How do you compensate your assistants?

4 Replies

Sorry for the length of this post, but I had to fit in all the details.

My business is expanding rapidly for just me to handle, and I need someone competent to come on board to assist me. I have already outlined in writing the duties expected of this position, and verbally have explained them. I have found a person with the required skill set, and who is in between jobs and that I have worked successfully with a decade ago. He must relocate from another state to accept this opportunity.

My question has to do specifically with process and amount.

What he wants as compensation: He wants to live in my condo (at no direct expense to him), plus $500 per month as "spending money", plus to be reimbursed for any local and/or out of town travel he may incur. Then, when he starts working on deals that close, he wants a percentage (although he has not directly stated what he thought that % should be). And then we are to "re-evaluate" after 3 months to see how to tweak compensation if necessary. Finally, he wants to be paid in cash (but that’s not going to happen…he will receive a 1099 as an independent contractor whether he likes it or not).

He provides no upfront capital or risk, I provide all the training, in place systems, financial and intellectual capital, contacts, legal entities, and accounting to make this business work…It has taken me about a year of blood sweat and tears to finally get it rocking at a good flow.

There's just something in this proposed compensation desires that isn't sitting well with me, but I cannot put my finger directly on it. Perhaps it was when he said something to the effect of..."if you make a large profit on a deal, I should get a higher percentage of that profit"....Or the fact I like living alone. Just not sure.

One of my RE coaches thinks he should document in writing what he is doing, how long is taking him, and what he accomplished. Then pay him on an hourly rate and no percentage.

Or maybe compensate him with his $500/mo request and a set percentage of the deal, regardless of what the overall profits are. And after 3 months, he’s gotta find his own place to live.

I appreciate hearing your thoughts. I want to have a written legal contract up front so there is no confusion about what we exactly agreed to in terms of compensation and duties.

Thanks in advance.

This is just my two cents, but it sounds like he's taking advantage of your prior business relationship to get a whole bunch of concessions on your part that frankly shouldn't be made. What I would do is take the amount you want to make on each deal, split that however you want, divide by the number of hours he would be working on each deal, and there you have an hourly rate. I completely agree he should get a 1099 whether he wants one or not. Maybe give him a relocation allowance since he is moving. In my opinion, hiring your friends or past associates is fine, but ultimately you're the boss. 


I just recently joined BP and did a search on people in my area when I saw your post. Just out of curiosity, how did you end up working out this arrangement?

When I first started in real estate I teamed up with another agent who mentored me while I worked 2 days a week as her assistant. Instead of getting a % of her commissions, I received a flat fee for each transaction completed, no matter how much the sale price was. I was not ecstatic about the situation, but to be able to team up with an agent of her abilities and skill was much more important to me.

Hope it all worked out well!

@Shelby Smith  

 What you did is exactly what more people who want to get into RE should do.. Instead of blowing thousands on marketing right out of the gate with no tools to convert the leads it is in my mind *** backwards... What you got was a paid education.. you learn how deals are done you learn terminology you learn who the mover and shakers are etc etc.. Nice job.!!

@Jay Hinrichs

Thanks! I felt that education was much more important in the long run, and it turned out I was correct!

Free eBook from BiggerPockets!

Ultimate Beginner's Guide Book Cover

Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!

  • Actionable advice for getting started,
  • Discover the 10 Most Lucrative Real Estate Niches,
  • Learn how to get started with or without money,
  • Explore Real-Life Strategies for Building Wealth,
  • And a LOT more.

Lock We hate spam just as much as you

Create Lasting Wealth Through Real Estate

Join the millions of people achieving financial freedom through the power of real estate investing

Start here