Soooo, I bought the first duplex and I have some unclear thoughts again so maybe you guys can give me some ideas.
I've found one other PM and I was happy after the interview with him, he is a nice and clever guy, but when we came close to sign a contract he offered me this:
He ( they) will coordinate the project with hired contractors, they will manage my funds so nobody is paid until work is complete, they DO NOT ALLOW owners to mix with the contractors!! And he will be paid 10% of the project cost for these services.
Now, I can accept to have a cooperation with this PM without this, he offered me these two options,
1. he is a project ( rehab) managers and the he gets 10% and I get bids and cannot speak with contractors
2. I have my own contractors and if he goes to check the house and all the work he will be paid 75$
So, I have two questions that bothers me:
1. Is it normal that PM have this kind of a deal? Isn't that what turnkey companies do? and why shouldn't I be able to speak with contractors? And how can I know that it is not in his interest to make the expenses hire so that his 10% is hire as well?
2. even if I decide to have my own contractors, should I still have a cooperation with this PM? Should I trust him after this kinda shady offer?
It would be normal for him to charge a percentage of the work, just like a general contractor. My question is, what does he bring to the table? Is he qualified to supervise contactors, verify their work, and report back to you? And why wouldn't he let you talk to the contractors? That's the part that sounds shady.
I would find a reputable general contractor that can handle this for you. Get the place fixed up to your satisfaction and then find a property manager.
His offer sounds somewhat reasonable. If he's coordinating with contractors he should be paid for those services. Not sure why he is so firm on you not speaking to the contractors though. Perhaps he's not hiring big companies with a business like manager for you to talk to. He may be hiring day laborers & just in general rough guys who are not the kinda folks that should be communicating directly with clients. This could be good or bad. Good because they are cheaper, bad because they could just be a bunch of idiots from Craigslist. Lastly he could be trying to double dip. He could charge you the 10 points & then also inflate their bid.
Case & point this could go well, or it could go poorly. You have some risk here. What is your risk tolerance? If you don't want to take on some risk you should hire a big name company. Most large property management companies have everything set up & automatized for you. I imagine they are most expensive but you guarantee that you are getting what you paid for. In my experience dealing with 1,000's of out of state investors those who try to squeeze pennies usually end up getting burned.
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