The idea was if you have 200k you can get one of the properties like Michael shows on his Instagram and target 20-25% cash on cash returns. The idea is by spending big on amenities, you'll outperform other properties.
I had about 200k cash to invest, so I got on a call. There was an additional 20k fee for them to source you properties that would fit their model. I was excited to get started so I figured I would try to stretch and make that work.
They said their design fee was $18/SQ ft. And the budget was 15k/bedroom for furnishings. I recall asking if the 18/SQ ft was part of that 200k investment - the response was "Oh, you'll see all the costs broken out. It's all super transparent. And we'll send you a sample property so you can see the numbers breakdown."
They sent me a sample property breakdown, but it was a jpeg, not an Excel file. I was excited so I sent them 20k to get started.
First property comes over and I realize there is a second tab- one has the design fee, one doesn't. This is not an insignificant fee- we are talking $54k on 3000sq ft house. I say woah woah woah- I told you guys I only had 200k, this is putting me at like 270k invested with the 20k finders fee and design fees. No problem, we'll look for smaller, cheaper houses.
Then all the number breakdowns were based on 10% down payment using 2nd home loans. I spoke with two lenders who they suggested and the lender I normally work with and I could not qualify with my primary home and rentals. So I would have to do 20% down Dscr loan, pushing us again out of the budget.
At this point, they'd only sent me 3 properties and I realized it might not work so I requested we stop and honestly thought it would be a really reasonable request to return the 20k deposit/finders fee.
But they're not willing to return it.
