Number Cruncher - What Is It Worth?
Recently I've been approached by several people who have asked me to run some numbers for their development projects. Previously, I've done it just to help friends. Now, the people asking are referred and the projects are getting bigger. The projects range from a large building remodel to an 80 home subdivision.
My role is primarily doing development and feasibility analysis for them (preliminary BOE type stuff, proformas, front/back door analysis, etc) although some are now interested in my helping them find and secure tenants. I really don't know how to put a price on this service. Would I be best to charge by hour - if so, how much? Or, would it be better to work on a percent basis of some sort? ???
So, I guess what I'm asking is: What's your opinion, experience, and/or suggestion? Please let me know as I'm supposed to get back with two of them next week.
Thanks
Susan[ Edited by sefrede on Date 03/25/2004 ]
I used to charge $100 per hour to do this kind of work. If you charge a % and/or if you assist in finding tenants you have probably crossed the line into activities which require a brokers license. Likewise if you move from "running numbers" to actually negotitating the purchase.
What is your expertise? Qualifications? License?
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Mark -
Thanks for your input. I never thought about needing a license to find tenants or work for a %. Is this a legal issue?
Gregg -
I have an MBA in RE. I don't have a license - not yet (will start classes to get Realtor's license soon - - doing this to possibly enhance my investment opportunities). Basically, I enjoy the challenge of working with the numbers/scenarios/etc to make a project work - sometimes within budget, sometimes not. Previously, I have taken on projects just for fun and practice.
Thoughts ???[ Edited by sefrede on Date 03/26/2004 ]
Susan,You can get around the licensing issue by having the people you are helping give you a percentage of ownership in the project. If you are a principal in the company you do not need a license.
Agree with Michael - but you can also work on percentage of gross or planned sales - as long it is not based on commisison (acual sales)
I have hired feasibility studies ( fee based) accounting work ( fee based) advertising budget (% based) contractors (% based)
As a buyer of your service, i would definelty prefer fee based. Just do not be bashful with your fees.
I
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I have charged a range of $75 to $240 per hour. The price depends on the amount of time and the due date of the information. You are offering a very valuable service. I agree with GFous, Just do not be bashful with your fees.
Let us know how our collective advice pays off.
Thanks everyone!
I just finished yet another meeting today with someone about a commercial development project he has an option on for 90 days - - wants to get things done soon! And wants to know how I want to be compensated..... Man, when it rains, it pours! : )
Apparently, to get around the license issue, I should have a % ownership - does compensation happen when/if there is positive CF? What if the numbers don't work or if the deal doesn't go through for a reason out of my control? Maybe a combo of ownerhsip and fee based ??
I must figure out something as it's getting down to the nitty gritty now. Two of the clients are interested in % type compensation - - to help alleviate their upfront costs and get my long term commitment. I'm meeting with another potential client tomorrow morning and I'm not sure yet of his needs and expectations.
As Gregg and DavidMc mentioned, it is going to be hard for me to not want to "give it away" - hard to not be bashful about my fees. Thanks for the advice and I will keep you posted. If there are any more comments/suggestions/advice out there - - please send 'em!! Thanks!
This is very exciting for me . . . and a bit scary. But I am very much looking forward to what lies ahead.
Thanks again!
I have a thought and suggestion. If you're dealing with developers, preconstruction, then have them give you "X" number of unit Contracts at a discounted price. You could easily assign those contracts at the time of preconstruction offering and make a significant bonus in addition to your hourly fee. It's a win, win. You take a reduced up front fee for the reduced contract price on one of the developers units and the developer has a lower out of pocket cost and has one more unit under contract, which he'll need for the financing anyway.
be up-front when discussing compensation. perhaps the best way of establishing a business relationship. you should definetly obtain a r.e. license if you're that busy to start charging people, you can broker the r.e. side of the transaction. sounds like things are going well, good luck.
mt
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