Project Manager Compensation?

Question

For any of you medium to high volume flippers, I'm curious as to how you compensate your Project Managers. Our team is shooting for 24 Flips this year (and on-schedule so far) and we're struggling with our Project Manager. The original plan was to be 100% commission, based on metrics like net profit after the flip is sold, size ($) of the remodel, finishing on-time and under-budget, etc.

Meeting our average profit per flip and doing 24 / year, our PM has the potential to make around $72,000 / year. This is 1099 and the schedule is SUPER flexible. Pros and Cons of this compensation plan are...

* We could lose money on a project, or make twice our planned profit.
* The amount of hours spent managing could vary, based on size of remodel and number of contractors involved (10 hours or 80 hours, paid the same).
* The house could sit on-market a while, meaning the PM doesn't take a commission for 6-9 months on that project.

I'm hoping to get some feedback. What is everyone else doing for Project Management? Compensation, full vs. part time PM's, number of PM's, duties & responsibilities, etc. Thanks in advance!

- Troy

Troy DeLong · Answer

Thank you very much for the insight Autumn! Those are some great questions to ask and the clear communication up front is definitely key.

Troy DeLong · Answer

@Chris Seveney & @Corby Goade

All great feedback. Thank you!

Corby Goade · Answer

Honestly- with that volume and the profit you should make from 24 flips, $72K isn't enough.

With that many projects, I wouldn't want to rely on a 1099, I want an employee that I can actually require duties and timelines of.

Based on what you've said here, I'd offer that $72K as a base salary and bonuses based on profit and meeting deadlines.

Chris Seveney · Answer

@Troy DeLong

Paying a project manager 100% commission you are not going to get any decent. Having been a PM in commercial construction for 15 years they do not control the acquisition cost or disposition cost. So they could crush it and complete a project on time and on budget but because someone else screwed up they do t get paid?

They should be paid per project a specific amount and get bonus for completing on time and on budget.

That is how you will get better talent to manage these projects

If you go only commission you will find someone currently unemployed with most likely little experience

Alan F. · Answer

Here's some information that may be beneficial for you.

https://www.michigan.gov/leo/bureaus-agencies/uia/tools/fact...

I would consult with my attorney

Troy DeLong · Answer

@Steve Kenney We ended up trying a combination base salary + bonus split with a part-time Project Manager. If you're interested in the details, shoot me your email.

Steve Kenney · Answer

Hey @Troy Delong,

I know this post was from a year ago, but I'm to the point where I'd like to hire a part-time PM to help with my flips/development projects and I'm wondering how to structure that. I don't do enough volume for it to be a full-time position. I was just curious what route you decided to go and how it panned out?

Autumn Cain · Answer

Hi Troy!

I'm giving my 2 cents here as a former Cooperate manufacturing Project manager gone Property Manager:

I think the pay structure you have currently is an awesome start! With the RE game commission is a great way to ensure you get value in and value out on a project. However, as an agent and investor, we understand an accept that our payout comes with time- however for a project manager realistically looking for a 1099, being paid at the time of work is key to making sure you have the right person on your team.

Is there realistically a way that you can create your projections of net profit on a project (in a scale format from X$ to Y$) and find a happy medium in there of expected net profit, and carve out your PM budget there? You have a risk definitely, but paying your PM on a more consistent basis may help you get a motivated professional on your team who is there to stay! Maybe go for a commission based bonus structure to take it to the next level!

On top of ironing out pay structure, I would 1000% create clear documentation of what expectations you have for your project, and how and when you expect your PM to meet them to ensure that you receive the value and service that you are paying for. The documentation creates both a blueprint and document of accountability.

As a Project Manager, when diving into a new initiative, I'd sit down with a project charter with our VP, and ask questions to gain a full understanding of the expectations of a project. This may be a no brainer- but think of exactly how, when, and why you want this project done so you can clearly provide that blueprint to your PM.

Is your top priority here the timeline? The payout? The budget? Or creating the most unique Fix and Flip ever seen to become tiktoc famous? This could greatly change project approach for your PM. The less confusion, the more efficiency!

Hope this helps and Best of Luck!!

Project Manager Compensation?

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