Is a 50/50 JV split actually the beginner rate, or is it just the loudest number

Question

Everywhere I look, first deal advice says find an experienced wholesaler and give up half. Half of a 12k fee is 6k, which sounds fine when the alternative is zero.

What I can't tell is whether 50 is a real market rate or just the number that got repeated until it became the default. Because the work isn't 50/50 in most of the descriptions I read. If I find the seller, negotiate, get the contract signed, and my partner's contribution is a buyer list and a phone call, that's not equal effort. But it might be equal value, since the buyer list is the thing that makes the fee exist at all.

Argument for 50: the experienced side is carrying the compliance risk, the buyer relationship, and the actual closing. They can also walk away and do their own deals, so they price accordingly. And if the deal dies, my time was worth nothing anyway, so half of something beats all of nothing.

Argument against 50: it prices a newcomer's lead generation at zero premium forever. If I hand over a genuinely motivated seller at a real discount, that's the scarce thing. I've read people saying they moved to 65/35 their way on deal two and nobody blinked.

Argument I keep coming back to: maybe the split is the wrong thing to negotiate on a first deal and what I should actually be buying is access to how they work.

I'm still in analysis mode and trying to get out of it, so I'd rather hear what people paid than what people think is fair.

samantha_ruiz · Answer

I paid 50 on my first and it was the right price for what I got, which was somebody who read my contract before I sent it and caught that I'd left the inspection period open ended. That one line would have cost me the deal.

By deal four I was the one being asked for 50 and I said no, because by then my buyer side was the weak part and I knew it. That's the actual variable, windlass. Not experience, not effort. Whoever holds the side of the deal that's currently scarce gets the bigger number. Right now buyers who actually close are scarce and motivated sellers are less scarce than people pretend, because everybody's list is the same list.

Where I'd push back on your last point: you can't buy access separately. Nobody teaches you their process for a fee. They teach you by doing a deal with you and the split is what they charge for it. So negotiating hard on your first one is buying a worse education.

megan_doyle15 · Answer

Genuine question because I'm brand new. If the experienced partner takes half and does the closing, whose name is on the contract with the seller, and does that change what the split should be? I assumed whoever signs the seller has the leverage, but reading keystone it sounds like the buyer side is the stronger position.

priya_n21 · Answer

rigging, I wondered the same and the answer I got elsewhere is that signing the seller only helps you if you can actually perform, and a contract you can't close is worth less than a buyer who takes anything you send.

windlass, I'm on the passive side so I'm reading this as an outsider, but the 50 number stops sounding weird if you think of it as the price of not losing the deal. I paid a property manager 10 percent of gross for years and everyone told me I could do it myself for free. I could have. I'd have done it badly for the first two years and the mistakes cost more than the fee. Half of a first wholesale fee is the same shape of trade to me.

Where I'd hesitate is if the partner wants 50 on every deal after and calls it a standing arrangement. That's not a JV anymore, that's a job with worse hours.

Is a 50/50 JV split actually the beginner rate, or is it just the loudest number

3 replies