All Forum Posts by: Paul Winka

Hello, referral fees are an area of REI that I have struggled with for a long time. I get that they are part of the business, but I don't feel confident about what amounts are fair and reasonable in a given instance. I don't mind paying referrals, but am trying to walk the fine line between being cheap and being taken advantage of. It's hard to do that as a beginner. What I am looking for are anchors or somewhere to start with, similar to, say, paying a gratuity at a restaurant. With a $20 tab, a $20 tip is not typical. Somewhere between three and five dollars is reasonable and everybody's happy. I really wish that this tidy example was a facsimile for how things work in real estate, but probably not. On with the question then:

In my specific instance, I am acting as a hard money lender. Someone has brought to me a well-qualified borrower. It’s a loan of $320K, and I am putting up 100% of the funds. If I would take 100% of the earnings from this first deal, I would expect to leave with $17,000 in interest in about two months. I would expect roll the loan over and lend to the same guy again. So in this instance, what would be a fair referral fee to the person that had brought me this client? What I have agreed to, and I think may be excessive is 10% each time I do business with this guy. Is that really what people do? I am thinking about renegotiating this. 

Maybe a standard that I would pay the fee three times and that would be it? At some point, they’ve received a fair amount. 

At the end of the day, I want to be able to sit across the table from someone that I paid a referral fee to and he will be happy with what has happened, and not want to do business with me again as someone that has doublecrossed them and cut them out of a deal. 

Great turnkey property that will be a great addition to your portfolio. On a safe, quiet street with many long-term residents (not renters). Recently updated bathroom, new stove, new cabinets, ceramic tile in kitchen and dining room, and new carpet.

Call 314-281-0877. 

Hi Jeff, 

This is not commercial though, it's a residential rental property. Does that change anything? It's not with an agent either, it would be an off-market sale directly with seller and there are no liens. If I read you right, it's normal to make an offer contingent on seeing the Schedule E and inspections? Going by the fact that he is "behind on taxes" it seems shday. I mean really, wouldn't the seller at least proffer to show me that last Schedule E available, like for 2015 or 2014? My gut says walk away. 

Just as the subject says, the seller won't provide the Schedule E for a 3/1 SFH house I am considering as a B&H. The reason is that he is "behind on taxes" and I should just make an offer without it. I feel as though this is some kind of sucker test, not to mention it comes across as unprofessional. But is this really unprofessional or just a polite refusal? I was under the impression that providing a Schedule E is not out of line and quite normal and a serious seller should provide it on request.

What would you do? 

@Marcus Hendren

Why not post some pictures so the more trained eyes can see what you have? Some hardwood floors are surprisingly salvageable. I am going through the same dilemma with hardwood, but have opted to refinish them. Take a look at this thread; it should be helpful for how to hire it out if that is what you decide. 

 https://www.biggerpockets.com/forums/84/topics/407281-hardwood-floors-for-newbie-diyer

@Sam Wilson You summed it up quite well with how to size up a contractor for this job. The questions you ask are more of implications that the job that I want done will include all of what you mentioned rather than a request. I mean, who would want dust particles in their HVAC ducting? 

@Jill F. The price per s.f. is just a rule of thumb then. 

I am going to revisit this post when it is all done to talk about lessons learned and share pictures. Thanks all...this thread has been educational and has helped me make a decision already to hire it out. 

After this thread, I am leaning toward hiring it out, even if the highest and best use of my time would be staring at a wall LOL @Sam Wilson you mentioned that the rental equipment is 110V, but professionals use 220V. Does this just effect the timeliness or does it effect the quality of the job too? 

@Sam Wilson @JD Martin @Jill F. What are some good questions before hiring out that I can ask to get a quality job? Vetting questions, if you will.. 

And, would you recommend not negotiating the overall price of the job by having the guy take a look, but just a agree on a price per sq ft? Just ask how much per sq ft over the phone? 

@Elizabeth Wilson We've got estimates that have been ranging between $1700 and $2300. I'd like to get a feel for doing this job myself, even if I don't save a whole lot. When you say it is a heck of a job, is it because it is tedious? Because it is messy? Back aches? It takes too long? 

@Account Closed I'm putting your post's words into Evernote. From my picture, the 40-grit will get rid of that grayness? 

Social Serve

This website can be helpful in determining rents. It's heavily tiled for Section 8 / VASH recipients, but it will give you an idea. 

 Thanks, Scott. I should add a bit more about my situation because it might change your answer. 

I have two out-of-state properties that are under property management. These tools I bought could only be for this subject property that is not in service as a rental just yet. And I do not have a Schedule C income for last year. So where would these be expensed? Just claim it against the two out-of-state properties under "supplies" with 50% allocated to each? Or in other words, If I had only the subject property that is not yet in service, could it still be expensed when I am not officially in business yet? Sorry to be splitting hairs...