Paying your crew when you partner on a flip

[Ryan Nolan]

Hello everyone, I currently do fix and flips and buy and holds. I occasionally partner up with other investors on flips. This year I am hiring a full time employee to help me with day to day operations and also renovations. If you partnered up with another investor 50/50 with them bringing the money and you bringing the knowledge, real estate license, deal and subs. How would you go about reimbursing yourself for the time your employee spends working on that project? He would be painting, demo, repairs etc. He is going to be a w-2 employee so if I have him working on the flips I’m partnered up on I’m paying him to renovate the house so how would you go about recouping that cost. Would you bill your own company? Thanks for any input you may have. 

[J Scott]

If you're talking about how to reimburse yourself with respect to your investor/partner, if I were that investor/partner, I would expect you to pass one the actual cost of that employee to the project.

That said, I would also want to see multiple bids indicating that the cost of that employee was comparable to hiring a third party. And I'd also want to ensure that you had workers comp and liability insurance covering any employees you had on the job. No different than I would want to see if you were only hiring third party contractors.