Realtor · Las Vegas, NV · Member since 2014 · 11 posts · 1 vote
At a local REIC a local investor made the following offer:
The investor has an extensive and well financed targeted marketing campaign (+15K per month). For a substantial upfront fee (well, substantial to me) the investor will provide you with 100+ leads per month and personally coach you on how to follow up on those leads (what to say, how to say it, etc.). The first three deals you close you keep 100% of the profit. After that it's a 50/50 split for as long as the partnership is mutually agreeable.
My research shows that the investor has a good reputation in the local community. Given the length of time he's been operating in the local area and his positive reputation I'm prone to believe the numbers he's giving in his pitch. I'm just wondering if anybody has seen this type of offer before and what their thoughts are on it.
Investor · Sarasota, FL · Member since 2008 · 17k+ posts · 17k+ votes
11y
I'm not a big fan of large upfront payments. What happens if you decide that this particular coach isn't very good or isn't offering what he promised? What happens if you decide that REI isn't for you? Unfortunately, you're out a large amount of cash and never got value for it.
I have no problem with "pay as you go" coaching or "split profits on deals" coaching. These methods ensure that you're never paying if you're not getting value (or that you can immediately stop paying should you stop getting value), and in my book, that's a perfectly reasonable method of charging for any service.
The analogy I like to use is, "Would you consider it reasonable for a restaurant to charge upfront for 10 meals before you've had an opportunity to try the food." But, obviously, charging one meal at a time is perfectly reasonable...if you get a bad meal, you're out a few bucks, and you just don't come back...
There are a lot of guys out there who you don't need to PAY upfront to do deals with. Just be prepared on what you are willing to do (work, deals, running the job, dealing w/ utilities or whatever) ... these are the things you bring as a benefit someone doesn't need to deal with. But the large payment seems like a crap shoot ...
I love J's analogy of doing one deal, one time ... and begin your relationship.
Realtor · Las Vegas, NV · Member since 2014 · 11 posts · 1 vote
11y
@J Scott I agree. I intend to sit with this investor and ask if he would be willing to work with me on terms that don't involve quite as substantial an upfront risk for me but still show motivation and commitment on my part. If he is completely unwilling to budge on the large upfront payment it will make me question his motivations.