Invest With Passion!

It is important to hirer a project manager

By Gyna McElwee

Many new clients and people during seminar presentations want to know what are the most important steps they should take to become a successful investor. Among the top three is to hire a competent Project Manager.  Many investors really do not understand the importance of one.  This stems from them not knowing what their role is.  The Project Manager plays a key role in working with the contractors, appraisers, and inspectors.  He/she can also save the investor thousands of dollars by reviewing contracts for double markups and errors made on the contract.  It is important to know who is paying for the materials. The Project Manager makes sure the project is completed in a manner that is structured to the client’s specifications, completed in the time frame that has been agreed upon, and completed within budget.  The Project Manager serves as the eyes and ears for the client. Clients are kept involved by receiving daily emails and pictures showing them the progress of their project.

Many investors make the mistake of thinking that the General Contractor they hire is enough. They believe they are saving money by letting the General Contractor “manage” the project. This is a tragic mistake that usually results in the project going over budget and for a longer period of time than the contract stated. Many contractors are good at their chosen field, such as plumbing or painting.  Most lack the skills to successfully manage a project. Investors feel that the cost of the Project Manager (typical fees are up to 15% of the total job or an hourly fee for waiting for the utility company to show up, etc.) are unnecessary.  The time to hire a Project Manager is at the beginning stages of the project not when there is a problem.

The Project Manager must be able to be a liaison between the client and the contractor.  It is important that all of the tradespeople be on the same page regarding the order in which the work must be completed and ensuring that the materials are available the day before they are to be installed.  I have had to take over projects where the floors were laid before the rooms were painted or the roof was saved for last (because it is a large expense) and a heavy rain ruined the inside work.  My favorite horror story is when the contractor takes the materials from a client’s project to use on another client’s project.  This usually happens because the new client would not provide up front money to the contractor to get started.  Since the current client has, the contractor feels he will just “borrow” Client A’s materials until he is paid by Client B. I have worked on many cases where the materials (or money given for materials) have never been replaced.

Seasoned investors benefit from a Project Manager because they know that time is money.  Most have a Project Manager as part of their team, along with their Attorney and CPA. Not only will a good Project Manager monitor the time a contractor puts into the job, they will also free up the investor to find the next deal.  It is time consuming to successfully complete a project and the seasoned investor knows that his or her time would be better spent elsewhere.

Investors know that business has never been better regarding the opportunities to find and purchase properties. The key to success is to have a solid plan and a solid team behind you.  Each member of the team should bring something to the table that allows the investor to concentrate on finding the next deal.  If the projects are not completed on time and within budget, there may not be another project.  An experienced Project Manager will help ensure a smooth project each and every time.

SOME FUNCTIONS TO EXPECT FROM A PROJECT MANAGER

• Completion of scope of work

• Assistance with the completion of a realistic budget

• Obtain three bids for each project or work with bids furnished by client

• Coordinate each phase or job with contractors

• Assist with draw requests

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Gyna McElwee is the founder of Phoenix Midwest Properties, Inc., which provides resources to real estate investors, including Project Management. She can be reached at 708-277-3627 or msgyna@aol.com.

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