If you have recently purchased an investment property that needs rehab there are various options for how you bring your new investment into a positive cash flow position. A project manager is a beneficial partner for investors in bringing their property into marketable condition. Utilizing the experienced property manager for this service is smart due to the shared vested interests of both parties. It also coordinates objectives instead of using different partners with potentially conflicting interests.
You may decide to hire a contractor directly. You want a very high level of trust and accountability regarding draws and performance. There are contractors who will offer to roll in property management services at what appear to be a discounted rate. Frankly, the problem with this arrangement is your contractor is a contractor first. Guess what is more profitable...repairs or management? Ask any owner who has chosen this route about the cost and volume of repairs after the rehab. There may be a very good reason management fees are below the market.
Or you may choose to hire a property manager who does not offer rehab services. There is nothing wrong with this choice but they may not be much help in bringing your property to rent-ready condition. Or, what if you decide to sell after the project is complete? The advantage of a property manager serving as a project manager is the coordinated approach to bringing your investment to a profitable position.
A professional manager who offers project management services will be able to manage and resolve all of the expectations that make hiring a contractor so difficult. They are problem solvers.
Here are some of the benefits to an owner for hiring a project manager.
A project manager can oversee work flows. They also can determine if a certain phase of a job may be completed before a different phase while waiting on the availability of a preferred experienced contractor.
A project manager can negotiate prices based on other jobs that they are contracting. Their full-time availability provides skills that are very difficult for a self-managing owner to duplicate.
Project managers resolve the questions regarding workflow. Questions such as can one phase of the project jump ahead while waiting for a preferred contractor? Or determining the location of the contractor on a day where nobody is working...but should be.
Most importantly, a project manager will control funds. Money will not be released to a contractor until work has been inspected. In most cases, the project manager will also acquire materials and have them delivered to the job site. These acts reduce the risk associated with paying upfront funds to a contractor.
A Project Manager is the owner's fiduciary. They carry on the responsibility and duties to the owner that are a part of the property management process.
You may be surprised at the affordability of these services. There are several ways a project manager may be compensated. Our preferred method is a straight cost quote (materials and labor) plus a percentage for the management services.
In the final analysis, it is important to understand your team and their capabilities. Identify who can best manage the difficulties associated with property rehab and maintenance. The property manager as project manager offers an ideal combination of services. It makes your property manager a partner in the final outcome with an emphasis on the owners needs and budget.
WILMOTH Group is headquartered in Indianapolis and Fort Myers, Fla. WILMOTH Group focuses on providing creative local solutions for a variety of residential real estate needs including, properties for sale, property management services in Indianapolis, and short-term management services in Tampa and Fort Myers.
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