How Much Would You Offer To Pay a Bird Dog?

6 Replies

I would love the BP Community's advice on a current situation with a gentleman. He brought a deal to my attention and I'd like feedback on what is fair compensation.

I met a man that mentioned he had a deal, but no money to put it together. I'll call him Joe. After talking with Joe a bit, it became clear that he had NO experience, just came off of a Guru course and was out trying to make things happen...which I really admire.

Along with no experience, Joe also has no money and has not tied up the deal. He is so green that he really doesn't know what he wants to do with it. It turns out that it's a pocket listing and Joe, being green has also enlisted the help of his buying agent, so now there are two agents involved in the deal.

I asked Joe what he wants and he was a bit unclear, so I ran the basic scenarios by him.

A. Tie the deal up yourself and assign the contract to me.

B. Bird Dog Fee of $1000 and you should ask for something from your agent buddy.

C. Bring money into the deal for an equity share.

Joe didn't seem too happy, so I told him that this is the typical scenarios out there and everything is negotiable. I think Joe drank the guru Kool-Aid and is expecting to get rich on his first "Deal".

Here are the approx numbers based on research and info from agent, haven't seen the property yet:

Purchase $700K

Renovaton 100K

Misc Costs: 70K

ARV: 950K

Net Profit: 80K (7% of ARV)

I'd love feedback from the community.

If Joe doesnt know what he wants there's no way for you to know either. You've laid out 3 clear and fair options, there's not much more you can do. Maybe offer to walk him through the rehab process as the project progresses? He wants to get paid, but he probably also wants some real-world experience as well. I would probably step away from it after making sure he understands your offers.

Thank you for your thoughts @Account Closed

I will see him at the property tomorrow and try to find out what he wants and negotiate something fair.

Good luck with the investing,

Peter

So what struck me is "...the approx numbers based on research and info from agent..." The agent? Is that Joe? If not, I think this guy Joe needs to get a reality check. I'm thinking I don't have all the details, but Joe isn't entitled to anything in a brokered (agent involved) deal.

Net profit of 7% isn't profit. It's a loss if you account for all your expenses.

"Net profit of 7% isn't profit. It's a loss if you account for all your expenses."

@Chris Martin  , sorry, I don't quite understand why this net profit isn't net? what expenses would he need to account for if it's already the net?

I'm wondering because he already has a line item for $70K, which I assume is for realtor commission on the sell side, taxes, transaction costs and financing costs?

If someone brought you, a deal split the profit with him.


Joe Gore

Originally posted by @CK Hwang :
"Net profit of 7% isn't profit. It's a loss if you account for all your expenses."

@Chris Martin , sorry, I don't quite understand why this net profit isn't net? what expenses would he need to account for if it's already the net?

I'm wondering because he already has a line item for $70K, which I assume is for realtor commission on the sell side, taxes, transaction costs and financing costs?

My point was that 7% is very thin. I assumed the $70K was for holding costs and financing. Given "he really doesn't know what he wants to do with it" I figured the sale and sale costs were overlooked. Regardless... this is not a deal, IMO, worth pursuing.

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