In my area (Las Vegas), his system of percentage discounts does not work unless the property is a condo that hasn't sold for many months or a property so far out of town that no one wants.

So high returns (percentage wise) on little money invested, but with lots of risk - legally.

Do I need a contract or need to negotiate a certain percentage or what?

First, have a very detailed business plan that includes business structure and the percentage you are willing to share with the investor.Have you ever watched the TV show "Shark Tank"?

They don't qualify this with the number of people in the household.Personally, I generally use the rule of thumb of 25 percent of gross income.While it has been a practice for years by many to use 30-35 percent, I prefer the lower percentage simply because it does not stretch the budget as much.

I also build in payment clauses that certain work is to be done before a certain percentage is paid. 

I wonder what percentage of people just take a gamble and play Russian roulette with the DOS clause.

Eventually, they're going to keep lowering the price and raising the discount percentage until its an absolute steal of a deal.And the fact that most agents and homeowners don't understand how HUD works, they aren't going to have any clue that they could put in an offer at 60% of the list price and get it accepted.If the house is still sitting in 90 days, then you might very well be able to do just that.Although I will say that I have contacted an Asset Manager before to complain.

Did you just divide it by the number of units, the percentage of square feet, or something else?

But, without knowing more about your investing style (short-term, long-term, etc), your investing goals (income growth, passive cash-flow, etc), the types of deals you're doing (rentals, wholesale, rehab, etc) and your ability to keep your money working, it's difficult to recommend a set of metrics that will allow you to evaluate your success.For example, cash-on-cash is a nice, simple metric that will allow you to compare a certain type of investment (for example, a passively managed rental unit where a substantial percentage of the purchase is your own personal funds and where all cash that is thrown off by the investment is paid out and not reinvested) to other similar investments.