Am I paying my project manager too much?

21 Replies

Am I paying my project manager too much? 

I feel like I am paying him fairly but my family and friends cant believe I am paying a handyman about 75K a year or $1500/week - (PS we are in Cleveland market so 75K is a good living for this type of work)

In 6 years I have gone through more then 50 bum handymen/contractors to find the 5-7 I use now. Of all those contractors I only met one that I trusted enough to become my project manager and I knew he wanted more responsibility. 

Now Instead of running around getting supplies/managing and paying guys like a crazy person - I am now at home working on my other business or spending more time with my family. With 2-4 rehabs going on at any given time this was a long time coming.

Here is what he brings to the table that is beyond project management...

  • He doesn't just manage - he tells his 2 helpers what needs done then he goes to work doing tile or whatever else needs done.
  • He works about 50 hours a week and most Saturdays - so do his 2 helpers - he is not the type to slow down or cut out early because he is salary.
  • He has 2 guys working with him and he has extended their cheap $15/hour rate to me instead of bidding jobs and making a lot more. One guy does all the painting and misc stuff - he is a young kid so he can move fast. The other guy does all the electrical/plumbing - he is an old timer and moves slow but where can you find plumbing/electrical at 15/hour.

The numbers tell it all - my rehab numbers are down since I made this move. I used to pay a "cheap" painting crew about $2200 to paint the exterior of a home. Now it takes my $15/hour guy about 5 days to do so I am closer the $800. I used to have what i thought was a cheap plumber - but the amount I am spending on plumbing now is laughably low.

So I know all the evidence says its well worth it but I would love to hear what others are paying some of their full time guys.

@Adam Craig

With him working about 50 hours a week that works out to $30 an hour. Where I have worked (Utah, Texas, Montana), that is a good price. Could you find people for less? Of course. You have done that and gone through 50 of them. He sounds entirely competent and able to make you more money by allowing you to do other things. He saves you time. Which saves you money. And that is in addition to the actual money that he is saving you by getting the entire project done cheaper. 

I had a "project manager" that we paid about $20 an hour and I essentially ended up doing all the work that he was supposed to be doing as far as managing things. It did not actually save me any money or time because I was paying him and also had to physically be there almost all of the time. 

You really do get what you pay for and it sounds like he is worth every bit that you are paying him. 

I agree with the above.

In my experience, having someone that you can trust is invaluable. To pay him what I see as a fair salary and give him autonomy of the work, you are telling him that he can trust you, and in return based on your results you can trust him. I would  take the opinion of family and friends with a grain of salt - unless they are well versed in your business model and cost of labor, they are giving opinions without all of the facts. Plenty of people will say "That is way too expensive!", but when you ask them to provide names of other people who can be cheaper (not even considering how reliable they are), they are silent.

If he is providing a service so that you have more time to make more money in other deals, it sounds like a definite win-win

Most of my jobs are about 20min from my home and with traffic it can take up 2-3 hours of my day easy. I went from being out there 4-5 times a week to going out there 1-2 days a week. I could go even less but I still think being too removed from the business is not good.

I was the one who proposed this number to him so he is very motivated to do good work because he knows he  doesnt want to go back to bidding misc jobs all over town.

I wouldn't change a thing. Your family/friends see it as $75k/year and cringe. The truth is, a good PM is worth that, especially if he is saving you money and trustworthy. I think what you will have happen if you try and adjust to save money, would be finding unreliable people and causing you more headaches. Unless he is holding your company back I would plan to keep him on board and look into growing with him. 

@Adam Craig it sounds like you’ve answered your own question. I think what you pay him is fair

Originally posted by @Adam Craig :

Am I paying my project manager too much? 

I feel like I am paying him fairly but my family and friends cant believe I am paying a handyman about 75K a year or $1500/week - (PS we are in Cleveland market so 75K is a good living for this type of work)

In 6 years I have gone through more then 50 bum handymen/contractors to find the 5-7 I use now. Of all those contractors I only met one that I trusted enough to become my project manager and I knew he wanted more responsibility. 

Now Instead of running around getting supplies/managing and paying guys like a crazy person - I am now at home working on my other business or spending more time with my family. With 2-4 rehabs going on at any given time this was a long time coming.

Here is what he brings to the table that is beyond project management...

  • He doesn't just manage - he tells his 2 helpers what needs done then he goes to work doing tile or whatever else needs done.
  • He works about 50 hours a week and most Saturdays - so do his 2 helpers - he is not the type to slow down or cut out early because he is salary.
  • He has 2 guys working with him and he has extended their cheap $15/hour rate to me instead of bidding jobs and making a lot more. One guy does all the painting and misc stuff - he is a young kid so he can move fast. The other guy does all the electrical/plumbing - he is an old timer and moves slow but where can you find plumbing/electrical at 15/hour.

The numbers tell it all - my rehab numbers are down since I made this move. I used to pay a "cheap" painting crew about $2200 to paint the exterior of a home. Now it takes my $15/hour guy about 5 days to do so I am closer the $800. I used to have what i thought was a cheap plumber - but the amount I am spending on plumbing now is laughably low.

So I know all the evidence says its well worth it but I would love to hear what others are paying some of their full time guys.

 You already answered your own question. You tried paying less & ran through 50 guys. Don't chase pennies, waste of time & resources.

James Wise, Real Estate Agent in OH (#2015001161)
216-661-6633

Thanks guys - sometimes it just helps to confirm a decision when people tell you what you think you already know .

Just from the way you've described him @Adam Craig , you really have not mentioned any downside.  If you can afford him, I say its probably a great idea to keep him!!

If he is making you money and less headaches I think he is worth it. 75k in Cleveland is a high salary but seems it helps you achieve other business goals. Just think if you lost him do to a conversation about his salary. Will your friends and family help run around trying to finish projects, doubt it.

Seems he’s acting as a contractor not a handyman so not sure why you are basing his salary on a title rather then his actual job duties. Seems puerile

Sounds like you need to give him and his crew a bonus. 

Sounds like a winning combination.  The only thing I could really suggest would be that you may want to consider some type of insurance in case $15/hr painter falls off his ladder while painting your exterior, or old man river bursts a pipe or something.  For them to be bonded/insured probably wouldn't be too much, but it will mean alot if something happens.

I agree with what others have said and think that there may be further opportunities to have him share in the savings he creates for you. I think that paying good people (who are rare!) is great business. When I have a good employee I always want my job to be the golden handcuffs-they have it so good they can’t possibly leave me. That’s the way to run a great business that in the long run is more profitable! I think there is no high or low salary-each person should be compensated for the VALUE they bring to a business! This guy brings a ton of value to your business, when someone asks what you pay you could try something like “a lot less than the value he provides!” Also, if you’re saying about someone “I could never do this without them” that person is worth a ton. Point made!

I have to agree with what everyone else has said! it really sounds like you found a winner and I can see why he would want to work for you rather than out bidding jobs even though he might make a bit more money or not. I have to say it is refreshing to hear everyone agreeing to pay a valuable guy a living wage rather than nickel and diming. I will guess that everyone who responded to this thread has been through their share of nightmares and see the value in paying a fair wage when warranted. 30 an hour is a bargain price for a hard worker. As a contractor, I'd pay a guy that all day long if he worked hard and showed up on time without a hangover!

Based on your structure, it appears you may have some employees here.  Are you do withholding and providing workers comp etc ?

512-293-3885

@Adam Craig Think of all the aggravation you went through with the bad handymen you hired in the past. Do you want to go through that again? If your investments are performing up to your expectations with the current arrangement I would not change anything.  

Michael Noto, Real Estate Agent in CT (#RES.0799665)
860-384-7570

It’s the cost of doing business well. It sounds like your bottom dollar justifies this salary.

In terms of pay, his worth is what he economically brings to you in the marketplace

If he is making you money, and you can’t find similar services, then heck yes pay him. Sounds like he is worth every bit of it.

Who cares what everyone else thinks or pays their guys.

Look we have a contractor we love, he isn’t the cheapest, but he always is fair. At the same time, he installed a dishwasher for me on the day before Thanksgiving for my tenants as we were going out of town. I was worth every penny.

Doing 2-4 flips at a time do you run out of work for them? If not, then the rate sounds good (compared to contractor rates). I've been thinking that the type pf model you have is the best way to go. Contractor rates are generally very high, and much of the work can be done by less skilled 'assistants'.

Originally posted by @Adam Craig :

Am I paying my project manager too much? 

I feel like I am paying him fairly but my family and friends cant believe I am paying a handyman about 75K a year or $1500/week - (PS we are in Cleveland market so 75K is a good living for this type of work)

In 6 years I have gone through more then 50 bum handymen/contractors to find the 5-7 I use now. Of all those contractors I only met one that I trusted enough to become my project manager and I knew he wanted more responsibility. 

Now Instead of running around getting supplies/managing and paying guys like a crazy person - I am now at home working on my other business or spending more time with my family. With 2-4 rehabs going on at any given time this was a long time coming.

Here is what he brings to the table that is beyond project management...

  • He doesn't just manage - he tells his 2 helpers what needs done then he goes to work doing tile or whatever else needs done.
  • He works about 50 hours a week and most Saturdays - so do his 2 helpers - he is not the type to slow down or cut out early because he is salary.
  • He has 2 guys working with him and he has extended their cheap $15/hour rate to me instead of bidding jobs and making a lot more. One guy does all the painting and misc stuff - he is a young kid so he can move fast. The other guy does all the electrical/plumbing - he is an old timer and moves slow but where can you find plumbing/electrical at 15/hour.

The numbers tell it all - my rehab numbers are down since I made this move. I used to pay a "cheap" painting crew about $2200 to paint the exterior of a home. Now it takes my $15/hour guy about 5 days to do so I am closer the $800. I used to have what i thought was a cheap plumber - but the amount I am spending on plumbing now is laughably low.

So I know all the evidence says its well worth it but I would love to hear what others are paying some of their full time guys.

 I'm curious, do you pay the project manager and/or the assistants as your employees, or as contractors?

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