Just read an interesting article (Wall Street Journal, subscription required) about one of the tactics Sequoia, one of the most successful VC firms, uses to find deals and want to replicate it.
Here’s a description of the program:
“Since 2009, Sequoia has funneled millions of dollars to scores of well-connected entrepreneurs, academics and other people known as scouts. Scouts invest the money in startups and keep their eyes and ears open for ideas that Sequoia might like.”
Understanding that they’re looking for needles in haystacks, Sequoia basically hands qualified people money and lets them invest it. They then split any profits on the investments with the scouts. It’s a wonderful way to get more eyes out there prospecting for deals.
Now, in our business, giving people who bring deals in a cut of the upside is impractical (mostly due to the difficulties of structuring the entities).
But what we can certainly do is pay out finders fees to people who bring us deals.
And, in fact, I did that just recently. A guy who reads this blog hooked me up with an off-market, 12 unit deal we bought in Highland Park. You better believe I wrote him a nice check when the deal closed.
So, I’d like to open this up to all the readers: If you come across an interesting, off-market property that you think would work as a repositioning deal, get in touch. It doesn’t matter whether you’re a broker and have the listing or just a real estate nerd who keeps her/his eyes open. If you bring us something off-market that we ultimately buy, I’ll write you a nice check, too.