My partners insist on paying me. How do I calculate my worth?

8 Replies

Good Day Everybody,

Before I ask my question, I’m going to provide some context so hopefully what I ask makes sense.

I was asked to be a part of a team that flips single-family residential properties in the Atlanta market. We have myself, a local agent, a general contractor, and two private equity investors who put the money in.

I have officially labeled myself as the GSD engineer. GSD stands for Get Stuff Done. And honestly that is what I do- I get stuff done. I help the agent track down deals, I generate call list as well as Cold Call sellers, I find and vett subcontractors with the GC, I research and analyze particular markets as well as specific micro areas within those markets to see what strategy is best to employ, I collaborate on strategies and systems to implement to make processes easier, I also network and put people together. By the way I do all this remotely from a distance.

Okay, here comes the dilemma.

My partners that I work with appreciate my effort and believe my time is valuable, which I would agree. My problem, Albeit a good one, is that they want to ensure that I am compensated for the time that I spend doing all these tasks. I like making money just as much as the next person, but I am under the mindset that I want to be paid when the fruits of my labor or realized- as in a deal is completed or we go to closing. Something doesn’t sit right with me about being paid for work when the end product is not yet realized.

Am I crazy or should I let them pay me even when results may or may not be correlated with that pay? How would you value your time and the situation?

I look forward to your input?

@Robert White so that was my recommendation. 1-3% depending on the level of involvement for the particular deal. The real struggle is the intangible items outside of the actual deal.

Personally, I like the idea of advocating for the higher percentage because of these intangibles I provide to strengthen the process and business.

I this is a true partnership, then you all own a % of equity, and a % of profit. If they aren't talking about what % you own, and are rather, paying you instead, you are not a partner, you are an employee. 

@David Abbate is spot on. Either you work for them, or you're doing work for them and getting equity/profit.

If you truly are a partner, then receive an equity share and percentage of profit commensurate with your contribution to the partnership.

Agree with David and Joe. You are either a partner or employee, you all need to decide which and pay accordingly. Now, partners can be paid salary plus profit share too so the question becomes, do other partners get salary too or just you? If just you and they all get profit share only, that is fine since your abilities and job function seem to overlap all of theirs (with exception to the money partners).

1-3% of what? of the total sales price at end, the total profit before taxes, or the total construction costs? If you sell a flip for $200k and for your efforts (which appear to be substantial from your list), and where the profit was say $40k, making only $1,200 max seams a tad low to me unless you got 3% of total sales price which would be $6k of that $40k profit (which also is a tad low in my book for your efforts.

@Will Barnard @Joe P and everyone else. Good insight and knowledge. I've definitely advocated for the partnership and that's seems to be where we settled. And to answer one of the questions. It was 1-3% of the before tax profit. If I only find the deal and put the pieces together then likely the 1-2%. If I do the negotiations, analyze the deal, schedule contractors, etc, etc, then of course I'd push north of the 3%.

The relationship is still young (less than a year) and I'm letting the deals strengthen it. Later on once repeatable systems and people are in place will be the time for negotiating. I'm thinking long term growth versus quick profit.

Thanks again for your thoughts.


@Adam Scheetz   I'm wondering what your background is and how you developed the knowledge to analyze opportunities.  You could be the most important part of this equation!

Originally posted by @Adam Scheetz :

@Will Barnard @Joe P and everyone else. Good insight and knowledge. I've definitely advocated for the partnership and that's seems to be where we settled. And to answer one of the questions. It was 1-3% of the before tax profit. If I only find the deal and put the pieces together then likely the 1-2%. If I do the negotiations, analyze the deal, schedule contractors, etc, etc, then of course I'd push north of the 3%.

The relationship is still young (less than a year) and I'm letting the deals strengthen it. Later on once repeatable systems and people are in place will be the time for negotiating. I'm thinking long term growth versus quick profit.

Thanks again for your thoughts.

 So 3$ of a net profit on a flip of say even $50k is only $1500. You intend to spend as much time as it takes to perform those tasks and wait until the end for just $1500? Usually people here I find to be unrealistic with their projections and values over valuing them quite often. In your case, I feel strongly (based on the info you have provided) that your services are being grossly undervalued by YOU. I would recheck your worth in this structure before I agreed to anything close to that low number (in my opinion and perhaps I am missing some facts).

Create Lasting Wealth Through Real Estate

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

Start here