What percentage to pay project manager?

Question

I am interested in a rehab in the San Antonio, TX market. The project manager is ALSO my RE agent. The home is a small, old (1940) 1,000 sf sfh. This home needs approximately $25,000 in rehab. I expect to sell for around 120K. From what I have read by previous posters on this topic on bigger projects I think a 15% take on profit to be a fair payment for project management. Is this correct?

This RE agent also wants to be my seller and expects the typical 6% commission. IF it is true that 15% of profits is a FAIR payment for a PM, then is it also fair for this RE agent to receive a 6% commission?

This  RE agent also wants to be my seller and expects the typical 6%  commission. IF it is true that 15% of profits is a FAIR payment for a  PM, then is it also fair for this RE agent to receive a 6% commission?

Lori Hunter · Answer

I know this message is a little late, but thanks for the answers they definitely helped!

Dan Clark · Answer

If I'm following Yasmine and Ricardo on this post correctly then 10% of the cost of rehab is a generous payment for managing a rehab?

Yasmine Bisumber · Answer

Lori, it can get a bit complicated when you yourself cannot verify what is being spent on the project as a whole. I work with out of state investors and what we do is place the budgeted amount based on the wining contractors bid in a joint bank account. This way as the PM I handle the project and manage it and the owner/investor sees what is going on and still have complete control to pull the plug. We also communicate regularly and if there are very any questions or concerns they are spoken about almost immediately. So instead of the investor sending me receipts, I do that for them. I am able to keep track of the project and all expenses.

It wasn't easy establishing this kind of relationship but it works for us. Hope this helps.

Lori Hunter · Answer

I posted this question elsewhere, but maybe someone from this thread could help me out?...

We are about to begin project managing a renovation project and wanted clarification on something...

We will be collecting 10% of the total rehab cost.  Of course, this should include costs of ALL the materials such as tiles, sinks, vanities, doors, tubs, etc as well as labor, and supplies, correct?

Assuming this is correct, if the client is currently living out of town and ordering these materials on a credit card to be shipped to the site, how do we ensure we get compensated for our full project cost?  Do we ask that they hand over receipts?

Thanks in advance...

Dawn Brenengen · Answer

@Dan Clark I've been doing this for my out of state buyers for FREE! (Although, I do earn a nice commission in my average price point, so it's not so terrible).

Dan Clark · Answer

Let me clarify. I am saying the project manager (who is the RE agent) will be functioning as a manager of the subcontractors and will be in some ways like a GC, however their will be no GC for this rehab. This RE agent has no experience or training in carpentry, plumbing, electrical, roofing, etc. They will not be involved in the manual labor of the rehab. They will instead be managing the subcontractors throughout the rehab. They will get the bids, ensure the subcontractors adhere to deadlines, monitor their progress and general quality of work.

Ricardo G. · Answer

3% goes to the buyers agent and 2% to your seller's agent by the way. If you go the 5% route

Ricardo G. · Answer

In my opinion 15% just to control the GC and the other subcontractors is way too much.  I have seen it in other posts if I'm not mistaken that 10% of their rehab cost is the usual when you have a manager to help you hire the contractors and Supervise and to make sure everybody is doing their job. I might be mistaken though but that's how it is.  I truly don't mind paying 6% to my sellers realtor but if you expect to do more than one deal with him ask him to cut you a deal of 5%

Jeremy Pace · Answer

@Dan Clark

Are you saying project manager when you mean general contractor?  Or are you saying project manager as in, the person who keeps the GC on task?