Project Manager fee?

[Joe Hughes]

I am doing quite a few fix and flips, and all is going very well.  I have a Project Manager in place, and he is paid 10% of the net profit at the time of closing.  That is also working very well for both of us.

I am now wanting to set up some passive income streams with some buy and hold rentals.  I have a Property Manager in place, but I have a question on how to pay my Project Manager for any prehab work that needs done.  Obviously, I am not going to pay him the same 10% of profit on a monthly basis.  I had a realtor suggest 10% of the prehab budget, but that does not incent him to keep the cost down, quite the opposite.  I am thinking just a flat fee.  Is that the best way to move forward?

Any other comments or suggestions?