Should I hire a project manager or manage the rehab myself?

Question

Okay I have decided to put my question in front of the knowledgable....I have been thinking about how to proceed and I keep sitting on the fence as I am not sure what option is the best option....I am fairly new to BP.....tripped over the podcasts on youtube and eventually made it to the website....prior to BP I had an offer from a friend of mine to partner on a rehab project. Due to the decline in inventory and the smaller profit margins we have decided not to partner. However; since I work a full time job it would be near impossible for me to be on site as much as I should be given the fact that it would be my first flip....My friend offered to manage the project for me. He would do all of the footwork...find the house, rehab it and sell the house....

He has a proven track record....he has been flipping houses for a few years now and has profited at least 20% on every project.

Originally he said he would want 20% of the profit to manage the project. In a later conversation he through out a number(flat rate) he would want to be paid for each project. I told him that I would not be comfortable with paying him a flat rate as there would be no real motivation for him to maintain a tight schedule because he will get paid the same amount no matter what....

My question is this....has anyone been in this situation and if so how did you set it up?? What is a fair compensation??

Any feedback would be appreciated!! Either way I need to make a move....I have been sitting on the fence long enough...

Account Closed · Answer

@Henry Garcia

Thanks for your response!!

Account Closed · Answer

@Joe B.

Good points.....I agree.....I certainly don't know enough to take on that roll!

Thanks for your input......

Account Closed · Answer

@Valerie Couch

He would not be acting as the GC.....I already have a GC lined up for the project....He would basically be showing up during the day to make sure things are running smooth. He would also bring in the buyer when the project is finished.....

I am the only one putting up any money....he will make a percentage of the profits ......that is where I am lost as to what his cut should be....

Valerie Hiscoe · Answer

Here its not unusual for one partner to put in all the money and the other to find and oversee the deal (not do any labour though) and they split the profit 50/50. The inexperienced partner pays for the other partner's expertise allowing them to make money from their investment. You wouldn't actually be 'flipping a house' because you don't know how and don't have time to do it even if you did. You are instead 'making an investment'. If you can make 50% of a 20% profit in 6-9 months, you're doing well. But for you to get 80% after he did all the work is not fair. Although I'm very unclear about what that work would entail. When you say "manage the project", do you mean he'd act as General Contractor as well?

Of course you'd want concrete evidence that the track record is legitimate.

Henry Garcia · Answer

a good G. C. Won't bite off more than he / she can do.

Should I hire a project manager or manage the rehab myself?

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