I am recently getting more active on BP, have been consuming the podcast every time I get on the road. I live in Los Angeles and I'm looking for a way to get started in 2018. I want to househack a 4-plex and I'm looking for deals to present to potential partners. I'm also trying to learn the wholesale game. In the meantime I have my eyes open for distressed properties. I have a contact who is a residential and commercial builder. He's always looking for land. Yesterday, I found a vacant home on a 6000 sqft lot between two multifamily buildings. I found out it was bought about 4 months ago and it's still vacant. Maybe a developer waiting on permits. I'm planning on calling the LLC who now owns it to find out more. If they by chance are willing to sell to my contact, what's an appropriate finders fee my contact would give me? The lot sold in August for 1.3 M.
I am also wholesaling and trying to find a plex. The finders fee is up to you. What are you willing to work for? The more meat you leave in the table after negotiation the more you get. You should have multiple buyers do a bid unless one really helps you figure out a deal. I say 10k is good but others settle for less or refuse unless they get more.
There's no magic number in my book, it's just supply and demand. If the math doesn't work with your fee included, then either your fee is too high or it's not really a deal. Some buyers get upset if your fee is too high, but at the end of the day it either works or it doesn't.
@Cody Evans I was thinking 1% would be good. So if the current owners bought it for 1.3 M in August and haven't done anything with it yet, hopefully they are willing to sell it and break even. Although in this market that's unlikely. I guess it all depends on why it's been sitting around vacant for 5 months. I know I can get a buyer with 1.4 M and may have others who could take it down for more. So I may get 15 K out of it, which I would try to use for a down on an FHA loan to househack a class C 4 plex for myself.
@Ken Wilkinson are you saying that there is no set % for finders fee or bird dog? So it's up for negotiations?
There is no set fee and a flat fee based on price is generally better rather than a percentage in my opinion, be careful of the laws of your state and make sure you aren't doing anything that would require a real estate license.
Correct. We've paid wholesalers from 5k to 60k depending, on the deal. The bigger the margin, the more room there is.
I think a flat rate based on the deal is a better way to go about it. What if you say 1% on that house and you could have gotten 10%? Or what if you lose a deal because 1% is ridiculously high for a certain property?
It depends. Every deal is different, I wouldn't use %.
Is there a reason you don't want to flip it?
Hi @Carol Zeroual ,
I'm not looking to get into a flip at this time. Just want to do transactional stuff to get some capital together while the market tanks in the next year or so. Then as prices drop I'll buy with both hands. Besides, it's basically the last single family house on that street. My buyer will put an apartment building down.
I'm interested in Bird Dogging and Wholesaling. I'm good at finding deals but don't know how to go about getting them under contract. I figured I'd build up capital by earning finders fees from wholesalers and build some relationships and learn to wholesale along the way.
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