Project Management on Rehabs

[Brendon Pishny]

I've recently been approached with several opportunities to manage some rehab projects for other investors in my local area. This is for some investors that want to be very hands off. After doing my own projects I put myself out there to help others. I'm not quite sure how to structure the agreements to make it worthwhile and fair for each party. I'm not a general contractor so they would be paid separately. This would be more of the day to day activities and basically feet on the ground. 

My thoughts are a monthly fee to cover time and travel. Also, a percentage of the end profit and/or be the listing when the rehab is complete. I would do a certain number of site visits per week, handle all contractor bids and calls, keep to a predetermined schedule and budget, etc. Basically see the project through from start to finish.

What have others done in this situation? What has worked and not worked? 

[Jonathan Orr]

@Brendon Pishny  I have done similar things as a PM for a couple who was very hands off in some flips.  I structured it like I do commercial development deals.  It is a percentage of the cost of the project(normally anywhere between 3-10% depending on size and feasibility of the project) that is broken down in monthly installments in a 80/20 split.  Which means 80% of your fee is given in the monthly installments and 20% is given when the project is finished. 

It really depends on what you want to do and if you see yourself doing a lot of projects for them or if this is a one and done thing.  If it is one and done I would not take a back end.  Take your fee and when the project is completed (when I mean completed I do not mean sold, I mean finished from a construction POV so you are not waiting an extra 30-60 days potentially)  take your money and wish them good luck.  Your responsibility is done at that point.

If this is a thing maybe you do 1 or more every month or 2, I would negotiate a similar deal, but maybe lower the fee percentage and instead take a piece of the back end when it does sell.

Good luck!