Beginners Luck or Creating Success

[Brandon W.]

What would you tell a beginner who has stumbled upon a commercial deal which is the sell of 23 homes with a value of $6M Contract is already in place with 80% ( $4,560,000.00 ) financing and 30k Earnest Money but the beginner cant come up with the 30k Earnest Money or the 20% ( $1,140,000.00 ) If only the beginner knew someone who could come in and fund the 30k Earnest Money and the 20%  ($1,140,000.00 )  they will receive 38%  ($2,280,000.00 ) Ownership or stake in the company that will hold and manage the properties..............................

[Derek Carroll]

First off people are trying to help you understand reality so the attitude doesn’t help you get partners that’s for sure.

Second doubling your money is 100% return not 50%

Third, just because you’re giving someone equity does does not mean that this can be realized with any certainty and without cash flow there is not “return”

Think about the other side for a minute. What are you really offering them? You’re bringing them a deal where they are putting up the entire risk capital. You should get paid for the services you’re providing which include, broker/finders fee for a maybe a couple percent on a deal this size, finance broker fee (assuming they want to use your lender and don’t have an existing relationship) for one percent, and property management at maybe 3-5 percent of rents. Keep in mind these are one time fees and not percentage of equity given to you.

Everything in real estate is negotiable but if you continue to ask for terms as you describe above then I have a seriously hard time believing that anybody would even consider doing business at those terms. Most people with $1m cash know what types of terms/fees to expect and would run if offered a deal like this.

Keep in mind that the money dictates the terms and it’s up to you to clearly explain the value add you’re bringing to the table and a justification for your fees and equity. It’s better for you to have a small piece of a big deal than a large piece of no deal.