How to reward a contractor / bird dog for finding properties

[Suzanne P.]

Over the last couple of years I have graduated from passive mortgage investing / private lending to being a passive money partner in flips to now running my own active flips. My flips are generally 3 to 4 hours away from where I live since our local market is way too expensive and I have been using real estate agents to find me deals of the MLS.

Recently, I have found a contractor who offers reasonable prices for renovations, and in a conversation yesterday he indicated that he is aware of many local properties that are run down and uninhabited where I could track down the owners and offer to take the property off their hands. We are doing a project right now where he found out that a similar property as the one I am working on went for more than 50% less than what I paid for my project, in a better state of repair, through a private sale. So he seems pretty good at locating properties and digging up relevant information like previous sales and sale prices etc. From what it sounds like, he might be able to get me run-down properties at much better prices than what I can find on the MLS.

In doing so he would be my bird dog and also do some local inquiries about going selling prices and other relevant information. In your opinion, what options do I have for compensating this contractor? If I purchase the property, should I pay him about 2 to 3% of the purchase price (the going rate for local real estate agents), payable at the end of the flip? Or should I give him some sort of profit sharing?

Thank you in advance for any suggestions.