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Reduce Risk and Save Time Through Vendor Credentialing

Posted by Liran Koren on March 8, 2021
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Every landlord will, at some point, have to hire a vendor for services such as property repairs and maintenance. While choosing the first vendor that you find on Craigslist may save time, exercising due diligence in finding the right service provider will save you from potential liability.

What is Vendor Credentialing?

What is Vendor Credentialing?

Vendor credentialing is the process that businesses employ to ensure that the vendors that they work with meet certain standards, such as training, education, licensing, and more. Vendor credentialing is usually practiced in fields such as healthcare, food processing, banking, real estate management, and many others.

Why is Vendor Credentialing Important?

Why is Vendor Credentialing Important?

Vendor credentialing is a crucial step to follow in industries that have to comply with strict regulations on local and state levels. Vendors that aren’t thoroughly-credentialed put the business at risk. For instance, rental property owners who work with vendors that do not practice confidentiality may put his/her rental business at risk of non-compliance with regulations on privacy.

Leniency in terms of hiring non-credentialed vendors may also stain your rental property business’s reputation. Remember, vendors that you hire – even if temporarily – will represent your business. If you do not carefully select your vendors, your tenants’ expectations may not be met. If a tenant has one bad experience with an electrician, plumber, gardener, etc., they will be less likely to renew their lease.

Each vendor’s credentials should be meticulously checked before you commit to hiring them. This protects your rental business and ensures that your tenants are safe.

Where Should You Begin?

Where Should You Begin?

Not all rental properties are the same. Before gathering a list of vendors in the area, you must clearly identify the kind of services that your property needs. If you own multiple rental properties, hiring a property management company is the most efficient way to narrow down each property’s specific requirements.

Identifying the specific services that your investment properties need helps you compare different service providers. Keep in mind that not all vendors are alike. For example, while most landscaping companies offer basic services such as mowing and pruning, not all of them provide specialized services such as irrigation repair.

How Should You Select Vendors?

How Should You Select Vendors?

While doing your research on local vendors, make sure that each service provider meets certain criteria such as:

#1 Accessibility and Approachability

Accessibility and Approachability

Ideally, the vendors that you work with should be located near your rental property. They should also maintain multiple modes of communication to allow you and your property managers to easily contact them should the need arise.

Be sure to ask the vendor if they offer 24/7 services. Since home maintenance problems can occur at any time, you must ensure that the vendor will be able to respond to emergencies promptly.

#2 Employee Screening

Employee Screening

Are the vendor’s employees thoroughly screened? As the landlord, you are responsible for your tenants’ safety. If your vendor sends an irresponsible or dangerous worker to the property, he/she may put your property – or worse, your tenants – in harm’s way.

Vendors should freely provide information on their screening procedures. If they hesitate to divulge information, consider it as a red flag.

#3 Industry Experience

Industry Experience

Always choose the vendor that has the most experience. Vendors that have been in business for a short amount of time do not have the expertise. What’s more, is that they do not have enough referrals that will help you assess their quality of work.

Ask questions such as, “What major projects have they been involved in?” and “How many clients have they served since they entered the industry?”

#4 Licensing and Training

Licensing and Training

There are two licenses that you need to check: the vendor’s business license and the professional license of their staff. Many cities and states require vendors to possess licenses to render specific services.

Make sure that the vendor’s licenses are up-to-date and valid in the area that they are practicing in. Avoid unlicensed vendors at all costs.

#5 Insurance Policies

Insurance Policies

Accidents can happen when workers are conducting repairs on your property. If a worker falls through rotten flooring in your rental property, and you failed to warn them about the unsafe condition of the area, you may be held at fault.

It’s extremely important to know if injuries, damages, etc. are covered by the company or vendor’s insurance. Without a proper insurance policy in place, property owners may be held liable for injuries incurred by contractors.

Should You Set Policies for Vendors?

Should You Set Policies for Vendors?

You should always exercise due diligence. Take safety a step further by creating a list of policies that all vendors should follow at all times, whether it’s working on the property or interacting with tenants. Putting these policies in writing protects you and your property should an issue arise.

Keep in mind that these policies should be mutually agreed upon by you and the vendor. Common examples of policies include:

  • Expected timeline – how many days does the vendor have to provide a quote, finish the job, and perform other related activities?
  • Method of contact – how should both parties communicate with each other?
  • Documentation – what proof should vendors provide for the work done? (e.g. invoices, photographs, paperwork)
  • Consequences – are vendors entitled to an extension if the work is not completed upon the deadline agreed upon?

Where Can You Find Reputable Vendors?

Where Can You Find Reputable Vendors?

The Internet is the most convenient way to find local vendors. Check each vendor’s website to learn more about their services, policies, fees, and more. Make use of websites such as Yelp and Google to read client reviews and testimonials.

Another excellent way to find qualified vendors is through word-of-mouth or referrals. Check with your local landlord association if they have a list of preferred vendors. If not, you can always get in touch with other property owners to ask for recommendations. Once you’ve finalized your list of potential vendors, schedule interviews in person or over the phone to see if they are a good fit for your rental business.

The Takeaway

Ensuring that vendors meet certain criteria can be a time-consuming process, but it cannot be overlooked. Not screening vendors carries serious consequences that may put you, your property, and your tenants at risk. By providing your rental property with quality services from established vendors, you can protect your investment from liability. Plus, you’ll have a reliable network of vendors that you can count on when emergencies arise.

Working with the right vendors helps grow your rental business. At Luxury Property Care, we have established a long list of preferred vendors who deliver quality services at the most competitive price. Learn more about how we select our vendors and how you can benefit from working with a team of professional property managers by calling (561) 944 – 2992.

Fill out the contact form on our website to get in touch with our team today.

I'm Liran Koren. I'm a real estate pro and co-founder of Luxury Property Care. I believe that through common work we can create a healthy ecosystem, that serves investors, landlords and even.... Read More