James’s story, from Tanya Muro’s book The Operator Question, is based on real cases.

He was told the fees on his investment were 12%, taken from his money at the start. That was the number in the pitch, and it was accurate.

It just wasn’t the whole story.

The fees that came later

On top of the 12% up front, there were other fees spread across the life of the deal:

A yearly fee to run the investment.
A fee to manage the building.
A fee when the property sold.

None of them were hidden. They were all disclosed in the documents. But they were scattered across a long legal document, and nobody added them up for him.

When Tanya adds up every fee for the whole time James’s money was in the deal, the total comes to about 22% of what he invested. Nearly double the number he was quoted.

Ask for the all-in number

Before you invest, ask the company one question:

Can you add up every fee over the whole life of the deal, as a share of my money?

That means the up-front fees, the yearly fees, the property management fees and the fees at sale, all together.

Then pay attention to how they respond. As Tanya says, a good company will just do it. If the answer is slow, partial, or a reminder that “it’s all in the documents,” that tells you something too.

Fees aren’t the only number that can look smaller than it is. See how the same return can be described two very different ways.

Would you have asked?

This post is based on a one-minute video on Tanya Muro’s YouTube channel. For education only, not financial advice.