How should I determine what to pay brother and sister-in-law help

4 Replies

As part of building my team, my brother and sister in law live in the area where the rentals i'm acquiring are.  

They will be doing odds and ends types of things to help prep the house for rental.  Things like:

- Painting

- Installing sinks

- Patching small picture type holes in the wall

- visiting the house to do a pre signing walk through

- visiting house to evaluate it as far as a rental prospect

- etc

Any good suggestions on how I should determine what to pay them?  They are willing to do it for less than I could hire, ore example, a painter to do the work, but I'm trying to determine a formula for easily coming up with fair payment terms.

Cant answer what would be fair but here is an idea of what you would pay to outsource the work mentioned. You could pay them for the job, by the hour or by the day and give them a bonus for finding renters maybe $250

Painting $250-$400 per room

Installing Sink - $150ea ( +/- Labor Only)

Patch Holes - $5 ea Nail Size  

Lease Fee - 1 Month Rent (Property Management Comp)

Get contractor quotes and pay them fair market. Write it of as expenses.

Pay family as you would want to be paid, fair is fair and they won't be happy unless you do, for getting the property set for rental. I would set a price for all repairs and see if they agree to do that. After that you can decide if you want to go forward and keep them on the team. 

They should get a 1099 every year and they will have to pay taxes on the income, you can of course take their pay as business expense. You may find some jobs better suited to the trades,and hire that for sure. 

Insurance is issue, do you have workers comp to cover them for injuries ??  Otherwise they would be independent contractors and subject to carry their own insurance. Make sure they have insurance to cover what is needed for them to work for the business.

I hire family , they are on workers comp thru my property insurance, they get a 1099. What worked best for me was to figure out a set amount each month I would pay them for their services, some months they were overworked some months under-worked but all in all it has been a way for me to budget and stay consistent. They can take expenses like mileage and phone off on their taxes for self employment business, and are guaranteed a income as long as they show up and do what's needed.

Unless they are getting a share of the profits, I would pay them as you would any other contractor.  Have you asked them how much they want?  Just have them itemize any work needed and give estimates.  You can then choose to use them at that rate or pay someone else.


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