How Many Fix And Flip Investors REALLY Use Project Managers?

Question

Hello all-

I am new to investing but not so new to projects, flips and rehabs. I have a background in rehabbing homes for investors out of town (ran a small company a few year back). I am thinking more and more that I will use Project Management as my avenue into REI. I think it will be a great way to raise my own capital and build relationships all while staying true to the part of REI that excited me the most, which is rehabbing  homes.  I have done a lot of thinking and reading. In my opinion it is super important to find my value and then use that as a way to ease my way into REI as a full time career, If I can help an investor by managing a few projects while he/she focuses on the bigger picture  it can be a win win situation, or even help an out of town investor by giving them the confidence of investing in area where they do not live.

My question is- how man investors actually use the services of a PM? I would also offer the service of locating deals that make sense. Do you think this is a good way to get in where I fit in?

Gilbert Dominguez · Answer

Yasmine,

I am a professional construction project manager and what the others say is true. Most smaller projects will not think to use a project manager but they are the ones that will end up complaining about how long a project took to complete and be crying about ending up paying over 70% over budget and scared that the house they built will not sell because they have their lenders breathing down their neck for payment of their loans.

Professional project managers are typically hired by larger operations and more expensive real estate projects because they understand the value of a good project manager.

So I would say market yourself to higher end investors.

Michael Woodward · Answer

@Yasmine Bisumber

Some of the larger fix & flip businesses use project managers but the bulk of the smaller businesses handle it themselves.  It might be worth your time to look into some local new-construction home builders (the ones with model homes) to see if they need PM services.  I did some of that when I lived in Port Charlotte back in 2008.  I've heard that new construction is picking up again in FL so you might be able to get some business that way.  It would be a great way to learn your way into REI and they might feel less threatened by your ambition to get into REI than working for someone that will eventually be your competitor.  My two cents..... Good luck!

Kelly Rastatter · Answer

I am a PMP certified project manager by trade. In the world of project management, regardless of the industry, you will find the best are not the ones swinging hammers. A great PM with the ability to learn will be a pro at project management. They will learn enough of the details to be able to call BS, help the team identify risks to your projects, and monitor progress of work.

You can easily teach a good PM about REI and construction, especially if they already have interest. It is very difficult to teach good project management skills to a pro in construction or any other hands-on trade. It is just a matter of expertise. I would advise to find a good PM and teach them the industry.

I think most flippers use more of a GC. From what I see, the ones who scale up will add project managers to their team to take over more of the duties of the investor than the GC.

Steven J. · Answer

I haven't done too many large flips that require a PM so I can't say for sure. With my backround in construction I feel rather confident I can manage the project myself - also keep in mind I'm not one to trust others to finish a project as well as I can.

I think you're on the right track by identifying what you're good at, marketing and offering it as a service, and hopefully you can find a partner along the way. Attend RIEA meetings and networking offering to help investors out. When driving around and you see a place that is being flipped stop by and ask about the process. You might find they are investors and you might click. Or if you see a rental, or know of a landlord with lots of rentals, you could offer your services to update/fix up the units. I've got an apartment building right now that needs lots of work, a PM would be rather ideal in this case.

Justin S. · Answer

I would market yourself to investors that are doing 8-15 flips per year.  That is where an investor starts thinking of hiring additional help.  If an investor flips more than that they likely have a full time PM on their staff already.  Anything under that, and they are likely doing the work themselves.  Good luck.  A good PM will pay for themselves.

Andrew Syrios · Answer

We have had an onstaff project manager twice and neither time did it work out well (one was taking kickbacks the other we had to constantly restrain her ambition as she didn't seem to have much concern for how much things cost). We have used a project manager in Eugene, and she has done very well. For a big operation, you basically need one. But if you're just doing one or a few at a time, I don't think it's worth it.

Manolo D. · Answer

I would say it might be the hardest thing I have ever done, but I broke ground about 2 weeks ago. I used my skillset and contractors license. Investors are among the cheapest clients I have ever met, and they don't actually know what they want, they expect you to read their mind, I am used to just follow procedure, it was a steep learning curve for me to accommodate, several trips to Home Depot helped me understand how investors/house clients work. With that said, I am moving to a specialized niche, tear-down, new construction, Multi families, apartments, or rehabs that is more than 50k. I believe that my skillset best fits there, since these investors have their own set of teams already, they might be harder to convince, but who knows. I plan to help BP members with small jobs and just not charging for the worker referral, will just hope for a return of good deed.

my first client wants to meet me again to introduce me to his fellow investors, family members to be specific, he said he knows about 30 people who is flipping. since I gave him a deal that he couldn't resist, -- I only charged him about $50/day for monitoring, coordination, budget and schedule security --, he returned the good deed in introducing me to others.

Yasmine Bisumber · Answer

Thanks Steven J. for the response. Once I start networking and pitching my services I think I will have a better feel for how this can work. I didn't consider stopping by rehabs or rentals but that's actually a great idea!

Yasmine Bisumber · Answer

Reed, I actually took a step back to take a view at the bigger picture with my career as an investor. I have since become a licensed realtor and am managing one project which we are about to wrap up (one I am working on with an investor my father introduced me to). Still something I would love to pick up and turn into a larger part of my business. Thanks for following up, there are quite a few systems I am working on perfecting. Getting there.

Reed Starkey · Answer

@Yasmine Bisumber

Have you made any progress as a PM for Real Estate Investors?  What ever became of this?

Thank you

How Many Fix And Flip Investors REALLY Use Project Managers?

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