Let’s admit it, investing in property is not all rosy when you have maintenance issues. This is usually the biggest expense and it’s unavoidable. So as smart investors we all want to find ways to minimize outgoing expense.
And tradies understand that. Investors are not looking for top notch jobs. They just want someone who can get the job done, fast and at a relatively cheap price.
So how do they come up with a win-win? You guessed it – cash job!
What is Cash job?
Cash job is when customer pays the tradie cash for the service performed. As the customer will not get an invoice for the services carried out, tradie essentially won’t charge you the GST (and usually they may also avoid income tax) and therefore can quote a lower price.
The pros of doing cash job:
1. Cheap cheap la
2. Sometimes you get the job done faster as some tradies prefers cash job over official quote but not all the time
The cons of doing cash job:
1. As there will be no tax invoice provided, therefore you cannot guarantee quality of the work carried out. Tradie also takes no responsibility after work is completed should there be any defects
2. No Tax Invoice provided, so you won’t be able to claim as tax deductions expense
So as you can see there are a number of risks associated with this approach. What I’ve learnt is, if it’s a minor handyman job (couple of hundred dollars) then you may be able to get away with it. Anything other than that then cash job risk may outweigh the actual benefits.
In my investment journey I have been burnt by cash jobs once and since then I’m not a big fan.
This happened to my Slacks Creek property. Prior to settling I was looking to get downstairs cleaned up a bit. Also couple of things needs tidying up before I can get the place tenanted.
The scope of works were:
1. Remove wallpaper in bedrooms
2. Paint upstairs walls, ceiling, doors – 2 coats
3. Replace carpet for 3 bedrooms plus study
4. Paint downstairs walls, ceiling, bathroom, stairs – 2 coats
5. Downstairs bathroom small reno – replace shower screen, shower heads, knobs, floor tiles
6. Install small kitchenette including a hot plate, small sink and storage cupboard (to turn downstairs into a single studio style)
Hindsight is always a beautiful thing. This is by all means no small work. My budget was 5K all up and the tradie I got referred to was happy to do all the work but it has to be a cash job. Alarm bells did rang at that time but I still went ahead with it due to budget constraint. That was mistake #1 – for this type of reno it should never have been a cash job. I was still relatively green in engaging tradies for reno at that time so did no check on the guy, and I didn’t consider any compliance issues.
Once the property settled the tradie and I agreed on the project duration and when the work will commence. I’ve paid the deposit and requested photo updates daily so I can check the progress remotely. Everything looks promising at that stage.
Week 1 went by and I was catching up with the tradie every two days over the phone. The only problem is I didn’t get any photo updates as he was just “starting the work”.
Towards mid of week 2, after a number of calls he reluctantly sent me a number of photos. I can see the downstairs bathroom was being worked on, and the small kitchenette sourced and installed. All looks fine so far, and I was busy liaising with PM to get a tenant so I’ve left it with the tradie.
Come week 3 which is meant to be the final week, I’ve got a call from the tradie to say he’ll need a couple more days to get the work completed as he’s still got a bit to do. I’ve told him I have the tenant moving in at end of week 3 so hurry up please as there is no room to move in the timeline. He said he’ll get one of his mates in to speed up the process, but it’ll cost me a bit more.
At that time alarm bells start to ring at that time but I wish it ranged earlier! I realized that he’s behind on his schedule and want to get paid more! Also we all know human are much more prone to making mistake when pressure is on and deadline is really close.
When my Property Manager attended the place on Friday evening for status check-up, he’s still madly getting the old carpet replaced and walls painted. The mess was everywhere and he’s nowhere completing his work, let alone starting to tidy up the place! PM gave me a call, briefed me what’s happening and sent a couple of photos to me on the works being completed. Here’s a couple that I’ll share:
The carpet was “nailed” down, with nail head still sticking out! Imaging my tenant stepping onto it…
Have you ever seen carpet laid this way like a jigsaw puzzle? Well, now you do
Seriusly poor edging…
As you can imagine – all in all I was not impressed about the quality after seeing these photos. I gave him a call straight away to fix these up, but apparently he had a big fight with the PM and never came back to fix things in the end. And because I didn’t have an invoice I can’t hold him responsible for the crappy quality work he’s done…
The tiling was also done very poorly to the point where my PM could’ve done a better job than this!
In the end I had to spent more money to get another tradie to tidy things up and making it compliant, and it costed me more…but hey, it certainly taught me some good lessons about tradie and cash jobs!
So here are a couple of my personal key takeaways:
1. Try avoid cash job for any semi-serious reno. Personally anything over $500 I would now request a proper invoice to ensure work is carried out to a good quality.
2. Anything less than $500 (i.e. relatively minor, low risk jobs) may consider using a cash job tradie. Although with such low value you may not get much savings anyway, so after this experience I just go with a proper handyman or someone who provides an invoice.
3. Ask your PM to commit to do regular check-ups for you as work is progressing. If I’m able to do this again, even if I have to pay them to do this, I would engage the PM to physically be there every couple of days to check-in on the quality of work to ensure the work is on track as per the agreed schedule. I would do this disregard whether it’s cash tradie or any sort of renovation really, as PM is your trusted eyes on the ground.
4. Bottom line for me – that little extra saving is not worth all the potential risk and headaches that comes along with cash job tradies.