Of all the properties we’ve purchased ($350M+ to date over a twenty-year period), I’d say half of them were brought to us from agents outside our affiliate brokerage, RealEstateAuctions.com. We are always looking to partner with the broker community to purchase properties.
We are members of the MLS, so if you come to us with a property from the MLS, and we haven’t already researched it, we payout a 25% referral fee if we close on it. If we are aware of it, we would not pay any referral commission. With that said, please do not fear showing us product from the MLS. We’re not able to see everything that’s for sale in every single city.
If you bring us something “off market” and we close on it, we typically split the commission with you 50/50. We are brokers and it’s one of the ways we get paid representing our investment funds.
As a company, we typically look to purchase in excess of $50M in wholesale real estate annually. We like single-family homes, 2-4units, 5+ unit apartment buildings (up to 500 units), mixed-use commercial, retail strip centers and office complexes (up to 50,000 sq ft.). We’ve done most of our purchasing in Illinois and California, but have also closed on property in Arizona. In addition to these three states, we now have offices in Nevada and Montana to service flipping real estate as well.
The most expensive property we’ve purchased was a $31,000,000; 346-unit apartment building in Palatine, IL and the least expensive was a $60,000 home in Bakersfield, CA. We really do not have a sweet spot in reference to price point. We basically look for a strong rate of return on the project.
We look to add value by buying properties the following ways:
- Change use (apartments to condos)
- Increase cash flow with rehab and stronger management
- Buy low, sell high (wholesale)
We normally move forward on properties where we can earn a minimum of a 12% annual return, but we focus more on properties that can bring us 20%+.
We run live weekly Meetups in several locations throughout California on the “Ten Steps to Flipping Property”. We encourage brokers and agents to come and participate to learn more about what we do. This certainly will give you more detail about how we do things and what it is that we’re looking to buy.
We also pay referrals to brokers if they have investors that partner with us on properties (see investor partnerships). We normally pay the referring agent 50% of our collected salesperson fees if they bring in 100% of the capital. Here’s an example breakdown.
If we purchase a $5M property for a fund, here are the four ways we get paid:
- Acquisition Fee (2.5% of $5M) = $125,000
- Managing the project (10% of profits. Assuming 20% return on $5M = $1M in profits x’s 10% management fee) = $100,000)
- Construction Override (10% of all construction costs. Assuming there’s $500,000 in construction x’s 10% override) = $50,000
- Disposition Fee (3% of $7.5M sales price = $225,000 x’s 80% to salesperson) = $180,000
Total fee structure for $5M purchase = $455,000
If an agent or broker referred a client that invested the entire $5M to purchase the property, the above fee structure would be split with the agent or broker 50/50. We’ll call the agent or broker the “capital raiser” in this scenario
Total fee structure: $455,000
- Our agent: $227,500
- You-capital raiser: $227,500
Now, in the same above scenario, lets assume you refer an investor that comes in with $2.5M, not the entire $5M amount. You would then get 25% of the fee structure:
Total fee structure: $455,000
- Our agent: $341,250
- You-capital raiser: $113,750
When we put an investment fund together, we typically will have several investors as members. Your investor might be a 1% investor in the project, a 50% investor or a 100% investor. Your referral fee would be based on the percentage of ownership or capital they brought in.
Becoming an agent for our brokerage (RealEstateAuctions.com)
If you’re interested in actually joining the company, that’s much different from just referring us a property that we may be interested in buying. Inside our affiliate brokerage, RealEstateAuctions.com, there are three positions:
- Acquisition Director
- Sales agent
This position is an executive role and partner in the company. There is an entire section in the FlippingProperty.com website that outlines this position. Please click on the link for more info:
REA is interviewing for brokers that are interested in opening a “RealEstateAuctions.com” office for us. You would be involved in auctioning real estate, selling traditional real estate and handling the lead flow from our acquisition division. We conduct weekly Meetups around California and would be interested in having the brokers be part of it to service the leads.
REA is interviewing for agents that are interested in having “RealEstateAuctions.com” hold their license. You would be involved in auctioning real estate, selling traditional real estate and handling the lead flow from our acquisition division. We conduct weekly Meetups around California and would be interested in having the agents be part of it to service the leads.
If you’re interested in setting up an interview to be part of the REA/REM/Flipping Property Team, you can email Brian Kuzdas, CEO and Founder at: