 01/16/2025 9:55 AM
Hello everyone,

I am the property manager for a 140-townhouse complex in Texas. Our community was built in 1975, and over the years, we have relied on individual contractors for various jobs, paying them per project. However, with rising costs, I’ve been considering whether it might be more efficient and cost-effective to hire an insured contractor on a monthly basis, rather than continue with the per-job model.

The idea would be to hire a contractor to handle all maintenance tasks around the complex for a fixed monthly fee. Since we are responsible for everything outside the homes walls, we would purchase the necessary materials (such as siding, wood, etc.), while the contractor would take care of the work. Currently, we also have separate companies for landscaping, plumbing, electrical, and extermination services.

I’m curious if anyone here has experience with this model or has considered it for their community. If you’ve tried it, what worked well (or not so well)? Additionally, any insights or challenges you faced would be incredibly helpful as I prepare to present this idea to the Board. If this approach didn’t work out for someone, hearing about those challenges could help in making a well-informed decision.

Thanks in advance for any feedback or advice!

So what does hire full time mean? Is this person an employee and are you handling all the record deduction and contributions?

If this person in required to provide 40 hours of service per week, who determines he hss?

What about vacations and holidays? A contractor sets their own.

You wouldn’t be the first person to get sideways with the IRS for having an employee while attempting to treat them as a contractor.

JulieH4
Posts: 75

Posted:

Thank you all for the replies! Everything said has been sent to the Board as this is just a thought I had to save us money.

It would be a part time handyman/contractor. Everyone who works on property is a contractor and gets a 1099 at the end of the year, even me, and the new person would be the same way. There are no actual employees.

My advise to the Board was have them work the same hours and have the same amount of vacation days as I do. That way they would get time off when they needed it.

It might work, it might not. I'm always trying to save us money so we can take on bigger projects like fixing concrete private roads and sidewalks.

Thanks again!

🎯 You've read this entire discussion

Join the conversation with 50,000 HOA & Condo Leaders:

✓ Ask follow-up questions
✓ Share your experience
✓ Get expert advice
✓ Access 350,000 discussions

Create Free Account →

⚡ Takes 30 seconds

Already a member? Log in here