Hi,
Sorry for the length of this post, but I had to fit in all the details.
My business is expanding rapidly for just me to handle, and I need someone competent to come on board to assist me. I have already outlined in writing the duties expected of this position, and verbally have explained them. I have found a person with the required skill set, and who is in between jobs and that I have worked successfully with a decade ago. He must relocate from another state to accept this opportunity.
My question has to do specifically with process and amount.
What he wants as compensation: He wants to live in my condo (at no direct expense to him), plus $500 per month as "spending money", plus to be reimbursed for any local and/or out of town travel he may incur. Then, when he starts working on deals that close, he wants a percentage (although he has not directly stated what he thought that % should be). And then we are to "re-evaluate" after 3 months to see how to tweak compensation if necessary. Finally, he wants to be paid in cash (but that’s not going to happen…he will receive a 1099 as an independent contractor whether he likes it or not).
He provides no upfront capital or risk, I provide all the training, in place systems, financial and intellectual capital, contacts, legal entities, and accounting to make this business work…It has taken me about a year of blood sweat and tears to finally get it rocking at a good flow.
There's just something in this proposed compensation desires that isn't sitting well with me, but I cannot put my finger directly on it. Perhaps it was when he said something to the effect of..."if you make a large profit on a deal, I should get a higher percentage of that profit"....Or the fact I like living alone. Just not sure.
One of my RE coaches thinks he should document in writing what he is doing, how long is taking him, and what he accomplished. Then pay him on an hourly rate and no percentage.
Or maybe compensate him with his $500/mo request and a set percentage of the deal, regardless of what the overall profits are. And after 3 months, he’s gotta find his own place to live.
I appreciate hearing your thoughts. I want to have a written legal contract up front so there is no confusion about what we exactly agreed to in terms of compensation and duties.
Thanks in advance.
