My New Business Plan—tell Me What You Think (Sorry Kinda Long)

I have reached that age and financial condition where I would like to slow down a little. Not really ready to retire yet (either financially or energy-wise) but I’d like to re-arrange my job description and do more of what I like to do and less of what I don’t.



So the thing I like to do the most is look at odd properties and figure out uses. It also happens to be what I am best at. Over the years I have come up with more odd and unusual uses and users for buildings than anybody I know. Even architects and developer colleagues call me up to ask me to walk their properties for them and give them ideas about what to do when they are really stumped.



I’ve never really charged anything for that service—Just occasionally when I find a deal I am really enthusiastic about I get involved in various ways. But those various involvements are part of what I would like to avoid at this stage. Often that “involvement” requires months or years of me running the project to make sure that it works. That level of involvement limits the geographic area I am willing to work in (if I have to look at a project every day I don’t want to have to commute too far to do it), and it limits the number of projects I can be involved in at any one time.



I guess the other reason I never charged is that I figured I only did half of what it would take to make a viable “plan”, I came up with the idea and left them to do all the research (demographics, comps, pro-formas, etc.) But I like doing all that research too. So I’d be willing to make that part of the “package”.



Now it occurred to me that I could open a consulting service and charge people to look at their properties but that is really not all that interesting to me, at least as such things are usually structured. You see I don’t like working for an hourly rate (even if that rate is pretty big). I like it that I get compensated only if the project works and as a percentage of how successful it is.



With that line of thinking I thought I might organize things like this: I charge a standard 5-10% of the “deal”. For 5-10% the client gets me to come look at any property they like. If I can come up with a development plan that we decide to implement then the client does all the day-to-day work and I get my 5-10% of the LLC or other ownership entity for having kicked in my advice. The client can come back for more advice on the same project forever—my fee is my 5-10% and that gets my input from beginning to end.



My remaining concerns were two-fold: 1) how do I monitor the projects so that I get paid and, 2) how do I avoid looking at lots of projects that have no viability?



As to 1) I thought I’d put title in Land Trusts so that the client cannot sell the property without the Trustee notifying me.



As to 2) I came up with the idea of having the client pay my expenses to look at things, travel costs, hotel bills, lunch, etc. No mark-up, no fees, just the costs. This should eliminate most of the non-starters since the upfront costs, while not outrageous, would be enough to discourage people who have projects they can figure out without help (i.e. they aren’t sufficiently challenging to be interesting) or that are too small for my 5-10% to add up to anything.



Of course sometimes I won’t be able to think of anything and the “client” will get the shaft, so to speak, for the expenses but I wouldn’t charge the percentage in those cases.



As I think about it I’ve even got some members of my development team that would sign on for a deal like this—attorney’s and accountants that would work on contingency and only get paid if the deal works so I could add those services to my “pitch”



So what do the TCI members think? Is this a service that there is any demand for? How would I advertise such a thing? I could get letters of recommendation from people I’ve consulted with in the past so I could get some pretty quick creditability and I think the “no upfront fees” would be attractive to a lot of people. What percentage should I charge?



It looks like more fun to me than being a “Guru” which several of my friends are pushing me to do and when you compare the relative cost of having me look at a project to the $5,000 to $15,000 people are charging for “mentoring” it looks like a real bargain, don’t you think?



Plus I could keep doing my own development projects in and around Chicago-- a nice residual supplemental income without too much heavy lifting or day-to-day management.