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Updated over 7 years ago, 09/13/2017
Fees are too high for using partners team in place?
Hi there, I currently have one duplex in Indianapolis and am looking at other markets such as Detroit. I went to a meetup recently where the presenter, lets call him guru, was talking about how he has a team in place in Detroit and flys out there frequently to make sure everyone is doing their job. For renovations guru requires before and after videos be sent before he sends the money.
There is an upcoming Wayne county auction where guru has developed a program to pick out the golden nugget properties based on zestimates (not super accurate), starting bids, zrentals, and up and coming areas. There are over 6000 properties so going through one by one would take forever.
The plan is to buy 3 properties. 1 will be a JV 50/50 flip where I would provide all the capital and he would acquire the property and manage the rehab remotely. That is fine with me.
What I need your opinions on is the following situation....
2 of the properties I would use his team and be 100% owner, buy and hold.
Guru would acquire the property via the auction, get a rehab estimate from vetted contractors and manage the rehab. After the rehab I would need to find a property management company to find a tenant and manage the property.
Guru wants to charge me $5k for acquiring the property (bidding)
Guru wants to charge me $10k for managing the rehab and using he software to find the golden nugget properties)
Plus the auction site charges a 10% buyers premium which I would also pay
So overall guru wants $15k each ($30K for both buy/holds) to buy and manage the rehab remotely. He does not live in the Detroit area.
Does this sound fair?
What would be a fair price to pay for his services?