Should Wholesaling CEOs Join the $1 Salary Club?
What is it, what are the advantages and are there any hidden pitfalls to watch out for those that do?
Google’s founders and new Mark Zuckerberg have become the latest to join the elite $1 salary club, slicing their salaried pay down to a maximum of $1 a year.
It might sound crazy but this is a growing trend among top executives. So should wholesaling CEOs be jumping on board? Many real estate wholesalers are no doubt shaking their heads in bewilderment. Who would do such a thing? Isn’t the whole point in investing in real estate to make money and lots of it?
Let’s not feel too bad for the founders and executives of the giant global corporations. They are after all multi-billionaires and could perhaps do just fine if they never made another penny in their lives. Of course they also hold huge amounts of stock and expect hundreds of millions in bonuses too. But what are the real pros and cons for wholesaling CEOs, especially those that haven’t hit this level of wealth yet?
The main reason these executives likely sign on to this pay structure is appearance. Downgrading to a $1 salary certainly makes it much less likely your board will oust you. It also means boosting investor confidence as any real compensation will be performance based.
It isn’t just a selfless gesture for many though. Trading W2 salaried income for investment or 1099 income and staggering when money is withdrawn wisely can make a huge difference in the amount of taxes owed. It also might be a good way to keep up self-motivation for some wholesaling CEOs.
There are potential downsides too though. Taking a ridiculously low salary can be a big red flag for the IRS when tax time comes around. That isn’t the type of attention anyone wants. Some have also found this strategy bites them in the rear too if partners or shareholders push them out and base any retirement or severance package on their $1 salary.
While new real estate investors might think this is a little far off in the future for them and are just focused on flipping individual houses and pocketing small lump sums, it is never too soon to plan out pay and compensation structure.
Remember that while real estate wholesaling might be a better gig than any job you’ve had before or could expect to get, the idea shouldn’t be for it just to become another job.
The big picture or ultimate goal ought to be to have it produce passive income for you without requiring your daily involvement. If you fail to map that out don’t expect it to ever become a reality.
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