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Updated over 9 years ago on . Most recent reply

User Stats

28
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0
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Max Shepherdson
  • Renovator/Developer
  • Victoria Canada, BC
0
Votes |
28
Posts

Am I being too greedy?

Max Shepherdson
  • Renovator/Developer
  • Victoria Canada, BC
Posted

Hey all!

Im a reasonably new investor and wanted to share this deal with others to get their opinion.

I have a deal sent to me from a friend of mine.. It looks great if I were to do it myself, however he doesn't want to assign it to me as the return is great.. he wants me to fit the bill and he takes 50% returns. (Buy rehab and hold) 

Is a 50/50 split reasonable for a finders fee? One persons provides the capital while the other brings and manages the deal?

Its a 3 unit building ( with a 4th unit being a moldy basement right now, will be rehabbed at a later date)

The numbers look like this;

Purchase: $110k

Rehab: $50k for 3 units

In a decent up and coming area.

We have locked in 3 families for year leases at $1500 per unit per month.

Total rent =$4500pm before expenses

Were looking at $2200 cashflow.

Then split 50/50 is $1100 p/m.

So $1100pm cashflow return on a $160,000 investment.

Thanks in advance for your opinions.

Cheers

Most Popular Reply

User Stats

6,408
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2,655
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Brent Coombs
  • Investor
  • Cleveland, OH
2,655
Votes |
6,408
Posts
Brent Coombs
  • Investor
  • Cleveland, OH
Replied

@Max Shepherdson, "whoever has the gold, makes the rules". So, if he wants half, is he going to pay (nearly) half? If he wants you to "fit the bill" 100%, then he has only "earned" a normal wholesaler fee. If he wants ongoing drip feed (net) income, then his proportion should be much closer to 0% than it is to 50%.

What you could have asked is: is my friend being too greedy? (Answer: Yes)!

Now, read the first sentence again. Cheers... 

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