I have a wholesaler that approached me with a property that they have under contract and they are looking for funding to rehab and sale the property for retail. My question is I would like to find them the private money and insert myself into the deal in exchange for piece of the profits or charge a higher percent than the private money charges. What contract or steps would I need to make sure I am doing this correctly/legally?
Thank you in advance.
Dodd frank will come to play on a deal of this sort. You may be able to provide gap funding if the deal needs it to finish the property.
A better opportunity might be to be the listing agent for the property when sold for retail. if you could sign a contract to be the listing agent. if you can bring private money to the table.
Not looking to be an agent on the deal because it is in another state. Is there a way of getting around Dodd Frank restrictions? I know its common to do a syndication of this nature in commercial real estate. Thanks for the input Jonathan!
Dodd Frank does not apply if you are buying the property as an investment. Those rules only apply if you are buying the property to live in it.
If they are just looking to wholesale the deal then they would need an end buyer. If they have the deal and you find the end you can just split the wholesale profits or the spread. In other words if the their assignment fee is 5000 you would split and both get 2500. If they are trying to flip I am not sure how it might work.
They do not have an end buyer. My responsibility would be finding the money for the original purchase with the hold time and rehab costs. I am trying to figure out the proper way of getting compensated for putting such a deal together. Sorry if I was not clear in my previous post. Thank you for the comments everyone.
@Zachary Gordon ...where is the deal? and do you have the private money lined up?
I'm licensed as you are in CA, with RE license and NMLS license (I mainly focus on lending). Fix/flip money though falls outside of Dodd Frank and other regulations. One of my go to private lenders operates as a brokerage; I just charge what I want on top of the lender fees, making sure not to gouge the borrower. Haven't had an issue with out of state transactions. If it's literally an individual who is providing the money and you are "brokering," different rules apply in different states. If it's here in CA, it needs to be through a broker, so that means you would either use yours (if you're not one), or find someone who has the money lined up and just get paid on top of the fees that are charged. Or depending you could just write up a contract that provides you an equity position on the resale of the property (you take a piece of the profit at sale). OR you could likely argue for both, depending on how the numbers look. Currently that's what I'm looking to do on one of the fix/flips I'm looking at.
Have yet to line it up. I want to make sure that I have my ducks in a row first.
agree with jared. if the deal is in Chicago let me know.
The PM firms I've used have established broker arrangements. Might try reaching out to your end PM lender for advice on how to charge a fee. In any case, I'm a buyer with access to PM in Chicago if you'd like to change courses and sell the deal. I'd pay a referral fee if there's enough meat on the bone.
not my deal, already asked them if they would consider selling it, they are set on raising funds.
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