Welcome to the Self-Storage University Podcast, where you will learn the correct way to identify, evaluate, negotiate, perform due diligence on, renegotiate, finance, turn-around and operate self-storage facilities. And your host is a partner in one of the largest real estate portfolios in the U.S. with nearly $1 billion of holdings, Frank Rolfe.
You wanna pave your roads, not be paving the way to being taken advantage of. This is Frank Rolfe with the Self-Storage University Podcast. We're gonna talk about paving and all of the many scams that go with paving. Let me start off by saying there's a lot of great paving companies out there. I'm not saying that all paving companies are bad, that they're evil, that they're looking to take advantage, but there are a few out there who use some tricks, which happen so frequently, you have to imagine is kind of part of the business model for those few contractors to take advantage of those who need to have things paved. So why do we need to pave things anyway? Why don't we just give up on paving? Well, the problem you have is in the absence of paving for most storage facilities, you would just have basically dirt.
The cars would drive over the grass, they would kill the grass. It would become dirt. And that leaves you to have a very dusty and very muddy surface to drive on. And no one really wants that. Not when they're opening up their roll up door and putting their things in. They don't want to have all kinds of dust and things going in there. Instead, what do they do? Well, you have some options at the high end of the scale. You can put in concrete, concrete is a permanent solution that lasts forever, although you may have to fix cracks periodically. And then there's another option, which is to put in what's called road base or gravel. But the problem with that is it doesn't come off as looking fully finished, and it still has some element of dust and such that comes with it. But then in between those two things, you've got asphalt paving, and for some reason, all of your scams revolve around the paving.
It doesn't happen with concrete, doesn't happen with putting in more gravel or caliche on a road that's made of rock. It's all about the paving. What are the things, what are the problems with paving that can get you in trouble? Well, the first trick that some contractors do is they quote the job not based on what the total dollars will be, parts and labor. Instead, they give you a quote based on how much it is per truckload of asphalt. They try and make their bid simply price per truckload of asphalt. But they don't tell you exactly how many truckloads it's gonna be.
That's left up as a mystery. You always ask them, you say, "Well, how many truckloads of asphalt do you think I will need to fix these roads here in my storage facility?" And they'll say, "Oh, well it's gonna be 10 truckloads." And then when you get the bill, it's 40 truckloads and there's not a darn thing you can do about it because you agreed to such a stupid bid. You signed off on the idea that you were gonna pay X dollars per truck without any guarantee of how many trucks you're talking about. So what happens then when you don't pay it? Well, he's gonna probably sue you, slap a lead on your facility. You're in real trouble.
So how do you fix that? How do you not fall into the, oh yeah, it's gonna be X dollars per truckload. Don't accept bids like that. When the contractor says, "Well, I don't know how many truckloads it'll take." Then say, "Well, you must not know much about paving if you can't figure it out." So no, don't accept that. A good paving company will give you a bid that is all bills paid, parts and labor X amount. Sometimes they may bid it wrong. They may bid it too aggressively and they may lose money on it. But they stand behind that because the norm is that they do make a profit. But regardless of how many truckloads it took to get the job done, you're gonna get paid or charged one price. So on that scam, that's all your fault because you didn't force them to give you at all bills, paid parts, and labor final price.
Now, another trick that some pavers like to do is to put in a whole bunch of change orders. What happens is you sign the agreement to go ahead and get your self storage facility paved. And what happens? Well, the bill comes in and the bill isn't X that you agreed to. You thought you had it down. You thought you had a price that includes parts and labor, but now it's coming in maybe two times what you thought. And you say, "What is this? We didn't agree to this." And they say, "Oh yes you did." Well, we got out there to do the job. Your manager kept having all these additional items, wanted this, wanted that, wanted more speed bumps, wanted to just put this curb and gutter wanted us to do this, to do that. Well, you then call your manager, manager, did you agree to this?
And they say, "Yeah, I sure did. They just came to me and they said, Hey, wouldn't it be good if we had more speed bumps? Wouldn't it be good if we went ahead and put in a curb and gutter system?" And so I said, "Yeah, yeah, that sounds good." Not realizing that it was not in the bid, it was gonna cost you money. And once again, you're completely stuck because if you don't pay it, they're gonna go slap a lien on your property saying that the manager was your agent and they agreed and therefore you're stuck. So how do you get outta that pitfall? Well, the way you get outta that pitfall is that you put in the contract that no one can change anything you do with that contract other than you and in writing. So if a manager said, "Oh yeah, let's put in more speed bumps," well that's not acceptable because you can't amend the contract unless it's in writing by you, only you, nobody else. Are they taking advantage when they do that? Of course they do. They go to the office all the time wanting additional items, knowing the manager will say, "Oh, I don't care. Sure." You gotta stop them from doing that. And that's how you do that is you put in the contract that that does not count. Manager can't approve a darn thing, only you can approve it. And even then, there's not a, he said, she said later that it must be in writing signed by you.
Now another thing that pavers do sometimes is, they come at the end way after you agreed on everything and they then say, "Oh yeah, and if you want us to do this, this'll be extra." And that which will be the extra was part of the original bid you thought.
So how do you get away from that? You gotta make sure that everything to the umpteenth detail is identified in that bid. Some pavers wanna just put on there, fix the potholes, put on the skin skim code of asphalt, total prize 12,000 bucks. That ain't gonna work. Fix the potholes without identifying how many there are? That's not gonna work. You want them to go out there and mark those potholes. Spray paint of a big square around each of them. Make sure you understand every single item that they are going to be doing and that it's included in that contract. You cannot leave it loose like that.
You'll think, "Well, we had an understanding, we talked about it, we knew what was going on, I walked the property with them." You think that's gonna hold up in court? You have no record of that whatsoever. You'll say, "Well, we walked around." And they'll say, "We sure did. But we only talked about those big potholes, none of the small ones." And how are you gonna prove that that wasn't what was said? You're not going to be able to. So you've gotta make sure that your bid from the paver is extremely detailed.
We find that the really big companies, they typically always do that is for their own protection as well as yours. Is that middle grade paver, it's not one of the big guys, not a really professional trying to just slide some stuff in there, they always seem to wanna have the bids are very, very short. Professional, their contract might be two paragraphs long of detail. And this person just wants to have a sentence in there. They do that deliberately because they wanna keep it open-ended because that way they come back later on you and hit you up with a lot more stuff.
Finally, sometimes what the pavers will do is they'll do a lousy job and then try and pressure you to pay. So, well, nothing will match up, nothing with align. Everything is all screwed up. You go out there, you look at the roads and say, "This is terrible. You've done a terrible job." And they're like, "I don't care, pay me, or I'm gonna sue you or slap a lien on your property." What do you do on that one? Just don't be bullied. You have an agreement and they didn't meet the agreement. Take copious photographs of everything they did. Get a statement from your manager in writing that says, they did a terrible job. You gotta stand up for yourself because they'll walk all over you if you don't. If they promised they would do something and they didn't do it, make them do it. If they did something and it wasn't any good, don't pay them until it's fixed. We've had stand-offs before with pavers where they didn't in the end do what was agreed to. And rather than pay them, we say, "Well, we'll pay you but only once you fix it."
Then also don't let them do things where they say, "Oh well, pay me now and I'll fix it later." No, you can't do it. And don't let them say, "Oh, hey pay me, I'm almost done. I'm only a day away from done, pay me." Those really low grade pavers, they'll just vanish on you. The minute you pay that bill, they're gone. They don't care. There's no more money in it. They're not coming back on Monday. They're not coming on the weekend to finish the job.
So just be very, very careful. Never to pay anyone until the job has been done to your satisfaction and completed. The bottom line to it is that there's a lot of good pavers out there, but there are also some bad ones. These are some very, very common scams. If you talk to people who've owned a lot of properties over the years, you'll hear they've encountered all of these. So instead of the pitfalls, do those corrections I just talked about and you should be able to escape those kinds of paving scams. This is Frank Rolfe of the Self-Storage University Podcast. I hope you enjoyed this. Talk to you again soon.