I am in an LLC investing in RE. How much should we pay a non member manager? He is doing all of the legwork on purchases, sales, research, distributions, etc… Right now he gets 50% of profits but we are small now. Once the portfolio grows is a % the way to go - seems like it could get really out of whack.
an OUTSIDE manager is an employee. he/she should absolutely not get a percentage of anything. they should get a salary, which your company would claim as an expense. talk to a CPA about the rest of it.
dude, no way should this person get 50% of your profits…that’s insane! unless you and your partners have no clue about how to invest in real estate, do it yourselves…and if you don’t have a clue…learn. build competence. if this outside manager needs your business for cash (if your company has cash) - use that as an advantage. market your business to other outside managers - post an ad with a salary.
of course, you need to know your market so you can come up with the right numbers. when you have good numbers, plug them into a spread sheet, see where you stand.
wow…50% - that’s insane. start the manager out as an employee who you, as owners, OFFER to him a partner position. this is more than enough to keep any manager on the hook.
remember, any manager/ceo/president whatever MUST report to the Owners, board of directors, etc…not the other way around.