Bring a tenant on as a part time employee?

Question

I have a guy that I have used as a casual handyman for the past 18 months.  He lived a few houses down from a property I bought in early 2014.  He is a single guy that lives very close to the edge financially.  He works odd jobs for people in the area and seems fine making ~1k / month.  He currently has no car.  I moved him in one of my rentals that needed some work. (leaking roof, new floors, new doors, paint, drywall, a few windows, etc. ) Market rent is $700 for the place but in exchange for the labor I cut the rent in half the first year and have it increment up $75 / year until we hit market rent.

I pick him up on Saturdays and we do work for 4-10 hours  when I have something going on.

I want my Saturdays back with my kids.  I was debating getting him a $500 car, a mobile phone, free rent, and $400 / month to cover his phone, insurance, and fuel.

Trustworthy guy, he has been to my house multiple times to help me work there.

I would be 1099'ing him for the $1100 / month and with the car he could work other jobs as well to make more money.

I would have him do repairs, show units, turn units, & take phone calls from current tenants and prospective tenants.

I would still want to do the background searches on the applicants and do the finances.

He would be working 3-5 days a month most months.  as I buy other properties he could have more extensive projects.

As a data point I have 20 units and they are all within 20 min of his location.

Would I need to get workers comp  or liability insurance for him?  How about withholding?

I want to set him up with a bank account and an email, he currently has neither.

Guy is mid 50's.

Judd Campbell · Answer

I hear you guys.  I want to help him out, great guy, was in the Marines for 12 years and had a surgery last year the laid him up for a month.  He worked most days doing siding prior to that surgery.  Without a car he cannot get hired full time and he went a month without a phone so he had zero work.

I paid $72 bucks for him to get a phone and have it work for the next 30 days so he can at least have people call him about work.

I will speak to my tax guy and see what he has to say about it.

Justin Fernandez · Answer

I understand helping him out, in fact paying it forward has always hit close to home.  I would sit down with a lawyer and figure out exactly what you need for him to be an employee, how to cover him, and a contract that includes current and future duties, because we don't plan for sunshine, we plan for horrible tsunami's created by fault lines that end up as life shattering disasters.

That may have been overdramatic, but essentially, I don't want you to just believe what someone said on a forum and make it law, because many things are federally mandated, but your state may vary on what coverage is needed be it full time or part time employee.