Hiring a Project Manager For My Company? What To Look For?

Rehabbing & House Flipping
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Hiring a Project Manager For My Company? What To Look For?

Account Closed
Real Estate Investor · West Orange, NJ · Member since 2012 · 130 posts · 19 votes

Hello everyone,
First I must thank J Scott for the business plan template that he's made available through his website. I spent about 8 hours yesterday on it, but thank God I finally have a great business plan and the vision for my company is more clear than ever. Without your template, this would not have been possible. Thank you.

With that being said, I'm going to be hiring a part-time project manager. My goal is to complete at least 6 rehabs this year and a minimum of 2 wholesale deals per month beginning in March for a total of 20. I'm projecting the average net profit per wholesale to be about $15,000 and the average net profit per rehab to be about $40,000. As I spend this year scaling the marketing to establish a strong foundation for 2014, which will include the addition of many short sale deals, I will be evaluating the performance of that individual because I'll want to move them into a full time salary + commission position. This is a vital team member for me and a person that I want to build a lifelong relationship with. In addition as we build the company to our five year goal of 30 rehabs and 72 wholesales, they will grow with the company in income (At this point I will expect them to be earning somewhere around $300,000 as he oversees multiple projects at a time). His/her main responsibilities will be:

Preparing Written Repair Estimates For Wholesale Deals
Rehab Project Management
Weekly Project Budget Reporting
Initial Walk Through Checklist
Scope of Work Preparation
Contract & Job Bidding
Contractor Contract Signing
Post Rehab Checklist
Contractor Team Building
Locate New Contractors
Interview Contractors
Hiring/Firing Contractors
Reporting to Bookkeeper

As we start on this part time basis, what should I look for in this individual?
Also what should a part time project manager earn for this first year looking at the goals I have listed for this year. Being that the project manager will be involved in both our rehab and wholesale business, I will be compensating him/her on both. This person will be very important to the company and I am interested in everyone's opinion on both questions. Thanks a lot. God bless.

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J ScottPro Member
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Investor · Sarasota, FL · Member since 2008 · 18k+ posts · 17k+ votes
13y

Not sure how I missed this post...perhaps I need to set up some Keyword Alerts!

Here is my list of what to look for:

1. Trustworthiness. This person will represent you when you're not around, he may have access to your checkbook and bank account (mine does), he may have the authority to negotiate prices (mine does), and he'll certainly be spending time around your houses, personal property, etc. If you're not 100% trusting of this person (maybe not at the start, but eventually), it's going to defeat a lot of the purpose of having him.

2. Construction Knowledge. This person will likely be interviewing, hiring and managing contractors as the primary component of his job. If he doesn't have a decent understanding of construction practices and principles, he'll get run over by contractors and your business will suffer. How do I know? Because my PM didn't have much construction knowledge when he started, and it was a tough learning process on our first few houses.

3. Negotiation Skills. This person will be the interface between you and your subs, so you'll want to ensure that he can get you good prices.

4. Attention to Detail. This person will be creating the product you need to sell. The product needs to be flawless and therefore he needs to have a great attention to detail.

5. Ability to Manage. The biggest thing to derail rehab projects is contractors who can't keep on schedule (or managers who can't define and manage schedules). You need someone who can keep contractors updated on schedules, ensure they show up, ensure all dependencies are well defined and tracked, etc.

6. Willingness to Do Whatever it Takes. My PM does a lot of different stuff. Most of it involves what you laid out in the original post, but there are some other things that he probably didn't realize he was signing up for. For example, when an alarm goes off at one of our houses in the middle of the night, if he's closer to that house, it's his job to take care of it (I do it if I'm closer). He often prepares houses for showings on weekends in the morning and then locks them up in the evenings (again, my wife or I will do it if the houses are closer to me). I don't like talking to people on the phone, so he makes a lot of my business phone calls for me. When I'm mentoring someone, a lot of the day-to-day time I'll them spend with my PM...so he's doing some mentoring. Not to mention crawling under houses and through attics to do inspections, and other nasty stuff. Etc...

7. Handyman Skills. This one isn't a requirement (for me, at least), but it's nice to have someone who can do minor fix-it tasks. My PM will replace all outlets and switches for every project (saving us about $400), will hang mini-blinds, can do very basic carpentry/plumbing, etc. I don't generally have him do that stuff to save money (though it does), but more because I don't like having my handyman come out for a 30 minute job.

I'm sure there are other things, but those are the ones that first come to mind...

Btw, you mentioned your PM eventually earning $300K. I would suggest that if you have enough projects going on that he could earn $300K in commissions (even with a salary), you probably have more projects than one PM can handle. You'd probably rather have 3-4 PMs earning $75-100K each (or whatever is a decent salary in your area).

My PM can handle about 4-5 rehabs simultaneously, best case. That said, you might own 10 properties at a given time and only have 4-5 in the middle of rehab, so you probably don't need a second PM until you at the point where you generally own 10+ properties at a given time.

But, even when you're not doing rehab, your PM will still be doing work. For houses that you're in the process of buying, he'll be dealing with inspections, scope of work, budgets, schedules, lining up contractors, etc. And for houses that are recently completed, he'll be dealing with getting them ready for showings, dealing with inspectors/appraisers, completing inspection repairs, etc.

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  • Account Closed
    OP
    Real Estate Investor · West Orange, NJ · Member since 2012 · 130 posts · 19 votes
    13y

    Hey everybody, now's the time to chime in. I may have to start tagging some people.

    0Reply
  • Account Closed
    OP
    Real Estate Investor · West Orange, NJ · Member since 2012 · 130 posts · 19 votes
    13y

    Will Barnard, @j Scott (can't tag you)You guys are the only ones I know of that have worked with project managers. If anyone else has I would appreciate your input. Thanks.

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  • Karen MargraveBusiness Member
    Moderator
    Realtor, General Contractor, and Developer · Redding, CA · Member since 2009 · 7k+ posts · 4k+ votes
    13y

    Have you looked on Craigslist? Or you might put an ad in some of the free publications (Ebay Classified, Craigslist,) or some consturction type sites and run an ad for a part time project manager, with the list of things you've outlined. Ask them to respond with experience and salary expectations. Every area of the country is different, and there's a lot of very experienced contractors that are sitting idle or slow that might respond. Good luck!

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  • J ScottPro Member
    Moderator
    Investor · Sarasota, FL · Member since 2008 · 18k+ posts · 17k+ votes
    13y

    Not sure how I missed this post...perhaps I need to set up some Keyword Alerts!

    Here is my list of what to look for:

    1. Trustworthiness. This person will represent you when you're not around, he may have access to your checkbook and bank account (mine does), he may have the authority to negotiate prices (mine does), and he'll certainly be spending time around your houses, personal property, etc. If you're not 100% trusting of this person (maybe not at the start, but eventually), it's going to defeat a lot of the purpose of having him.

    2. Construction Knowledge. This person will likely be interviewing, hiring and managing contractors as the primary component of his job. If he doesn't have a decent understanding of construction practices and principles, he'll get run over by contractors and your business will suffer. How do I know? Because my PM didn't have much construction knowledge when he started, and it was a tough learning process on our first few houses.

    3. Negotiation Skills. This person will be the interface between you and your subs, so you'll want to ensure that he can get you good prices.

    4. Attention to Detail. This person will be creating the product you need to sell. The product needs to be flawless and therefore he needs to have a great attention to detail.

    5. Ability to Manage. The biggest thing to derail rehab projects is contractors who can't keep on schedule (or managers who can't define and manage schedules). You need someone who can keep contractors updated on schedules, ensure they show up, ensure all dependencies are well defined and tracked, etc.

    6. Willingness to Do Whatever it Takes. My PM does a lot of different stuff. Most of it involves what you laid out in the original post, but there are some other things that he probably didn't realize he was signing up for. For example, when an alarm goes off at one of our houses in the middle of the night, if he's closer to that house, it's his job to take care of it (I do it if I'm closer). He often prepares houses for showings on weekends in the morning and then locks them up in the evenings (again, my wife or I will do it if the houses are closer to me). I don't like talking to people on the phone, so he makes a lot of my business phone calls for me. When I'm mentoring someone, a lot of the day-to-day time I'll them spend with my PM...so he's doing some mentoring. Not to mention crawling under houses and through attics to do inspections, and other nasty stuff. Etc...

    7. Handyman Skills. This one isn't a requirement (for me, at least), but it's nice to have someone who can do minor fix-it tasks. My PM will replace all outlets and switches for every project (saving us about $400), will hang mini-blinds, can do very basic carpentry/plumbing, etc. I don't generally have him do that stuff to save money (though it does), but more because I don't like having my handyman come out for a 30 minute job.

    I'm sure there are other things, but those are the ones that first come to mind...

    Btw, you mentioned your PM eventually earning $300K. I would suggest that if you have enough projects going on that he could earn $300K in commissions (even with a salary), you probably have more projects than one PM can handle. You'd probably rather have 3-4 PMs earning $75-100K each (or whatever is a decent salary in your area).

    My PM can handle about 4-5 rehabs simultaneously, best case. That said, you might own 10 properties at a given time and only have 4-5 in the middle of rehab, so you probably don't need a second PM until you at the point where you generally own 10+ properties at a given time.

    But, even when you're not doing rehab, your PM will still be doing work. For houses that you're in the process of buying, he'll be dealing with inspections, scope of work, budgets, schedules, lining up contractors, etc. And for houses that are recently completed, he'll be dealing with getting them ready for showings, dealing with inspectors/appraisers, completing inspection repairs, etc.

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  • Aaron McGinnis
    Contractor · Atlanta, GA · Member since 2008 · 978 posts · 985 votes
    13y

    The trouble will be finding someone who can perform all those items on your list and still be willing to go part time.

    The skills you're looking for are not casual or easy to come by - they require years of experience and quite a bit of construction know-how.

    Someone who has those skills and is young isn't going to want to go part time.

    Your hire will probably be a retired, or close to retirement-age person who has worked in construction and whose body can no longer handle the physical requirements of the work, but has a sharp eye, mind, and tongue who can do what you need done.

    Also, I think you may be surprised at how quickly you will find this not being a part time job, but rather a full-time one. Get two rehabs going at the same time and one person will be hard pressed to do all those things you want done in a part time week.

    2Reply
  • Will BarnardPro Member
    Moderator
    Developer · Santa Clarita, CA · Member since 2008 · 15k+ posts · 10k+ votes
    13y

    Not sure I can add much to what Jason stated as I agree with it all. Also, Aaron stated that such a job is likely not going to be handled part time so look for a full time position.

    My PM happens to be family so I am lucky in that regard as the trust factor is built in and my PM is a licensed HVAC contractor and all around handyman who can perform a multitude of tasks.

    When I started out in rehabs, I was on the job site most of the time and performed many of he tasks a PM does, thus, I was the owner and the PM wrapped into one. On your first one or two, I highly recommend it as it gives you the experience of what is needed/ required and makes you a better trainer and helps you hire better for that position.

    As far as wholesale deals, unless the PM is working to locate deals, not much work beyond that, so I would recommend that the PM be strictly used for the rehab management only.

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  • J ScottPro Member
    Moderator
    Investor · Sarasota, FL · Member since 2008 · 18k+ posts · 17k+ votes
    13y

    Good responses by Will Barnard and Aaron McGinnis above...

    Aaron makes a fantastic point. Finding someone with all these skills will be tough enough in itself, and finding a part-time person will probably be near impossible. My recommendation would be to cull down your list of responsibilities so that you can eliminate some of the requirements the person has. Or cut down your list of requirements and teach those skills over time.

    For example, perhaps find someone who has the construction knowledge and good organization skills, but doesn't have the management side of things yet. That person will be less in-demand as a project manager (so he may consider part-time work), but if you can teach him the business side of things, he'll be well rounded by the time you need him full time.

    Also, consider finding other work for your PM if you only need him part time. For a couple years, we were very slow during the summers, so I would hire out my PM to manage rehabs for other investors. My PM isn't a GC so he wouldn't be doing complex stuff for other investors, but he was fully capable of putting together a schedule, budget and babysitting the contractors for any standard cosmetic renovation.

    Also, other investors would ask me if they could hire him to take pictures of potential properties they were interested in, handle inspection repairs, get houses ready for showings, etc.

    He made extra income during our slow periods, and I took my cut as well... :)

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  • Scott Graves
    Milwaukee, WI · Member since 2012 · 26 posts · 1 vote
    13y

    @Will Barnard and @j.scott

    Are your project managers actual employees of your company or are they self employeed?

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  • J ScottPro Member
    Moderator
    Investor · Sarasota, FL · Member since 2008 · 18k+ posts · 17k+ votes
    13y
    Originally posted by Scott Graves:
    @Will Barnard and @j.scott

    Are your project managers actual employees of your company or are they self employeed?

    Mine is a full-time employee. Given his scope of responsibilities and how he's managed, I couldn't legally have him as a contractor.

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  • Will BarnardPro Member
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    Developer · Santa Clarita, CA · Member since 2008 · 15k+ posts · 10k+ votes
    13y
    Originally posted by Scott Graves:
    @Will Barnard and @j.scott

    Are your project managers actual employees of your company or are they self employeed?

    Mine is not, he has his own company and I am billed through his company for services rendered so he is not an employee but a subcontractor.

    Keep in mind that unless you actually do this correctly, just calling the PM a sub contractor does not make it so and the tax guys will be looking for such cirumventions of the rules to pop you.

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  • J ScottPro Member
    Moderator
    Investor · Sarasota, FL · Member since 2008 · 18k+ posts · 17k+ votes
    13y
    Originally posted by Will Barnard:

    Keep in mind that unless you actually do this correctly, just calling the PM a sub contractor does not make it so and the tax guys will be looking for such cirumventions of the rules to pop you.

    That's a good point to clarify...

    Here are some of the reasons mine would be classified as an employee vs contractor:

    1. His services contribute to a key aspect of the business
    2. He doesn't do work for anyone else (unless it's through my company)
    3. He doesn't always decide what to work on or in what priority (I often set that direction)
    4. He doesn't make his own hours (he works based on when I need him to work)
    5. He doesn't provide his own tools (the company pays for anything he needs)
    6. He's not allowed to sub out any work to others without my permission
    7. He gets vacation time as requested (as opposed to having his vacation defined in a contract)
    8. He gets reimbursed for any expenses he incurs as part of the job
    9. He doesn't work through any other business entity

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  • Will BarnardPro Member
    Moderator
    Developer · Santa Clarita, CA · Member since 2008 · 15k+ posts · 10k+ votes
    13y

    1. His services contribute to a key aspect of the business
    I could argue that any contractor perfroming any service to my rehab is a "key aspect" of my business so I dont think this is an appropriate identifier.
    2. He doesn't do work for anyone else (unless it's through my company)
    Mine does so I am good there.
    3. He doesn't always decide what to work on or in what priority (I often set that direction) True, but how would anyone else know this info and with any subs I hire, I can and am allowed to tell them what I want done in what order and by when.
    4. He doesn't make his own hours (he works based on when I need him to work)
    True, I set this up for mine, but again, he also has freedom in there and there exists no contract stating hours or days which keeps me in the clear.
    5. He doesn't provide his own tools (the company pays for anything he needs)
    Mine provides his own tools, although I do have a few that he uses from time to time.
    6. He's not allowed to sub out any work to others without my permission
    True, and that is true with any contractor I hire, if I hire you, YOU are to do the work so this does not strike me as a determining distinction either.
    7. He gets vacation time as requested (as opposed to having his vacation defined in a contract) What is a vacation? :)
    8. He gets reimbursed for any expenses he incurs as part of the job - Mine would add any expenses to the service bill and I am billed for this just like any other contractor who buys materials for the work they are to complete.

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  • J ScottPro Member
    Moderator
    Investor · Sarasota, FL · Member since 2008 · 18k+ posts · 17k+ votes
    13y

    Hey Will,

    I wasn't trying to argue that all PMs are employees or should be...I was just listing the things that make my particular PM an employee (based on discussions with my CPA). I'm probably more of a control freak than most, so I like knowing I can run my PM crazy with specific direction and requests without having to wonder if I'm treating him too much like an employee... :)

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  • Scott Graves
    Milwaukee, WI · Member since 2012 · 26 posts · 1 vote
    13y

    J Scott:

    I am familiar with many of the considerations you list and the fact that the IRS may consider someone to be an employee based on how they work, even if they are not technically an employee of your company.

    When you first started working with this PM, did you hire him or was a sub for some period of time and then you decided to hire him as his scope of work increased.

    How did you originally find your particular PM?

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  • J ScottPro Member
    Moderator
    Investor · Sarasota, FL · Member since 2008 · 18k+ posts · 17k+ votes
    13y
    Originally posted by Scott Graves:

    When you first started working with this PM, did you hire him or was a sub for some period of time and then you decided to hire him as his scope of work increased.

    How did you originally find your particular PM?

    My PM started out as a contractor -- for about 6 months. The next time I met with my CPA, we discussed my PMs role, and my CPA basically told me to make him an employee to avoid any future IRS issues.

    My PM is a relative who I asked to move here from another state to work for us. Given that I had very, very little real estate and construction experience when we first started, the most important trait in a PM was trustworthiness, and that was the quickest way to find someone I could trust 100%.

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  • Sean Brennan
    Rental Property Investor · Manchester, NH · Member since 2013 · 447 posts · 81 votes
    13y

    This is the type of position I would love to find... too bad we do not live closer together. I am currently an appraiser and have the ability to do as little or as much work as I want. I would love to do something like this part-time... though my construction knowledge is limited and I would have a learning curve there.

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  • Will BarnardPro Member
    Moderator
    Developer · Santa Clarita, CA · Member since 2008 · 15k+ posts · 10k+ votes
    13y
    Originally posted by J Scott:
    Hey Will,

    I wasn't trying to argue that all PMs are employees or should be...I was just listing the things that make my particular PM an employee (based on discussions with my CPA). I'm probably more of a control freak than most, so I like knowing I can run my PM crazy with specific direction and requests without having to wonder if I'm treating him too much like an employee... :)

    I know that bud, I wasn't posting to argue your list, it was a great one, just pointing out to readers why and how my PM can legitimately be a sub contractor and not an employee while u pointed out reasons why yours IS one.
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  • Will BarnardPro Member
    Moderator
    Developer · Santa Clarita, CA · Member since 2008 · 15k+ posts · 10k+ votes
    13y
    As is mine though he did not have to move here. I agree 100% that the trust factor is the biggest hurdle to overcome and having family is a huge benefit.
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  • Steven Hamilton IIPro Member
    Accountant, Enrolled Agent · Grayslake, IL · Member since 2011 · 5k+ posts · 2k+ votes
    13y

    Employee Vs. Contractor will definitely be on a case by case basis in this field. J Scott's PM is an Employee without any doubt.

    -Steven

    [email protected]224-381-2660
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  • Will BarnardPro Member
    Moderator
    Developer · Santa Clarita, CA · Member since 2008 · 15k+ posts · 10k+ votes
    13y

    Very true, we all agree with that.
    And mine is a contractor (sub) for sure as he meets such requirements and could not be considered an employee.

    Point was not to try and take a person like Jason uses and call him/her a "contractor" that is where you get into trouble.

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  • Account Closed
    OP
    Real Estate Investor · West Orange, NJ · Member since 2012 · 130 posts · 19 votes
    13y

    So much great information, thanks to all who've shared so far. So I see that the challenge will be finding someone who can start on a part time basis. The reason I was looking to start out part time is because of the actual volume that we'll be doing in the first 4-5 months. At 2 wholesale deals per month and 1 rehab, I don't think that will be enough action to constitute a full time person. Mind you I've never hired anyone before. Basically I'm looking for someone who understands where we're going and can roll with us.

    Let's say for instance I do bring a person on full time, how do we start the payment process? I was looking for someone part time who would be available for a few hours out of the day for certain tasks. I need a repair estimate, they meet me at the property and prepare it, we buy it they prepare the scope of work, meet w/ contractors, get bids, manage the contractors, etc. Getting started they wouldn't be managing more than 2 properties at a time until about the 4th month. At that point we'll be rolling and they'll be busier, but how do we get things started? I have cash reserves but I don't know about paying a salary at this point, should I consider a small salary in the beginning or will people work on a per job basis if I contract them as a PM?

    The goal is to have a person that handles the construction side of our business. I'll focus on marketing, talking to sellers, meeting with sellers, negotiating, paperwork and raising money. If I have someone to handle that part of the business I can work twice as hard on producing more deals and raising money.

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  • Account Closed
    OP
    Real Estate Investor · West Orange, NJ · Member since 2012 · 130 posts · 19 votes
    13y

    Maybe I can just do what Karen M. suggested and run a craigslist ad for the person I'm looking for. After a few interviews, maybe I'll have a better view on what the market is looking for.

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  • Adam Gerig
    Investor · Fort Wayne, IN · Member since 2012 · 276 posts · 77 votes
    13y

    Deshone Drummond I have had great success with finding "partners" to help locate properties for me on Craigslist I think it's a great place to start just make sure you have a system in place for interviewing and know going in exactly what you expect out of that person.

    My main problem has always been I'm too nice. (Guess it's a good flaw to have) I always try to see the good in people and without a system would try and fit that person into my box of what I wanted even if they didn't. After some learning experiences systems make it much easier. "Sorry we decided to go another direction" I usually put a test in the Craigslist ad as well just to sift through someone I wouldn't want to work with anyway. For instance, "I am looking someone who can follow direction" in the body of the ad and then at the end if you are interested please send your name, email address, and phone number.

    If they don't send their name, email address, and a phone number sorry you are out.

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  • Account Closed
    OP
    Real Estate Investor · West Orange, NJ · Member since 2012 · 130 posts · 19 votes
    13y

    Awesome advice Adam, I just got some big help from Karen as well in regards to ad wording. I'm going to run the ad tomorrow evening or Monday morning after I get all my ducks in line. Im not in a position where I have to rush and hire someone, so God willing, after thorough interviewing and screening I can find the right person. I will definitely update this post as these events occur including the results of the interviews. Thanks everyone and if you guys have any other input going forward its appreciated. I hope those reading this post get as much out of it as I am.

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  • Karen MargraveBusiness Member
    Moderator
    Realtor, General Contractor, and Developer · Redding, CA · Member since 2009 · 7k+ posts · 4k+ votes
    13y

    Adam Gerig I think you're missing out on some qualified people with your requirements, as you're not giving them any credit for being smart enough not to send their name, and phone number to someone that they don't know. It would be better for you to tell them to email you, and you will respond with your phone number for them to call.

    Too many flakes out there trying to steal peoples identities by placing ads to sell stuff, for employment, etc.

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