Investment bankers charge anywhere from 3% to 10% depending on the size of the deal. Mortgage brokers make less than that on smaller deals but their effort is less.
If the person is merely introducing you to someone they know, you may wish to pay a lower fee. If they are putting a lot of time and effort into getting the deal done, you may wish to pay an I-Banker type fee. You should probably also look into the legal aspects of paying a fee to someone who is neither a broker-dealer nor mortgage broker.
Let us know how much money they are helping you get and what their effort has been and we can give you better guidance.
Investment bankers charge anywhere from 3% to 10% depending on the size of the deal. Mortgage brokers make less than that on smaller deals but their effort is less.
If the person is merely introducing you to someone they know, you may wish to pay a lower fee. If they are putting a lot of time and effort into getting the deal done, you may wish to pay an I-Banker type fee. You should probably also look into the legal aspects of paying a fee to someone who is neither a broker-dealer nor mortgage broker.
Let us know how much money they are helping you get and what their effort has been and we can give you better guidance.
The fee is a function of how much work they're doing for you and how much money we're talking about.
If they are bringing you a pre-sold investor who is ready to write a check, that's worth more than someone who hands you a name and phone number.
Additionally, the fee should taper off as the dollars go up, sort of like the old "Lehman formula" which was 5% on the first million, 4% on the second million, 3% on the next, etc., down to 1%. (Of course, we saw how well that formula worked out for ol' Lehman, now didn't we?)
And as Vikram said, you need to be 100% sure that any compensation agreement is legal.
Thank you for all your responses!
There are 2 situations: $700K & they didnt want us to interconnect with the PI, but we were doing all the logistics & due diligence.
$250K - we find all the properties & they are just referrals & we interface with them directly!
Bryan I would love to take up your offer for your finders agreement, is it on your website!
Thank you very much! Have a great day!
Toni, when you say you did the "due diligence," do you mean you put together the presentation for the investors? Did you get a loan secured by a first position lien or did you get equity funding that you could further lever using HML or other funding? The reason I ask these questions is because it will give us a clearer picture to give you more specific guidance on compensating the person who helped you identify the investors.
Vikram C.
We dont put together a presentation because many of our deals are so quick, we get the deals from our resources & decision is asap & closing is within 7-10 days!
We do traditional RE biz in SOCAL & have represented investors & 1 in particular is a RE attorney, so my husband has learned to be very precise with his paperwork & when putting together comps, he is an expert in that field. There is no funding in this scenario, we are seeking monies to fund this project & she/he has brought in a Private Investor. Basically thats all she/he does, bring the PI to the table!
Hope this makes sense!!
Thank you!
I hire Private Money Coordinators (and insist they get licensed if they are not already) so that I can pay them 1% of the money I use. I use an IC agreement.