How much do I pay for this?

Question

My dad is a contractor and he has been instrumental in helping me buy my first reo property.  He has inspected the house and determined what work needs to be done on it.  He will also have one of his guys serve as the project coordinator for the job.

My question is how should I compensate him for his help?  I guess he's functioning more as a consultant than anything else.  He already said he doesn't want a penny from me, but I don't feel right about that. Should i give him percentage of the profit when the house sales?  or a flat fee?

I want to do what is fair and reasonable.

Justin Pierce · Answer

You know, on your first deal, just make sure you turn a profit first.  Don't spend money you haven't made yet.  Make it up to your dad once you get a better feel for this business.  There will be plenty of other people with their hands out.

Chris F. · Answer

I like the dinner and card idea. Don't insult him with money. Or how about just "thanks!" Dad's "payment is time with you =)
                        
                        I say this as a dad, and it's what most dad's would want, I think.
            
            Of course I can't speak for every dad- only you can say for sure.
                        
                        just my 2 cents...

Jeffrey K. · Answer

It is your dad, just pay him his costs.

Michael Culler · Answer

It depends, and you know your dad better than anyone.

My dad would be mad at me if he said not to pay him, and I tried to.  I just do what the old man tells me to do, its worked so far! :-)

Will Barnard · Answer

Eric,
That is a very interesting study and it makes sense. In my persoanl situation, that woudl not be the case with my Father, but on average, I think I would tend to agree with the study. Very valid points.

Eric Medemar · Answer

This is  a very interesting question in deed....

If you check out the book "Irrational Predictability" they have a very interesting case study on a subject similar to this one.

Their findings were that if you decide to compensate someone partially for works they have voluntarily done then you cheapen the the entire scenario and actually leave the person being compensated more agitated than if you didn't compensate them at all.....Reason being when they do something voluntarily they get their pay from "Feeling good about doing something"....

But when you introduce payment to the scenario instead of feeling good about doing something nice....They compare the pittance that you are offering to what they would normally be paid....and that serves as an insult....

My suggestion would be to send him a note of appreciation with a gift card to an area restaurant....This allows him to know that you really appreciate his help and it doesn't set up a scenario of comparison to his normal fees.

Eric Medemar

Will Barnard · Answer

Will one of your Dad's guys be paid for his role as project coordinator?
If so, then your Dad has basically done an inspection for you and brought you a team member. Home inspections usually run about $300 and the team member could be invaluable. I think paying a flat fee of $1000 is more than fair and great compensation for your Father.

I also agree with you that you should pay him even though he doesn't want it. My Father would say the same and I still would pay him for the assistance/work.

Curt Davis · Answer

You are asking a very hard question. He does not want anything fro you but you feel the need to compensate him for his efforts. Why not just give him a flat fee for his help. $1,000 - $2,000 would be good depending on how much you are planning on making.