RV Park Mastery: Episode 71

Watch Out For The Interaction Between Managers And Contractors

There is nothing more dangerous to stay on budget with your RV park than the relationship between the manager and contractors. Even the best-planned renovations and property updates can go bad when a manager gets involved in the process. In this RV Park Mastery podcast we’re going to review how a manager can ruin your budgets – and even create liability – when you let them have a say in what, when, and how a contractor works on your property.

Episode 71: Watch Out For The Interaction Between Managers And Contractors Transcript

Managers and contractors, a toxic combination. This is Frank Rolfe with the RV Park Mastery Podcast. We're gonna talk about the pitfalls that can prevail when you have relationships between the manager and then when the contractor and where you don't set certain boundaries and let them have influence and kind of run wild and the terrible things that can happen from that. Let's look first at what happens when you have something you need done at your RV Park. Let's assume that you need to get some trees trimmed, as an example. You wanna get rid of your dead tree limbs, your dead trees, they overhang your various RV sites and camp sites, and you can't have one of those obviously come crashing down, so what do you do? Well, you dispatch three tree companies to go out and give you a bid, and at the end of it all, you have the low bid and you check their insurance. Yes, they have insurance, and they can start it on it on the right timetable and get it going. You say, "Okay, let's go ahead and get them out there to start doing it."

And your agreement was they would trim and cut down all those trees for $7,000. But then the bill comes in later and the bill comes in at $10,000. Now, you call the tree company up and you say, "Tree company, what happened here? Your bid was $7,000, I have it in writing, but you sent me a bill for 10,000, so I'm not gonna pay it." And they say, "Well, you have to pay it, if you don't pay it, I'm gonna slap a lien on your property, you'll be humiliated. I'll sue you in small claims court." And you say, "Well, under what right do you have to send me a bill for 10,000 when our agreement was seven?" He goes, "Oh, well you see what happened was when I got there, the manager just kept adding on items." They said, "Oh yeah, well, while you're here, let's reshape those two trees at the entry, and also that tree there. I know it's not dead, but it looks like it's starting to get sick, let's go ahead and take it down too." And what do you do? Well, you're pretty much doomed because there really is no way to get out of this.

Your manager, who is really an agent of your company, the person in charge has gone out there and ruined you financially because they amended the contract. That's a problem you have with managers frequently, they decide, "Well, you know what, I'm smart, I know what I'm doing, I'm gonna go ahead and import my little additional thoughts," and it's a catastrophe. So how do you not have that happen when you have a manager and the contractor? Well, the first thing you have to do is you have to make sure that the contract states that cannot be amended by anyone other than you. You have a written agreement to perform a certain set of work, a certain set of price and it needs a say in it in all caps if needed, this contract cannot be amended by anyone on site, including the manager without my written permission as the owner, that would've solved the problem.

And you should also tell the contractor this, constantly tell the contractor, "Look, when you get out there, there may be people at the RV Park or my manager who says, Hey, you know what, while you're here, I have this great idea of something I'd like to have done, don't you dare listen to them. I'm not going to pay for it, it's right there in the contract, there are no amendments," and just remind them constantly. And then tell your manager, when the contractors there, do not go out to them and give them any additional work to do. Your only job is to manage the RV Park and to give me photos and updates of how they're progressing on the job. But you don't add anything to it, you don't throw anything else out there. If you hold the manager and the contractor in that kind of relationship bond, then you won't have situations where the bill comes in and it's nothing like the bid. But unless you do that and it will happen to you, the next thing that happens between contractors and managers is even worse, and that is when they decide to go into collusion.

Here's how that works. Let's assume you've got a problem out at the RV Park, your water line is broke and water's going everywhere, and the manager tells you it's a really big issue, there's so much water, we gotta get all over this thing. And I talked to ABC Plumbing and they said they can come out and start on it right now, and you know what, if we don't get it done, the city came by and they said they're gonna shut our water off. Can't have such a leak going on, so we gotta get it done. So what do you do? Well, you're desperate to get it fixed. You trusted the manager, you say, "Okay, well, I guess then let's get it go with ABC Plumbing, but how much will it be?" And they said, "I don't know, let me get ABC out there, out here and get it going and we'll give you a price." Then they call you up and say, "Okay, ABC is here. And ABC, after looking over the job, they say they can get it done, but it's gonna cost about $4,000." You say, "Wow, that seemed like a lot."

They said, "Well, I know, but it's a pretty big old leak, sure is looking pretty terrible." So you say, "Okay, well, let's get it going." And then what happens? Well, you get a bill for 4,000, so they got that right, but the problem is you never had a water leak or if you had a water leak, the actual cost to fix it was the thousand dollars that you thought it would've been, and they end up splitting the proceeds. Basically, they'll give the manager half of whatever you send, so you'll send the plumbing company 4,000, they'll pay the manager 2000 and say, "Hey, let's do that again sometimes soon, that was fantastic." Now how do you guard against that? Well, the way you guard against that is you say, "Well, if there's a big old water leak, send me the picture, show me the video of that big old water leak. Show me the photo of the video of someone actually doing the digging, I wanna see them out there digging, I want to see, okay, there's a line, now I see it, we're losing water, I wanna see the patch. I wanna see that everything's dry around it, that the patch has worked, and I wanna see them burying that again."

You've gotta get more granular into what the problem is and make sure you're not being scammed. Also, it's a good idea when you have contractors, particularly plumbers, plumbers over time have proven to be the worst at this. I don't know why that is. Why not electricians? I don't know something about plumbers, it's been our experience. What then happens is you've gotta make sure that you change that plumbing contractor on a frequent basis. Don't let the same plumbing contractors suddenly start popping up over and over again, that's the first sign that something bad is going on. What do you do? Well, you tell the manager, "Hey you know what? Yeah, let's try out somebody new. I don't wanna use ABC." "Oh, no, we gotta use ABC, they're the best." "Well, no I want to use somebody else." Because when the manager presses to use that contractor, that's a good sign there's collusion. And here's what we see sometimes, RV Park never had any problems at all, and then suddenly this starts popping up over and over and over, same problem. Seemed kind of weird, doesn't it? Been on for years, decades, never any issue and suddenly, bam. Problem after problem after problem is all popping up, what could it be? Well, I can tell you what it would be. It's probably collusion.

And speaking of collusion, another problem you have with RV Park managers and contractors is nepotism, many times things that happen in the RV Park turn out not to really be armed with transaction, but a transaction between your RV Park manager and their boyfriend, girlfriend, family member, best friend, doesn't really matter. Now, why is nepotism so dangerous? It doesn't work in a RV Park setting, because traditionally you just have the one manager overseeing everything, and they're never gonna tell you the truth about anything as long as they've a vested interest in pleasing and keeping that person employed. So you just can't allow it. When you find that somebody is wanting to hire someone that they are related to, to do some task, don't do it. There's a million horror stories of situations where managers hire their next of kin, their best friend, their romantic component, and those things always end up in a complete mess. Not only does the job never get done correctly, never is it even on budget, but typically it always ends in litigation at the end, because somehow or other they break up or they fight or something terrible happens, and then they come after the RV Park because they want vengeance and they want their money and whatever. So just don't even allow it to happen. If someone's last name is Smith and they wanna hire a contractor and it's called, you know William Smith and Sons, you got a huge problem going on.

So make sure that when you hire contractors that they are, in fact third parties that are not related to the manager. And the final component, what you have between managers and contractors is you've gotta play more active role in vetting those contractors. Every contractor that ever sets foot on your RV Park must, at a minimum have a contractual agreement in writing, parts and labor when the start date will be and insurance. You can't just let your RV Park manager hire people to do jobs, because the problem is, everything I've just described is gonna happen when you let your guard down and let them start doing that. That does not mean that you have to micromanage, you don't have to go be the one to call every time there's a leaking faucet. However, you do have to vet who those contractors are, you can't let them just pick and choose themselves. If they wanna give you a slate of three or four options, that's fine. If you wanna go ahead and get the insurance and stuff and make sure everything's fine with those, that's fine too. But you have to play a more active role because if you look at how much money goes out the door with contractors, you can really ruin your budget for that month or even that year if you let the manager and the contractor run wild. This is Frank Rolfe, the RV Park Mastery Podcast, hope you enjoyed this, talk to you again soon.