Project Manager Pay for rehabs and prehabs??

Question

Hello,

I would like to know once i hire a PM how much should i pay him to manage my prehabs i will be doing.  His responsibilities will be to manage the prehab and to set milestones for contractors, pulling permits, and basically just being liable for the whole prehab.  Should i give him/her a percentage of what i make from the prehab?( and how much) or should i pay a wage per hour? (and how much)  Thanks

Aaron McGinnis · Answer

You really don't want someone who feels any kind of ownership over your business in the PM position. It is way too easy for that person to feel as though they own the entire business, and that can lead to a very bad place very quickly.

The PM needs to be strictly an employee or strictly a subcontractor, do not make them a profit-share partner. This is a relationship that needs to be cut and dried and leaves you in total control.

Manolo D. · Answer

I might have confused you a bit, this is what "I" charge. And this is something that you could do a 1099 for. Although 1099s are pretty rigorous in some areas, the manager is not actually being controlled by the client, no time, no tool, his tool is only a pencil or a computer.  This is how I value my time, if someone hungry for work or is of a lower caliber, they might charge lesser. In case if an investor will be hiring a full time employee, then it is according to skill, accuracy, scope of services, and etc at the very least. Someone could hire a $12/hour employee if all they do is collect names of a subcontractor and give them to you, but a former superintendent or a REAL project manager that could conceptualize and close ground up construction by just pushing paper won't accept anything below $40/hour with benefits.

Every investor has their own limit of pay for management, and every worker in any shape or form knows their value, for the services mentioned above, I think it is an affordable rate for the scope that will be done. It all depends on the investor's taste and what they think they want vs what they really need.

Marcus J Richardson · Answer

Yea I'm thinking more of a w2 employee since they will be overseeing all of my prehabs. I wish to get up to two prehabs a week. 8 in a month so I would probably save on cost aswell if I paid a salary of let's say 50k. Instead of around 2k per prehab I do.  How does that sound.

Account Closed · Answer

I have no idea what the appropriate wage/salary is in your area, but keep in mind that a $50K salary is going to cost you a heck of a lot more when you factor in the all the soft costs of having an employee.

Account Closed · Answer

@Marcus J Richardson, @Aaron McGinnis points out a couple of key things to be mindful of: 1) the cost of a W2 employee vs. the cost of a 1099 sub/independent contractor (yes, a PM can be a sub).  With a W2 employee, you'll have a plethora of soft costs and responsibilities that you won't have with a 1099.  But keep in mind that the IRS has clear definitions about the differences between a W2 and a 1099 worker. 2) "This is not a particularly easy job, and there's a lot of idiots running around doing it badly. You should take your time and hire wisely."

As for how to compensate your PM, that really boils down to the kind of person you want on your team... one who is compliantly motivated relative with their fear of losing their job or, one who is entrepreneurial, like it appears you are, and is motivated by rewards greater than simply earning wage?

Manolo D. · Answer

@Marcus J Richardson If you have the volume, and you have the cash, hire one. But I wouldn't do anything for less than $40/hour. $25/hour less taxes runs around $21/hour or $168/day, rent here is around $1500/month plus utilities, so two weeks goes to rent and utilities. People have to eat also.

Aaron McGinnis · Answer

Is this for a full time employee? Doesn't that complicate payroll considerably, and cause your management overhead to expand as the job expands?

Manolo D. · Answer

I do them 3k for less than 30k jobs, +1k every 10k up to 100k, if above 100k 10k + 500/10k. But this is a full accounting, full reporting and full responsibility job, 2 days/week jobsite visits.

Marcus J Richardson · Answer

Oh ok I just re read what you wrote. Yea I'll give them salary then. And since I can't really control there time I'll just set the standards of making sure everything is complete up to standards on the deadline.

Aaron McGinnis · Answer

I would not recommend paying a slice of the action. This person doesn't need to have skin in the game... he's a mid-level manager, his skin in the game is that he gets to keep his job if things go well, and lose his job if things go badly.

Project Manager Pay for rehabs and prehabs??

Most Popular Reply