How to determine finders fee?

[Frank Rizzo]

I am a real estate investor, I own 23 units over 9 properties. I recently was approached by someone to help them get started in real estate. We agreed the best structure would be a finders fee to help find and stabilize a property. It will be some work for me considering he wants to recoup much of his investment with the BRRR method. I would probably help him through the process of analyzing deals, rehabbing, and renting. I am trying to determine what a reasonable amount is for a finders fee. Does anyone have any experience with this that can provide some insight on how to structure a deal?

[Samuel Eddinger]

To me, there are always three parts to any transaction; finding the deal, finding the money, running the project.  What of these things is he planning on doing to provide value?

There are a couple ways to structure the deal.  If he finds the deal, he could give it to you for free but then shadow you as you show him all aspects of the deal.  This would be using sweat equity to learn the business.

Another approach if you find the deal is to charge him an assignment fee for finding the deal.  Then you could have him run the project so you don't have to and you could split the profits (or divide it in whatever % makes sense).  This will be hard if he intends to keep the property as he will not want to pay you full market price.

The main point is that you need to make sure that both sides are comfortable with the arrangement up front.  Relationships break down when one side feels like the other side screwed them.

I'd be happy to talk more about this if you are interested.  DM me.