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.
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.
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.