Question about hiring boots on the ground

9 Replies

It depends on what kind of expertise your B-O-G rep can offer for you.
I would absolutely get references and run a background check, which you can easily and inexpensively do.
Since they're a 'contracted employee', you may decide to ask for them to provide you all necessary information that may be found on a W2 for tax purposes, taking a copy of their license also.

Just make sure you thoroughly vet and set proper standards of communication and required details when they're sent out to a property on your behalf. You may also want to consider advising your BOG what details you'd like withheld from selling agents, as discretion means leverage and that is an important part of being able to do solid deals.

Best of luck to you!!

@Fili Aguirre

The question you are asking can be interpreted differently depending on what your end goal is.   If you are an out of state investor that is rehabbing and you need someone to double check the rehab and show the property for potential sale or rent I would suggest using a property management company.   But if you are wholesaling and just trying to confirm the condition or get a contractor in to bid then you would want to find a local realtor that would do that for a small fee.  There are plenty of struggling realtors out there that would do that cheap, I know because I was that struggling realtor at one point and did this for out of state investors to help me get started in Real Estate.   

I would only work with a licensed individual, too much risk hiring random people that haven't taken the time or care to get licensed. When someone is licensed they are insured also, if something does come up that you need to recover you can always work with insurance companies, but individuals can very quickly disappear if something goes wrong and your recourse is almost zero in that scenario. 

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@Fili Aguirre

Your question is not very clear. Are you asking how to make sure they are competent and are not crooks? Then your best bet is to not hire unknown people directly and never pay upfront. If they will have contact with other people or visit other people's properties on your behalf, you will need to do background check and be extra careful to avoid liability exposure for their actions. Might need additional insurance. This is a lawyer's question.

Since you asked this question on a tax forum, I'll take a guess that maybe you were asking a tax-related question. How to pay them legally and deduct these payments? I will answer this one, just in case you meant it.

If you're going to pay someone $600 or more for the year, for all of his/her jobs combined, then you need to get them to complete form W-9:  https://www.irs.gov/forms-pubs...   Do it before they start! And the following January you will need to send them (and a copy to the IRS) Form 1099-NEC reporting their earnings. 

To protect your tax deduction, you need to keep track of these jobs and have a proof of payment, so use traceable methods like Venmo or Zelle. Avoid cash payments, for more reasons than one.

Finally, you're not supposed to hire anyone not authorized to legally work in the US. For contract workers (as opposed to W2 employees), this rule does not have clear procedures and is widely ignored.

Originally posted by @Fili Aguirre :

@Michael Plaks do I need them to complete form W-9 for for any type of work where I pay them even if it is a very simple job? When shouldn't I ask them to complete form W-9?

The W-9 form is needed in order to obtain their tax ID which is normally their Social Security number. You will need their tax ID to later issue Form 1099-NEC for their labor. And 1099-NEC is required if your business paid $600 for any kind of labor. See more details here: https://www.irs.gov/forms-pubs...  and here: https://www.irs.gov/forms-pubs...

Originally posted by @Fili Aguirre :

@Michael Plaks ok thanks, I will just pay 100-200 though, so I won't need it. But, if you don't mind me asking.. what would happen if I paid over 600 and didnt have them complete a W-9 and such things??

Remember that it's $600 total for the year, not per job. You can get away with no W-9s if you have their correct SSNs and issue them 1099-NEC forms. If you don't, you're in non-compliance and are subject to IRS penalties. https://www.irs.gov/government...

If your next question is about how the IRS will find out and how often does it pursue it - the answer is not often currently. But they can, so it's your risk to take or not.