What is a typical finders fee for a $20M multifamily deal?

Question

What type of deal structures do you do with someone who brings a unicorn $20M multifamily property to you?

Account Closed · Answer

A deal of that size will be shopped by the owners of the multifamily (they are not country bumpkins) and it's usually shopped through commercial brokers who charge on average 5%. But, if you ever have that happen tell them you'd be happy with 1%. ;-)

Will Barnard · Answer

The purchase price of the asset means much less to me than the spread in the asset so the finders fee would be more based on that in my opinion than the purchase price. Another factor is what this finder actually brought to the table to earn any fee. Did they arrange purchase price under market, locate the property and bring buyer and seller together, are they licensed, and a whole bunch of other factors should be weighed. Are they just looking for a finders fee or are they getting a piece of the deal via partnership or some other format also factors in this.

I have always felt that a finder/negotiator of a deal is worth between 5%-10% of the spread in the deal, so if the deal had a profit spread (for a flip) of $100k, I would be fine paying them $10k for that. For a buy and hold, your profits will come over time through cash flow, potential value adds, tax benefits, etc so calculating a fee on that is much more difficult in my mind.