Hello, my name is Jeffrey D. Smith. I am looking for experienced project managers to be my eyes, ears, and feet on the ground for running my projects on repositioning distressed commercial properties. I am mostly interested in distressed apartment buildings for now.
This is NOT a JOB offer. I don’t hire employees. I work with entrepreneurs.
Here is what I am proposing:
This is a Joint Venture between you and me. I will find the financing for the projects and you will manage the projects from start to finish. You and I (we) will equally split whatever fees and the profit that I can negotiate with my financiers. We will be independent contractors working on behalf of my private financiers. My private financiers have the final decision on everything. We equally split an upfront fee upon closing of the purchase, and we will equally split a nominal monthly project management fee for the duration of the project. We equally split a subordinated equity position (ownership) of the project in exchange that we have no management vote and no liability on expenses.
My private financiers are paid before you and I are paid from the cash flow or profit, according to their specified agreed minimum yield. My private financiers provide the financing, and you and I provide the sweat equity as our contribution to the project. I work from my home office and you work at the project site.
For example, if their agreed minimum yield is 12% and the resale profit is only 10%, then you and I get nothing. Any profit is split typically about 60% to 70% for my private financiers and the remainder is equally split between you and I, subject to the minimum agreed yield. If the net profit is, say, $200,000, then the 70% split for my private financiers is $140,000, and we will equally split the remaining $60,000. Most of our profit in this arrangement is on the back end, because it is potentially much larger than what an ordinary job pays. There’s no upward limit on the profit potential. That’s our incentive for finding and managing great projects. This arrangement is specified in the Operating Agreement of the Limited Liability Company (LLC) that is formed for the express purpose of each contemplated project.
Some projects are fix-and-sell and others are fix-and-keep. For fix-and-sell, the net profit is split about 60% to 70% for my private financiers, subject to receiving an agreed minimum yield on their investment, and you and I equally split the remainder, if any. For fix-and-keep, my private financiers will arrange for refinancing the stabilized property for cash out and positive cash flow. You and I will equally split our subordinated equity position for a percentage of the cash out and of the cash flow.
I want my project managers to understand the basic principles of income valuation and syndicating group investments. Although not a requirement for consideration as a project manager, I highly recommend that you learn more about syndication and income valuation by clicking here.
Here is what I want from you:
You will handle all of the daily operations, obtaining digital photographs, getting bids from general contractors (the winning bidder gets the job when we close the purchase), getting conservative pro-forma analyses from experienced commercial real estate brokers, supervising the due diligence, and managing the repositioning effort on a daily basis. You must provide thorough vetting of the general contractors for experience, licensing, insurance, etc. If we need local professionals, like attorneys, accountants or property managers, then we will rely on you for referrals.
Sometimes, I will find the suspect properties. Most other times you will find the suspect properties, because you are the local expert. Either way, you will manage the project on the ground from start to finish. You must be familiar with the market in which the distressed property is situated.
As an entrepreneur, you are responsible for your business overhead, taxes, etc. You will pay for your expenses out of the fees and profit sharing that you receive from the project. You will provide monthly invoices for your project management fee in the name of your legal entity (LLC or corporation). My private financiers will pay for approved project-related costs, so you must obtain their approval (through me) before committing to buy material, products or services on behalf of the project. You and I will sign a Joint Venture agreement that defines our duties and interests for each project.
As an independent contractor, you may engage in other unrelated business activities with the understanding that our business arrangement is top priority. If you substantially under-perform your agreed duties, then the agreement can be terminated and you will be liable for cost overruns for me to acquire a replacement project manager.
This is not a steady paycheck, like a job. Please understand that there can be interruptions in deal flow and financing may not be available for some projects, because the funds are already committed to other projects. I am working deals all over the country, so I must focus on the best projects. The best projects get top priority for funding.
If this proposal seems like it will fit your entrepreneurial vision, then please contact me at your convenience. I will respond with my direct email address for you to attach a résumé of your related experience and expertise, and your preferred property types and locations.