Updated over 11 years ago on . Most recent reply
Hiring a Project Manager
If you were to hire a Project Manager for just one flip/rehab - either because that's the only project you had going or you just wanted to a "first date" to test their skills how would you structure their pay? Let's say this PM would be acting as your General Contractor for the job and would oversee any and all subs.
Would you agree to a flat fee based on the project and/or a percentage of the profit or a percentage of the agreed upon ARV.
How would you handle the purchasing of materials... give them a Home Depot gift card, temporary access to your credit card, go with them to the store, have them purchase and reimburse them?
Would you structure their payment to be half at starting, half at end of rehab. Or would you expect them to not get paid until the property is sold.
Would love to get lots of feedback and ideas please.
Most Popular Reply
@Christine Lovett my project manager works solely for me and isn't the GC. The project manager would hire a GC. This is because I need someone who is my wingman covering me in my project. The GC is the contractor on the project and while that person should be considered to be a reputable or reliable one in real estate investing it's just good practice to have someone covering for you (investor). I pay my project manager 5% of the SOW as a fee to oversee the project, visit regularly, send me photos, etc.
I pay for materials over the phone as a standard process in order to avoid material upcharge, avoid paying an upfront fee to contractor, and helping the contractor not having to finance my own project. This is separate in my business from the project manager. The project manager is someone who is working for me at the project.
The project manager gets paid at the end of the project on the final draw. If you do pay some upfront fine that might work for you but you need to make sure there is a good amount at the end so the project manager has good incentive to finish out the project. Just like a contractor I don't pay them everything upfront and I hold a fair amount until the project is completed.
Good luck!