Partnering with a project manager, end game compensation thoughts
BP wizards,
I once again call on your wisdom.
I'm bringing a project manager in on a deal to manage a rehab that has two end-games, Flip or rental. He's new to real estate, but my requirements are fairly low, and I'd like to develop a good professional working relationship since he's becoming a realtor in one of my markets.
The project manager will be my eyes and ears (weekly pictures, coordination of contractors, and brief email summary of progress). He will have no equity position in the property or deal, until the sales closing is complete. I'm drafting the operating agreement now.
The compensation agreement is we will split all profits 50/50 after the cash I input is paid back at 112% (12% earned), and he gets to list it as a realtor and make his selling agent commission.
However, if we are unable to sell the house within a year, at a price that puts us above the bottom line, my plan is to convert it to a long term rental hold.
The issue I'm working through is trying to find fair compensation for his efforts if the deal doesn't work out.
Is there a fair way to compensate or a markets standard for this type of transaction?
Thank you for your time.
Cheers,
-Sam