All Forum Posts by: Marcus J Richardson

Hello, I am interested in house flipping and starting my own business. I have a question on the market I should be starting out in. I am interested in The California area Los Angeles or outside of Los Angeles. But I would like to know if that area is to expensive for me to start in? I know home prices are very expensive there but would like to know if there are any cities surrounding I can start my business. Or should I try another cheaper market? Thanks

Originally posted by @Account Closed:

@Marcus J Richardson, @Aaron McGinnis points out a couple of key things to be mindful of: 1) the cost of a W2 employee vs. the cost of a 1099 sub/independent contractor (yes, a PM can be a sub).  With a W2 employee, you'll have a plethora of soft costs and responsibilities that you won't have with a 1099.  But keep in mind that the IRS has clear definitions about the differences between a W2 and a 1099 worker. 2) "This is not a particularly easy job, and there's a lot of idiots running around doing it badly. You should take your time and hire wisely."

As for how to compensate your PM, that really boils down to the kind of person you want on your team... one who is compliantly motivated relative with their fear of losing their job or, one who is entrepreneurial, like it appears you are, and is motivated by rewards greater than simply earning wage?

 Yea I'm thinking more of a w2 employee since they will be overseeing all of my prehabs. I wish to get up to two prehabs a week. 8 in a month so I would probably save on cost aswell if I paid a salary of let's say 50k. Instead of around 2k per prehab I do.  How does that sound.  

Originally posted by @Aaron McGinnis:

I would not recommend paying a slice of the action. This person doesn't need to have skin in the game... he's a mid-level manager, his skin in the game is that he gets to keep his job if things go well, and lose his job if things go badly.

 Oh ok I just re read what you wrote. Yea I'll give them salary then. And since I can't really control there time I'll just set the standards of making sure everything is complete up to standards on the deadline. 

Originally posted by @Aaron McGinnis:

For a mediocre project manager, expect somewhere in the $40k-50k/yr range. For a rock-star, more. This is W2 pay. For 1099, you should expect to pay more.

I would not recommend paying a slice of the action, and for management, hourly pay isn't really good either - his value is not driven by hourly production and his hours won't be regular. 

This is not a particularly easy job, and there's a lot of idiots running around doing it badly. You should take your time and hire wisely.

 To have skin in the game, how much percentage of the profit I make should I give him/her?  

Hello,

I would like to know once i hire a PM how much should i pay him to manage my prehabs i will be doing.  His responsibilities will be to manage the prehab and to set milestones for contractors, pulling permits, and basically just being liable for the whole prehab.  Should i give him/her a percentage of what i make from the prehab?( and how much) or should i pay a wage per hour? (and how much)  Thanks

@Benjamin Pekarek yea I'm thinking at least 5k wholesale. 15k prehab. 20k rehab. To try not to go below those numbers after expenses. 

Hey BP,

I am interested in doing prehabs and some rehabs in the Florida market. I would like to know for the market what is the usual profit in the Orlando market for prehabs and rehabs after all expenses are paid. Thanks. 

@Account Closed thanks a great deal. So much to learn lol. Thanks for taking the time to explain. Hopefully we can stay in contact. Thanks again. 

responsibilities should he be in charge of. 

Originally posted by @Account Closed:

A PM could manage individual employees, subs and GCs... or a mixture of all three as the circumstances require. Might want to start with the GC approach first and as you learn and grow ,and your PM is solidly on board and with your program, then spread out to subs and/or employees.

 Ok thanks Micheal. So I should re a PM and bring on a GC to start out. I just have two questions because I plan on prehabbing four houses a month. Will the GC have his own group of workers or will the GC then need to hire more people because just the GC can't take on all the work him or herself. And when I do hire a PM I want him her in control of the prehab process so what