I'm not a contractor and I don't really know what the cost of workman's compensation is, but 40% sounds ridiculous.

I would assess and confirm the current rents in the area and request a reduced increase amount to compensate for his long term relationship.  

I will do a couple deals through that realtor to properly compensate for time invested then I'll find out who the big reo broked in town is and go directly to them.

There was very little supply and high demand for small multifamily properties in my market, so I turned to rent-by-room because you basically turn a single-family house (that costs less than a multifamily) into multiple "units" by having multiple tenants.In our case, we just pay for all utilities and have the rents increased a bit to compensate.

The best structure for management fees is based on occupancy rate, where manager compensation increases as occupancy rate/revenue increases. 

I would be able to compensate anyone who is willing to help me out with either money or donating my time to your cause.

Participating in the management of an activity is not considered for this test if (a) any person (other than the taxpayer) received compensation for performing services in the management of the activity, or (b) any individual spent more hours during the tax year performing management services than the taxpayer (whether or not the individual was compensated for the management services).

(A minimum of general liability and worker's compensation insurance coverage as well as E&O (Errors and Omissions) ).(4) Do you have your own maintenance staff or do you have to outsource?

The clause should cover the fact that your insurance does not protect them or compensate them in any way.

Totally different than commission based compensation.