Rental Property Investor · Baltimore/ New York · Member since 2020 · 11 posts · 4 votes
Hi friends,
I could use some advice on what to pay this wholesaler that I’m considering a deal through.
Usually when I deal with a wholesaler it’s for a one off deals. But for this particular deal (my first big scale up) I’m dealing with 2 commercial properties, and then 10 units.
Originally He said he wants $2,500 for every 50k, but that was for 1 unit at a time. Also, it’s important to note that we have never closed a deal together. Mostly because the deals haven’t been worth it. He’s always late, he forgets appointments etc. But I always look at his stuff bc I never know when something will work out.
When doing multi unit deals etc, what do you pay your wholesaler? Is $2,500 for every 50k normal? Or do you have a package deal?
I don't know, how much does he have it tied up with the seller for? I mean these guys are getting pretty d*** greedy when they want their skim and then they want buyers to kick in also.
If he hem/haws when you ask if he has it in contract, but won't tell you what the amount is, call the seller directly - You can always submit a back-up offer if the WS wants to play the a-hole. Can almost guarantee you the WS doesn't have a listing (or a RE license).
Better yet - Why don't you deal with a legitimate broker, you'll probably get a better deal.
@Emily Wilson Litzinger $2,500 for every $50,000? Why not just say 5%? Not sure if that should be a red flag or not, but it’s certainly a weird way to phrase it. Sellers of commercial deals are usually too savvy to agree to an assignable contract. They also almost always require proof of funds, and generally do a better job than distressed homeowners do at vetting buyers/sniffing out fake buyers/recognizing when a buyer is unlikely to make it to closing. The sales cycle for commercial deals is long, the due diligence period is arduous, negotiations take place at several junctures throughout the process and many deals fall through in the process. For these reasons we don’t see many wholesalers in the commercial space. What we see more of is acquisitions companies that essentially help you find the deal for 1-2%, or bird doggers that sell leads for anywhere from less than 100 to a few thousand per. I wouldn’t say there’s a normal fee for a wholesaler on this type of deal because a wholesaler being involved in this type of deal is rather rare. If he’s truly wholesaling, he’d have it under contract with the seller already for a certain amount and then get under contract with you for a higher amount with the difference being his “fee”/ cut. I’d definitely recommend working with a commercial agent on your first commercial/ multifamily deal unless you’re already very good at underwriting, analyzing, contracting and buying this type of property.