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Updated almost 3 years ago, 02/28/2022

User Stats

53
Posts
12
Votes
Dan Barman
  • Brooklyn, New York
12
Votes |
53
Posts

3% commission on hard money loan?

Dan Barman
  • Brooklyn, New York
Posted

Am considering going in as a first time investor / hard money lender (limited partner) on a large (150+ unit), ground-up multi-family.

The opportunity came to us by way of one of the managers of the deal, who is a friendly acquaintance of my wife. As we understand, she helped to find, vet and secure the land the property will be built on, put the numbers together for the project, etc.

She’s partnered with a builder / property management company to do the buildout and manage the property until it sells.

She’s charging a 3% commission / finders fee for anyone who comes in to the deal through her. Is this standard / normal? This 3% comes out of our stake in the deal, e.g. if we invest $100K, she keeps $3K and we’re invested for 97.

As it happens, I ran this opportunity by a good friend who is a RE investor that knows the neighborhood very well. Turns out he’s already in on the same investment but came in through the partner / builder side and was not charged a fee.

Would love some advice on this 3%. Is this normal / cost of doing business for these types of deals or is something fishy going on?

Thanks so much!

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