I will be a passive investor who will finance the flip and my partner will do all the work and we will split profits according to our agreement.My preferable way would be to buy it in the name of the LLC I own 100%, my partner will deal with contractors and does all the work needed, my LLC pays for everything, we sell the property and my LLC pays my partner agreed percentage of the profits as a project management fee.Can I treat the income from such an activity as passive and avoid self employment tax?

Since Dan will be a long term partner for the business, I'm leaning towards more of giving him a small percentage of the business.

Even despite the higher cashflow as a NUMBER, your pre-tax returns as a PERCENTAGE fall to low single digits and the investors AFTER-TAX return is even lower.

A couple options could be a flat per unit fee like you mentioned, or perhaps a revenue share model where you get a small percentage based on the number of units that sign up. 

My pro forma using the 50% rule and using standard expense percentages for San Diego both created a small negative cashflow.

Nathan G is right, please review the contract as every property management company determines what they are up charging or if they just have a percentage.

So in essence I think it is a classification error, you base your property's sale price on other sales in your market, however a percentage of the price of these other sales is due to considerations that your property simply does not have. 

Small percentage were just fine.

So on the expensive properties, the percentage will be far lower than on cheap properties. 

How do I calculate profit with Real Estate Commission Fees (Do I just multiply the 0.06% percentage to the ARV/MaximumOfferAllowed?)