Excellent question from a member ... Let's Learn Together!
Question from Tori (thanks!): What is the typical fee for helping someone secure funding, and where do you usually go to source that funding? I will assume that this is about asset backed lending, and not escrow protected funding (aka transactional funding) that we do. We split profits 50/50 and you can come to us. 😉 Let's talk about this through the asset backed lending lens. 💎 In short, we get paid for creating value ... ... and the first step is understanding who the value is being created for. 1️⃣ Sometimes the value is for the borrower, in which case they need to explicitly pay us for helping structure or source the funding. 2️⃣ More often, the value is for the lender, and they’re the one who pays us a referral or broker fee. For example, when it comes to second-position money on fix & flips, there are countless borrowers looking for it, and lenders already see piles of those deals every day. Simply bringing a second-position deal usually doesn’t create much value for the lender, so the fee may be very small or nonexistent—unless the deal is a true unicorn (e.g., under ~70% total LTV in second position with strong returns). On the other hand, hard money (HML) and DSCR lenders are almost always looking for clean, well-structured deals. Many of them have standard referral arrangements: 💰 Some pay a percentage of their fee (low end being 10%) 💰 Others offer flat fees, typically 25–100 basis points, and some allow you to decide on this 🗝️ It's important to clarify in our own heads upfront 1) what value we’re providing, 2) who benefits, and 3) who is paying for that value. ⏩ As for sourcing this kind of lending, that part is more nuanced. At Real Quick Funds, we work with: ▶️ A couple of DSCR brokers with whom we have history, and ▶️ A couple hard money lenders / brokers with whom we also have long standing relationships ❌ We don’t currently have a capital source that takes second-position deals at scale, so when those come up ... we use it as an opportunity to sell transactional funding!