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Author Topic: Any advice on fee structure for Commercial finds?  (Read 3791 times)

Offline snjbrian

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Any advice on fee structure for Commercial finds?
« on: August 04, 2004, 02:08:07 pm »
Hello all,
I am new to this website and so far I have found it to be invaluable....just dripping with educational morsels!!

Thank you for that!

I am located in the southern NJ area right near Philadelphia, Atlantic City, Wilmington and Trenton. There are tons of opportunities around me!!! I have been actively seeking investors and one contacted me 2 days ago.

I typically worked with single family and small multifamily properties. This investor is looking for retail locations and bare land with a minimum of room for 15 houses.
He seems to be honest and a good guy but he is silent about his compensation. Instead, he wants me to set the rate. I honestly do not know what is fair and what is unreasonable when it comes to this type of commercial work.
I know he is hoping I will be stupid and set my price way below the norm.

Is there a typical fee structure that I should follow?
Obviously an exact number cannot be determined in this fashion...but I would guess someone could tell me what is typical.

Is 2-4% typical or would it more likely be in the 5-10% range or maybe higher?
Also what would be a fair base to use...the gross price of the land? The gross price of the deal after it has been flipped to a retailer or developer?

 A gentleman I used to deal with always wanted properties of atleast 150k and always paid a flat rate of 2.5% on every deal he closed. He always gave you $500 if the deal fell through for reasons unrelated to the bird-dog. He was a very kind man. I have yet to meet another like him. So I guess I am swimming with the sharks now.

I used to do some investing and now I want to get cash together so I can partner in investments once again.

Thanks for any and all advice,

Brian - NJ

« Last Edit: August 04, 2004, 03:23:17 pm by snjbrian »

Offline tedjr

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Re:Any advice on fee structure for Commercial finds?
« Reply #1 on: August 05, 2004, 08:31:17 am »
Howdy Brian:

As a birddog a few points would be great. You are taking no risk and are not working as hard as a full time Realtor who would charge more. You may even accept less depending on the amount of work involved. It sounds like you already have a pretty good idea of waht to ask for and have had some experience in REI. You probably should only ask for a % of the land deal unless you stick with the deal and actually help put together the development etc and then you may want to ba a partner with a bigger %. Maybe 10% if just helping with no money or risk.

The sky is the limit if you find a super deal for them and get it under contract and flip it, but this involves earnest money and risk.
Ted P. Stokely Jr

San Antonio, Texas

Offline snjbrian

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Re:Any advice on fee structure for Commercial finds?
« Reply #2 on: August 05, 2004, 11:51:57 am »
Thanks Ted for the opinion and for giving me an idea of how realistic I was being.

I wanted to be realistic without cheating myself.  I try to judge each deal by the value in it and of course my participation.

Some properties are bought for 50k and flipped for 100k. I am glad that person is making a great profit, but only slipping me $500 is pretty lame. lol I feel $1500 is more appropriate. On the other hand, if a deal makes someone 250k on a land development deal...I do not feel I am entitled to 25k/10%. Yet, those deals are hard to find so maybe it is fair to compensate me on that scale?  

I am humble about this and truly just want to be fair without being ignorant. I do take into account that I am taking no risk. There are enough deals and profit for everyone to go around anyway. lol

Money is a great motivator and if I know someone is being generous with me, then I am going to focus all my efforts on making sure they get first pick of my resources and finds.

I need to spend more time elarning the art of the assignment/flip before I get into it. For now, I will stick with a fee range of 2-5% depending on the circumstances and doing the math on it before I make a claim.

 




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