How much should I make as a bidder?

Question

Hello All-

I'm new to BP, but have a question for all of you investors out there.  If I bid on behalf of an investor (via power of attorney for example), how much should I be asking to get paid?  I would bid M-F (if auctions were on all 5 days, which they typically are) in one county.  I'm doing this as a way of getting my REI career off the ground.  The investor I will be bidding on behalf of has agreed to mentor me.

Steve Babiak · Answer

As @J  Scott alluded to in his post above, if you are doing things that are relatively unskilled the pay would not be high - that scenario would not be considered "challenging".

As @Jay Hinrichs posted there are bidding services. I think this investor expects you or your wife to be something similar to these bidding services, where title and lien searches are performed, comps are identified, the property is visited, repairs are ballparked, etc to arrive at a bid number; all that is quite a bit of work. Then you go and get certified funds and place bids; placing bids is the less challenging stuff.

Account Closed · Answer

@Chris Mangrum

"I don't really have the option to get paid nothing as we need to keep up with our monthly bills and such so I'll wait and see what this investor proposes and go from there."

I am a bit lost on your scenario.  First you referenced you doing the bidding, then mentioned it would be your wife, who is a college professor.  Is her schedule typically open during the time the auctions are held?  Was she looking for part time work to fill this time prior to this opportunity?

If this investor is the real deal and truly plans to mentor you, then even if you get $0 you aren't getting "paid nothing."  Be careful you don't ruin a good thing by expecting more than his willingness to teach.

J Scott · Answer

It depends -- do you think that bidding at auction is something that requires an equal amount of study, experience and expertise as being a professor?  I would assume not, so I would assume that asking to match her current salary would be ridiculous.

So, what level of study, experience and expertise is needed to do a good job of bidding on properties at an auction?  My guess is not much.  In fact, the investor could probably go on Craigslist and find 100 people who'd be happy to do the same for minimum wage.  Assuming that's the case, minimum wage is probably the right amount, or slightly more if your wife is very conscientious and hard working.

As for assessing of properties, that likely takes some knowledge (or ability to learn quickly), so that might be worth more -- $15/hour or so.

Now, if the plan is that this investor is going to mentor you and help you with your career, or if you're going to be doing more complicated stuff as you learn more, than the pay should scale with the amount of responsibility and expertise you bring.

Justin Pierce · Answer

Chris, you don't want to let anyone take advantage of you but also keep in mind that a good real estate education is literally worth 10's of thousands of dollars.  Keep that in mind when you're negotiating with the investor.  It may really be a good deal for you to do the initial work for free just to get to see the process and soak up the experience.

Just make sure you're dealing with a legit investor.  There are a lot of posers out there and then you're just wasting your precious time.

Curt Davis · Answer

Why dont you just ask this investor what they are willing to pay you?  You are new and they are willing to mentor you so your fee should not be much I would assume.  If you were experienced I would say you could ask for a higher premium.

What type of volume are they looking to do?

Chris M. · Answer

Steve-

That is very helpful feedback.  That makes a lot of sense.  He will likely expect more than just her raising her hand to bid at an auction.

Chris M. · Answer

David-

She is only part time so if REI works out in our favor, it will be the better source of income.  His mentorship is going to include paying me 20% for bird dogging so we will use that to fund real estate investments.

Account Closed · Answer

Does she not make good money as a college professor?

If you lose her income as a professor, how to you plan to fund your real estate investments?  Is his mentorship going to include financial backing?

Chris M. · Answer

David-

My wife would leave her job as a college professor to do this full time because we recognize that REI is probably the better choice long term.  The investor told us we would want to eventually quit our jobs as this business is lucrative.  One of us needs to take the risk and put ourselves out there and we agreed it's better for her to do that.

Jared K. · Answer

I would see what he offers and see if it is satisfactory. Given the fact he is mentoring you, and I assume paying you to bird dog already, then the education is worth doing it for to build on the relationship. If your wife is doing this in spare time then its a bonus to be an asset to your mentor b/c he wont want to loose you when your in place so you have a lot to gain learning from him. I understand gas, time, etc isn't free and your mentor does too so I am sure he will try and compensate fairly for his time and expenses. I am also sure he realizes 5 days per week possibly is a job in itself and a decent responsibility. I know guys who have bidders that are attorneys and I am sure they aren't cheap but anyone could do it for them. I'm not sure about the auctions in your area but here they don't last that long, 1 hour at best. It would be hard to put a per hour # on this b/c you never know exactly how long they will last but I bet he offers to pay you like a contractor, by the day!! You should think of yourself as a contractor, not an employee. If he payed you $50 day he would save gas and his time but you would also reap rewards. I would guess he will offer you $100 per day for this responsibility. Let us know how it turns out!

Good position to be in, best of luck!!!

How much should I make as a bidder?

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