Is an $8,000 wholesale fee on a $150,000 rental a normal cost, or a red flag

Asking what he has it under contract for is a completely normal question. He did not answer it because the answer is a number he does not want sitting next to his fee. That does not automatically make him a crook. Plenty of people in this business make a spread and never disclose it, and in some states that is fine as long as they are operating as a principal on their own contract. But you asked and he dodged, and that is information about how the rest of the relationship will go.

Run the number before you run the ethics. Take $158,000 all in, plus say $3,500 closing costs, call it $161,500. Rent at the website number is $1,325. Taxes, insurance, management at 8%, maintenance and vacancy reserves at say 12% combined. On a house like that in most markets you land somewhere near $600 a month of operating expense before debt, so roughly $725 of net operating income a month, $8,700 a year, on $161,500. That is a 5.4% unlevered yield. At his rent number of $1,450 it is about 6.3%. So the entire question of whether this is a good buy sits on a rent figure he gave you and you have not verified. Pull three actual leased comps, meaning leases that signed rather than asking rents on listings. If it rents for $1,325 you are paying $8,000 to a stranger for a 5.4.

The $500 to hold it is the part I'd stop on. What does the deposit contract say happens if you decline? If there's no written agreement, you are handing cash to someone whose incentive is to keep it. Ask for the hold agreement in writing before the money moves, and if he won't send one, that's your answer without you having to be clever about it.

Fee structure matters more than fee size here. $8,000 as an assignment fee on a house he already controls is one thing. $8,000 as a service fee paid to have him find and negotiate on your behalf is a different arrangement, with a different set of duties owed to you, and which one you are actually in depends on what the paperwork says rather than what the email says. @priya_n21 which is he offering? Right now the email reads like both at once.

To @mikeoconnell7's point, the honest sourcing services I've looked at have you sign something first, before they show you anything. Buy box, fee, term, what happens if you pass. This guy showed you a house cold and then asked for money. That's the sequence of a spread deal wearing service language.

Nobody has said the obvious one. You haven't seen the inside. A $150k house that a wholesaler has locked up is frequently a house with a $25k problem, and the photos will be of the kitchen and the yard. Get in with someone who can tell you what the roof and the panel and the sewer line look like before you talk about the fee at all.

@omar_haddad yes. Ask when the panel was last touched and whether it's fuses. On the older housing in the price bands wholesalers work, cast iron drain lines are the one that eats people, and a camera on the main run is a couple hundred dollars against a five figure repair.

One more thing to check and it's cheap. Look up whether your state requires anyone marketing a property they don't own to disclose that they hold an equitable interest, or to hold a license to do it, because several states have added rules like that in the past few years and the details vary a lot state to state. Your state's real estate commission website will say. It won't tell you whether the house is a good buy, it will tell you whether the person selling it to you is operating inside the lines.

Ask him for the assignment agreement he intends to use and read it before you decide anything else. In particular, whether the assignment fee is refundable if title comes back bad, whether your earnest money goes to him or to the title company, and whether he is assigning you a contract that is still valid, because these contracts have expiration dates and it is not unusual to see one assigned four days before it expires.

A fee of $8,000 on a $150,000 house is not a crazy number on its own. Fees like that get paid, and the buyers paying them are usually paying someone who has been sending them deals for two years and whose rent figures they can check against units they already know three streets away. You would be paying it to an email address. That is the difference, and it is most of the difference.

The $500 hold is reason enough to walk on its own. Real acquisition services get paid at closing or on a stated retainer with a deliverable attached. A refundable deposit to look at a house is a mechanism for turning your hesitation into their float.

Counterpoint to the pile-on. If the house genuinely nets what @hannah_west29 calculated at the real rent number, the fee is just part of the price. You are allowed to buy a 6% yield from someone you find distasteful. What you are not allowed to do is buy it without verifying the rent, and the rent is the actual open item. His manners are not.

As @aaron_fitz10 says, the fee is just price, and @hannah_west29's spread between 5.4 and 6.3 is the whole decision. One addition: your exit gets priced by owner-occupant buyers, who do not care about yield, so also pull three sold comps within half a mile and see whether $158,000 all in puts you above or below them. If a wholesaler's fee pushes you past retail on the resale comps, you have bought the house at a loss on day one and no rent number saves that. And @priya_n21, do not send the $500.