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pacificwalker

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Reply with quote  #1 
I have a friend with a deal who is seeking investors, and I agreed to help. I'm not sure how to structure my part in it, and I could use some suggestions. 

I'm not a licensed real estate agent. But because of my work, I have contacts with investors, not to mention this group. My question is, how do I get paid for making an investor connection, since I am not a real estate agent? Do I charge the investor a scouting/wholesale fee? 

In other deals, I can take a percentage ownership in the deal itself and get paid when it sells. But in this case, my friend prefers to pay me a straight commission. Since I'm not an agent, I don't think i can legally take a commission on a sale, right? 

I thought to talk to a lawyer, but don't know any who could help with something like this. Do you recommend I talk to a lawyer? If so, who do you recommend? 

My friend owns a .66 acre property in Leucadia. They are building a multi-unit dwelling. They are seeking capital of $1.1 million, with 40% equity. Estimated after-construction value is $3.8 million, estimated 14 months to complete construction. So it's a good opportunity. 

I appreciate your suggestions! 
rickencin

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Reply with quote  #2 

Thank you for posting your question.  We appreciate newer members and having something to discuss. 

I’m sure the smart, good looking members of this board are off earning a fortune.  Since my tenants haven’t called my phone today I have some time to peck away at the keyboard.

You have good reason to worry about accepting a commission.  Since it is contrary to law, I can’t see how it could be enforced in court.  It’s odd that your friend wants to use this method.  It might be best to bite the bullet and get licensed.  I’ll skip the Civil Code citations.

 http://www.bre.ca.gov/files/pdf/refbook/ref01.pdf

http://www.bre.ca.gov/Publications/ReferenceBook.html

The California Department of Real Estate, Reference Book – A Real Estate Guide

Chapter 1 The California Department of Real Estate

Page 2 “When a Real Estate License is Required”

“Without a license, an individual cannot receive compensation for the performance of any of the acts defined as being within the purview of a licensed broker or salesperson. In addition, the law provides penalties for a person who acts or purports to act as a real estate broker or salesperson without being duly licensed.”

I understand your need for secrecy, but you should make it clear that you can provide the following information to a prospective buyer”

The multi-unit dwelling is a multi-owner condominium development (with all the association overhead) OR rental apartments.  It seems unlikely that a single owner would buy and occupy the entire property.  (I assume you are not selling to individual condominium buyers, but who knows?)

A projected net profit if the building is flipped.  You seem to be suggesting that the percent equity would get the same percent of net profit.  Unexpected expenses or delays casing addition holding costs would lower this.

Your investor would probably want to know the CAP and ROI of the building as a rental, as this would be very important to the end buyer and heavily influence the purchase price.\

 CAP = Net Operating Income/Price. 

So buyers will often take the given NOI and their target CAP to figure out a fair price: Price = NOI/CAP.  

Simply put Return On Investment is (NOI – (annual) Mortgage Payment)/Down Payment.  This includes leverage and mortgage payment.  ROI isn’t bigger than CAP until the annual mortgage payment/starting loan amount is greater than the CAP.  

Include some weasel words to the effect that actual net profit, CAP and ROI could be less or more or none at all than the projected values.

In the end, you get value by giving value.  Here’s to a long and successful career in real estate!


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Rick
pacificwalker

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Reply with quote  #3 
HI Rick,

Thanks for taking time away from your grueling work of collecting rent checks and delegating tasks to the property manager, so you can peck on the keyboard instead. [smile]

I really appreciate your suggestions. The legal sections you offered are super helpful. 

Yes, we have the CAP and NOI rates, etc, but without an agreement in place for me, I'm not at the point of promoting the deal yet.  I'm happy to let you know later. If you are interested, let me know and I'll send a direct message when the time is right. 

Meanwhile, I found a lawyer to talk to about this. 

Looking forward to more keyboard pecks ! Thank you soooo much!!



pacificwalker

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Reply with quote  #4 
Ok, so I see that 60 people on this discussion board actually read this post, so I am going to share with you what I did. 

I talked to a friend's real estate lawyer, who gave me guidance and said this is called a Finder's Agreement, which is signed with the developer/seller. I also did a Google search and found other real estate lawyers in San Diego, who I called and talked to. They also said a Finder's Agreement would do it.  

A typical Finder's Agreement is $600 to $700 for a lawyer to write. It stipulates that my key role is only to make introductions (so I'm not a real estate agent). A finder like me can typically charge anywhere from 2% to 10% of such a deal. I am going to go with 3%. 

The developer/seller in Leucadia is seeking a $1.1 million investment to expand a duplex property that has $3.7 million after-repair value, for an estimated 31% ROI in 14 months. My fee would be 3% of the $1.1 million investment, to be paid by the seller. 

If anyone on this discussion board has any other questions, feel free to post here or direct message me. 

So my questions are answered. This issue is resolved. Thank you for your input! 




rickencin

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Reply with quote  #5 
Thanks for the update.
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Rick
javipa

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Reply with quote  #6 
Talk to a professional wholesaler.  Finding money, is exactly the same as finding buyers.  You just invoice escrow for your fee and call it a day.  And it'll save you $700 in legal fees.
 

__________________

"Obstacles are those frightful things you see when you take your eyes off your goals." --- Henry Ford "

"149 Ways (Plus One) To Find Motivated Sellers and Get Them To Find You" >>>Click Here To Download 

Robertbouffad

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Reply with quote  #7 

GENUINE BANK GUARANTEE (BG) AND STANDBY LETTER OF CREDIT (SBLC) FOR LEASE AT THE LOWEST RATES AVAILABLE. OTHER FINANCIAL INSTRUMENTS SUCH AS MTN, CD, DLC, PB ARE ALSO AVAILABLE.

I am direct to a provider who has recently issued banking instruments for a couple of my clients the provider is 100% check-able you can do your due diligence on them. I personally know the provider.

Our instruments are only from triple 'a' rated banks and we issue from $1M to $5B . The provider is 100% verifiable. If you are genuinely seeking bank instruments. Contact me and i will furnish you with details.

They deal with issuing of instruments such as Bank Guarantee and Standby letters of credit also Letters of credit. I only want serious buyers then i will put you in touch with the provider directly.

- Bank Guarantee (BG)
- Standby Letter of Credit (SBLC)
- Direct Line of Credit (DLC)
- Medium Term Note (MTN)
- Letter of Credit (LC)
I will be glad to share with you our working procedures.
Contact : Robert Bouffad
Email: robertbouffad358@gmail.com
Skype: Robert Bouffad
BROKERS ARE WELCOME & 100% PROTECTED!!!

 

javipa

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Posts: 3,380
Reply with quote  #8 
Quote:
Originally Posted by Robertbouffad

GENUINE BANK GUARANTEE (BG) AND STANDBY LETTER OF CREDIT (SBLC) FOR LEASE AT THE LOWEST RATES AVAILABLE. OTHER FINANCIAL INSTRUMENTS SUCH AS MTN, CD, DLC, PB ARE ALSO AVAILABLE.

I am direct to a provider who has recently issued banking instruments for a couple of my clients the provider is 100% check-able you can do your due diligence on them. I personally know the provider.

Our instruments are only from triple 'a' rated banks and we issue from $1M to $5B . The provider is 100% verifiable. If you are genuinely seeking bank instruments. Contact me and i will furnish you with details.

They deal with issuing of instruments such as Bank Guarantee and Standby letters of credit also Letters of credit. I only want serious buyers then i will put you in touch with the provider directly.

- Bank Guarantee (BG)
- Standby Letter of Credit (SBLC)
- Direct Line of Credit (DLC)
- Medium Term Note (MTN)
- Letter of Credit (LC)
I will be glad to share with you our working procedures.
Contact : Robert Bouffad
Email: robertbouffad358@gmail.com
Skype: Robert Bouffad
BROKERS ARE WELCOME & 100% PROTECTED!!!

 



YOU'RE EITHER A BOOB, OR A SPAMMER, OR BOTH. 

__________________

"Obstacles are those frightful things you see when you take your eyes off your goals." --- Henry Ford "

"149 Ways (Plus One) To Find Motivated Sellers and Get Them To Find You" >>>Click Here To Download 

GeorgeB

Senior Member
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Posts: 646
Reply with quote  #9 
I think both.

Wish there was monitoring of the forum. These guys have taken over.
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