Compensating An Acquisitions Manager

[Jacob Evans]

Can someone answer, or point me to the post that answers the question of how to compensate a property acquisitions manager?

I recently trained a woman to analyze and make offers on reo properties. I gave her all of the tools and training needed, put her in touch with my cma expert to give her resale values, my contractor to verify rehab budgets and my realtor key to tour the properties on her own. I had her sign a non compete agreement and turned her loose with ALL of my auto-notification leads from the mls.

The only problem is that I'm not sure exactly how to pay her when she finds me a deal...

I told her to look for a target profit equal to or greater than the cost of the rehab, with a minimum net profit of $12,000. IE: 15k rehab = 15k net profit, 20k rehab = 20k profit, 5k rehab = 12k profit, etc...

I think I would be comfortable paying her $2,000 for every deal she was able to find in this way, but I'd also like to give her an incentive to find better deals than that as well...

I'm thinking of drafting a document agreeing to a $2,000 commission on any acceptable deal that meets company buying guidelines as well as a bonus 25% of potential profits in excess of minimum net profit guidelines. Of course, all projected resale figures must be verified by management and the cma expert as well as all rehab costs verified by the project manager and/or GC.

What do you think? What were you able to do? How have you structured the delegation of property acquisitions in your own investment business?

I'm anxiously awaiting your replies :-)
Thx for reading!

[J Scott]

First, it seems a bit weird that you would train her, give her all your tools and then set her free to find you deals all before you figured out (and discussed with her) how she would get paid. Has she not asked about payment? Has it not been discussed with her prior to all the training?

The crazy thing is that she signed a non-compete with you without knowing how much she'd get paid. Why would she do that?

Btw, based on your relationship with her and her role in your efforts, it sounds as if the IRS would classify her as an employee as opposed to an independent contractor. As such, why don't you pay her as an employee -- on an hourly basis. You can offer a commission/bonus as well for every deal she finds.