Commercial real estate mentor. Is 50% until $500k a normal cost?

Question

Hi there,

I am persuing cashflow through multifamily real estate investing. After a lot of study I believe that having a mentor is my best option to get started.

At the moment I have found a mentor that charges 50% split on all net Cashflow until $500k is reached ($250k each).

I believe that this mentor is very qualified due to his decades of experience and the books that he's authored and also books that he's co-authored with other well know real estate Moguls.

This is a big commitment into partnership and just wondering what the general populus thinks about this agreement.

Also, if anyone has suggestions for specifically apartment investing mentors I would appreciate it.

God bless

Stephen Kleyn · Answer

Sorry for the late reply. I ended up not going for the mentorship program I talked about in my initial post. I found a group called "success classes" by Anthony Chara, mainly becuase they were in my town and I could meet personally with them and network.

I spent a total of $20k for the classes, got a coach for life, and got a pretty decent size group of investors to email proposed deals to.

it has worked out quite well. I bought a 16 unit, 32 unit, 20 unit and a 12 unit, all in a 2 year period. I sold the first 3 at top of the market and personally made $520k in a 4 year period, plus distributions. I made my investors an average of 48% annual average rate of return so they are ecstatic.

Ive been busy with single family for the last 4 years but I'm getting ready to look for a larger multi deal.

All that said, the mentorship program I went with was a life changer, and only cost $20k. Made that back in my first syndication fee 🙌

weekly

Joel Owens · Answer

Only you can determine the value of a relationship. People that are successful average thousands to tens of thousands per hour for their time or more.

If they are spending time with you for instance and not closing deals it is costing them money. It is an investment in a person that may or may not pan out. People tend to have a hard time with this concept. I used to have residential brokers and agents approach me to learn commercial real estate. They wanted to join my company. I spent sometimes 1 week to 2 weeks and then the people petered out and took corners trying to succeed and it doesn't work out that way.

Now I tell them usually 25,000 non-refundable deposit upfront and 50/50 split. When you close your first deal then you have already paid 25k.

So if first deal 50k was the commission for example they would keep it all as they have already paid the 25,000 (50% split).

Cody L. · Answer

I had someone offer me something like that.  I told them I'd rather just help them for free via email with the occasional questions.

That was 1000 emails ago.  I should have just taken a cut with the amount of time I've given up  :)

Justin Goodin · Answer

Sometimes I can’t tell if we are in the commercial multifamily industry or the commercial coaching industry 😅

Vassilios Kovanis · Answer

Welcome to bigger pockets, the largest market place to sell bridges.

I hope some BP readers realize that a huge part of frequent posters on this forum are not genuine deal makers, but phonies with no track record only in the business to sell mentorship programs, seminars, books and bad investments to gullible newbies.

Do you really think real successful deal makers waste their time posting thousands of times on a forum essentially catering to first time investors?

Do you think successful RE entrepreneurs need to chase small time investors money, mentor newbies and write books about their winning strategies in an already over competitive / saturated market?

Real estate is plain simple and there is absolutely nothing you can’t learn reading

Good luck

Abel Sng · Answer

The split sounds more than reasonable. He's actually taking the bigger risk than you are because if you turn out to be a terrible "mentee" he's actually upside on his RoT (Return on Time). He's only making money if you make money. I would take him up on it since you have absolutely no risk.

Unless you sign some sort of non-compete and are not allowed to do deals outside the partnership until he recoups $500k then that would be a large potential issue.

Good luck!

Matt McCurdy · Answer

Sure, anyone can learn anything with the many outlets of real estate books, facebook groups, youtube channels, etc. However, many new investors' heads start spinning with the amount of information and struggle to know where to begin and who to believe.  A great coach will help investors cut through the analysis paralysis and help investors take actionable steps to making cashflow vs. sitting on the sidelines and wondering what step to take next.  Did I describe your coaching experience @Stephen Kleyn?

Elvin Luccon · Answer

The mentoring would cost $250k with no investment on his side except his mentoring?

Andre Hartman · Answer

While I think that having a mentor is invaluable, I do think a 50% split on all net cashflow is really high if it is just traditional mentorship without them being very hands on. You could always utilize a bunch of BiggerPockets resources and network with other real estate investors locally/virtually for much less.

James McPherson · Answer

Would you mind introducing me? I am looking for a mentor.

Commercial real estate mentor. Is 50% until $500k a normal cost?

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