We hired the cheapest painter we could find on a 6-unit turn last spring. His bid came in at $1,800 for all six units. The next lowest bid was $3,100. The highest was $3,600.

He was $1,300 cheaper. It felt like a win.

Three weeks later, we'd paid him $1,800 for work that had to be completely redone. Walls had roller marks you could see from the hallway. Trim paint was bleeding onto the walls. He'd painted over outlet covers instead of removing them. One unit had the wrong color entirely because he grabbed the wrong can and didn't notice until we walked it.

We brought in our regular crew to fix everything. Cost: $2,400 to strip and repaint what he'd done, plus the original $1,800 we'd already paid. Total cost: $4,200 for work that should have cost $3,100.

Oh, and the three-week delay on those units cost us approximately $3,300 in vacancy loss because we couldn't show them while the paint was being redone.

Total damage from the "cheapest" bid: $7,500 instead of $3,100.

We learned that lesson once. We won't learn it again.

The Three Hidden Costs of Cheap Contractors

When you look at a contractor bid, you're seeing one number. The actual cost of hiring that contractor includes at least three other numbers that don't show up on the quote.

Cost 1: Rework

Cheap contractors are cheap for a reason. They're either cutting corners on materials, cutting corners on labor (working too fast, skipping prep), or they're inexperienced and don't know the difference between good work and bad work.

In all three cases, the result is the same: you're going to pay someone else to fix what they did. Or you're going to live with substandard work that costs you in other ways (tenant complaints, faster deterioration, code violations).

In our experience, roughly 30-40% of work from bottom-dollar contractors requires some level of rework. Not always a full redo like our painting disaster. Sometimes it's a callback to fix a leaky faucet that wasn't installed right. Sometimes it's rehanging a door because the hinges are crooked. Each callback costs time, coordination, and usually money.

Cost 2: Vacancy Extension

Every day a unit sits in "under repair" status is a day it's not generating revenue. When a contractor misses their timeline, or when their work needs to be redone, the vacancy extends.

On a $1,000/month unit, every day of extended vacancy costs roughly $33. A one-week delay costs $233. A two-week delay costs $466. These aren't hypothetical numbers. They're real dollars that disappear from your NOI and never come back.

Reliable contractors who charge more per hour but show up when they say they will, finish on schedule, and do it right the first time are almost always cheaper on a total-cost basis than the bargain option who takes twice as long and requires two trips.

Cost 3: Relationship and Reputation Damage

If a tenant moves into a unit with sloppy work, they notice. The cabinet door that doesn't close right. The paint drip on the floor that nobody cleaned up. The caulking around the tub that looks like a 5-year-old applied it.

These details communicate something to your tenant: you don't care about this property. And tenants who believe their landlord doesn't care about the property don't care about it either. They're less likely to report maintenance issues early. They're less likely to keep the unit clean. They're more likely to leave at the end of their lease.

Tenant retention is directly connected to the quality of the living experience. That quality starts with the work your contractors do.

How We Vet and Select Contractors

We don't hire the cheapest option. We don't hire the most expensive option. We hire the contractor who gives us the best value, defined as quality work completed on schedule at a fair price.

Here's our vetting process:

Step 1: Referrals first, ads never

We don't find contractors on Craigslist or random Google searches. Every contractor in our network came through a referral from another property manager, another investor, or another contractor we already trust. Referrals carry accountability that ads don't.

Step 2: Small test job

Before we hand a new contractor a $5,000 project, we give them a $500 one. Fix a fence. Paint a bathroom. Replace a water heater. Something small enough that if they botch it, the cost is contained.

We evaluate three things on the test job:

Did they show up when they said they would?

Did they finish when they said they would?

Is the work quality acceptable?

If any of those answers is no, they don't get a second job.

Step 3: Three bids on anything over $2,500

For larger projects, we get three bids. Not because we're looking for the cheapest one, but because three bids give us a market range. If bids come in at $4,000, $4,500, and $4,200, we know the market rate is roughly $4,000-$4,500. If someone bids $2,500 on the same scope, something's off. They're either cutting corners, underestimating the job, or they're going to hit us with change orders halfway through.

Outlier bids, both low and high, get scrutinized. Fair market bids from reliable people get accepted.

Step 4: Written scope, written timeline, written price

No handshake deals. Every job over $500 gets a written scope of work that specifies:

Exactly what work will be performed

Materials to be used (brand and grade, not just "paint" but "Sherwin-Williams ProMar 200, eggshell, two coats")

Start date and completion date

Total price, including whether materials are included

Payment terms (we pay on completion, not upfront, with few exceptions)

This document protects both sides. The contractor knows exactly what's expected. We know exactly what we're paying for. If the finished product doesn't match the scope, we have a reference document.

Building a Contractor Bench

One of the most valuable assets in property management isn't a building or a bank account. It's a reliable contractor network.

We maintain a "bench" of 2-3 contractors for each major trade:

Plumbing: 2 companies, one for standard service calls, one for larger projects

Electrical: 2 electricians

HVAC: 2 companies

Painting: 1 primary crew, 1 backup

General handyman: 2 individuals for small punch-list work

Flooring: 1 primary installer

Cleaning: 1 dedicated turn cleaning team

Having backups matters. If your only plumber is booked for two weeks and you have a water heater failure, you're either paying emergency rates or your tenant is taking cold showers. Neither is acceptable.

We also pay our good contractors promptly. Net-15, no exceptions. Good contractors have options. If you pay them in 45 days, they'll prioritize the client who pays in 15. Being a good client to your contractors is one of the best investments you can make, because when you need someone on short notice, the contractor who trusts you to pay fast will rearrange their schedule for you.

The Real Math

Here's a simple way to think about contractor selection.

Contractor A bids $3,000 and completes the job in 5 days with zero callbacks. Total cost: $3,000 plus 5 days of vacancy ($165 on a $1,000/month unit). All-in: $3,165.

Contractor B bids $2,200 and takes 10 days, plus needs one callback visit that takes another 2 days. Total cost: $2,200 plus 12 days of vacancy ($396) plus the callback labor ($200). All-in: $2,796.

Contractor B looks cheaper on paper. But factor in the extra week of vacancy, the callback, and the stress of managing a substandard job, and the gap narrows to almost nothing. Now factor in the risk that Contractor B's work causes a tenant complaint or an early move-out six months later, and Contractor A was the obvious choice all along.

The Bottom Line

Your contractors aren't an expense to minimize. They're a revenue tool to optimize. The right contractor preserves your asset, keeps your tenants happy, and gets your units back on the market fast. The wrong contractor costs you in ways that never show up on their invoice.

Stop shopping on price. Start shopping on value. Your NOI will thank you.

If your properties aren't performing the way they should, let's talk. Reach out at Tanner@TopTierInvestmentFirm.com or visit toptierinvestmentfirm.com.

Tanner Sherman is the Principal and Managing Broker of Top Tier Investment Firm in Omaha, Nebraska. He co-hosts the Freedom Fighter Podcast with Ryan of Avara Investments.

Why the Cheapest Contractor Is the Most Expensive One