Transcript:
Welcome to the Tax Sale Podcast, where tax sale investing is made easy. My name is Casey Denman, I’m a tax sale veteran, the leading tax sale expert, author of The Tax Sale Playbook, founder of The Tax Sale Academy and I’m your host right here on The Tax Sale Podcast.
Thank you so much for joining me on today’s podcast episode. This is a completely free podcast and is brought to you through and because of The Tax Sale Academy. If you’re looking to learn more about investing in tax defaulted real estate, just head to TaxSaleAcademy.com. Again that’s TaxSaleAcademy.com.
I wanted to discuss an extremely important topic today with you that many people tend to jump the gun on a little bit or they just don’t know how to go about it. I’m talking about hiring out tax sale help.
There are a numerous situations when it could be a smart idea to hire out help. We’ll go over some of them in today’s podcast show, but I want you to also understand how important it is to not put the thought of hiring others on some sort of pedestal. Outside of real estate I’ve owned other business where I’ve had a number of employees on payroll, up to seventeen at one point. What I soon discovered is that I went from owning a business to owning the responsibility of managing employees instead. While it’s excited to create jobs, help others and every other positive aspect of hiring people, it can quickly get challenging. So tread very lightly.
But, hiring some sort of staff can certainly be helpful. Your business could get to the point where your hands are tied simply because you don’t have enough time. You might need someone to help with research, organization or simply office tasks. You could also start investing out of area where you need someone to be your eyes and ears local to that area. Or there are a number of different situations that could necessitate help.
There are two primary reasons you would compensate anyone else for help: To help save you time and/or to help save you money. We will often need to compare these to the cost of hiring others in order to make an educated decision, so keep that in mind.
We can break down the types of help down into three basic categories . . .
The first is a full time, full blown employee.
Someone that you pay with a paycheck, take taxes out, and all of that fun stuff. Someone who works on a regular basis to help you. This could be 5 hours a week or 50 hours a week and is someone that will report directly to you and works on your schedule. For the majority of investors listening to this, this will likely not be too helpful. Most tax sale investors don’t have this type of assistance as it’s not necessary in many situations. It could become a necessity if you’re doing a phone sales, showings, have some sort of specific process or are investing more than 15 or 20 million per year. To hire a full time employee you’ll need to make sure you have sufficient cash flows. Don’t take this lightly, because many business fail because of employee costs.
An employee could essentially do anything that you trust them with. I remind all tax sale investors that you should be extremely careful in trusting anyone, besides yourself, with making decisions about what to invest in and what to pay. You can use others for assistance with this type of stuff, but trusting someone to invest YOUR money is asking for a disaster.
Hiring an employee for your tax sale business is just like hiring an employee for any other business. There are a number of areas where you can find qualified applicants – it’s just a matter of finding one you can work well with and who’s income requirements meet your abilities.
The second is some sort of as needed, but ongoing arrangement with an independent contractor. An independent contractor is someone that works on an as needed basis. While your arrangement with this person could be a one and done type relationship, we’re going to refer to this type of arrangement as an ongoing or semi regular arrangement for the sake of this episode. An independent contractor will usually work for a per task or otherwise as agreed fee, and will work to satisfy your job requirements. You’ll simply pay them their fee without worrying about payroll taxes or anything to file as you would with an employee. At the end of the year, you’d issue them a 1099 and file one with the IRS which allows you to write the expense off and requires the contractor to pay taxes on that income. It’s important to note that you can’t require the independent contractor to do certain stuff, like show up to work at eight o’clock every day. They would become an employee then and would fall under a different set of laws requires payroll taxes and a number of other things.
Independent contractors can be utilized in many different manners and are very helpful in this business.
Let’s go over a few common examples:
– I’ve got a friend who used to work at a title company doing title searches before she retired. She has a few clients that pay her anytime they need a title search for their own benefit. She does very well doing this in her spare time, the investors get the information they need and everyone benefits.
– Another example would be an area where you invest heavily in, but aren’t local to. This person could be your errand runner – take photos, go to a county office, even attend auctions on your behalf.
– Another example could be someone to assist with research. Again, I highly suggest that you do NOT allow anyone to do all of your research. Instead, use someone to perform the baseline research for you. After training, they can help determine if it’s vacant, or improved. They can find the assessed value. Essentially, someone that can read a property appraiser’s report and le tyou know what it says.
– Along the same lines is someone that could help with data entry. They could pull the tax sale list, put it into an excel format, along with the baseline research we discussed and then it’s ready for you to take over and finish up.
Using an ongoing independent contractor arrangement is very popular and extremely helpful. It might not be necessary for the beginners, but as your business grows, it’ll certainly be helpful.
A great place to find help like this is through referrals and word of mouth. If you’re not able to find who you’re looking for there, you can always review resumes and post ads. Something to note is that these folks will usually not work in your office. They’ll work remotely from their homes or wherever they’re located, which might be down the street or could be in an entirely different country when we’re talking about utilizing VAs or virtual assistants.
The pay will vary of course, but it would certainly be less than someone who is full time.
The last type of help will be those who are what I consider task oriented help. They are there to assist you on a one time basis. With this arrangement, you simply ask someone to do something, give them their fee and you’re on your way. It’s like hiring someone off Google to pressure wash your house. Call them, they provide the service, you pay them and the arrangement is over.
Let me go over a few examples, so you understand how you can best utilize this task oriented type help:
– A very common example for tax sale investors is to use locals for drivebys and photos of properties with thinking about purchasing. This can be an extremely cheap way to get a better idea about what’s on the property, opposed to the traveling and expense required to view the property yourself.
– Another example could be hiring someone to do a trashout on a building you just purchased. Many tax defaulted homes need to be cleaned up in order to satisfy the city, so it’s easy to hire someone, send them over and pay them to clean it out, whether you’re local or not.
– Another common example is for mowing a property, shoveling snow or otherwise cleaning up the yard. It’s usually easier and faster just to pay someone to do these task than handle them yourself.
– Then obviously, there are a number of other tasks.
This type of arrangement is by far the cheapest type of help available, but it’ll also usually require the least amount of knowledge and training and will, consequently, be the least reliable. So, be careful about the difficulty of the task you assign and be certain your instructions and 100% foolproof . . . and even then expect mistakes from time to time.
If I hire someone to take photos, for example, I’ll provide a map, cross streets, neighboring buildings, arrows, Google Street view images, aerial images and anything else I can find to assist them. And then, I’ll still ask to have them take the photos so that certain recognizable landmarks can be seen in the photo in relation to the subject property, just so I can independently verify what they’re taking a photo of.
The usual places to hire task oriented help with be websites like Craigslist or other local help wanted sites. These tasks are meant to be supplemental income to the person handling them and should be fairly cheap. Taking photos, for example, should be handled by someone nearby and could be $10 and then I’ll usually toss in an extra $5 if they did a good job and if the photos are useful for me. Again, take whatever you get with a grain of salt and have a way to verify it.
So there you have it – three different types of help for your tax sale business. I’m all about growing, using your time and money wisely and getting help when needed.
My word of advice, however, is to think carefully before making a long term commitment to a full time employee. Start off small with task oriented help on as as-needed basis and work up from there!
I truly hope that today’s episode has helped you when it comes to hiring the help you need or might potentially need in your tax sale business.
We’re so thankful you listen to our podcast and hope you enjoy it. If so, please consider leaving us some positive feedback on whatever podcasting platform you listen to us on.
If we can help in anyway, there are a number of different links in today’s show notes. We’ve produced more tax sale training material than anyone in the world and we’d love to be able to help you. Just head to taxsaleacademy.com to get started. Again, that’s taxsaleacademy.com.
Take care and make it a successful day.
See ya!